Which statement best differentiates insourcing from outsourcing?

Which statement best differentiates insourcing from outsourcing?

• A. Insourcing keeps activities in-house for control and integration; outsourcing contracts others to perform tasks, potentially lowering costs but increasing reliance on external parties.
• B. Insourcing relocates activities to foreign suppliers; outsourcing keeps tasks internal.
• C. Insourcing reduces risk completely.
• D. Insourcing guarantees lower prices than outsourcing.

Answer: (A)

Insourcing vs outsourcing is about who does the work and how much control you keep. Insourcing means doing the work with your own staff and processes, giving you direct control over how tasks are carried out, how they fit with other operations, and how quality is managed. Outsourcing means contracting another company to handle the work, which can cut costs or bring specialized skills, but you then depend on an external provider for performance and continuity and must manage that relationship and its risks.

The statement you chose captures this distinction: keeping activities in-house for control and integration, versus contracting others to perform tasks—potentially lowering costs but increasing reliance on external parties. The other ideas don’t fit because insourcing isn’t about moving work abroad, risk isn’t eliminated by insourcing, and price isn’t guaranteed to be lower with insourcing.