Outsourcing vs. Insourcing: When to Own, When to Partner
The 21% Benchmark: Striking the Optimal Balance
A recent study conducted with BCG’s benchmarking unit Expand, analyzing 55 banks, uncovered a consistent pattern: the best-performing institutions outsourced approximately 21% of their IT capabilities.
Costs rose sharply when outsourcing exceeded 34%, largely due to diminished internal control and excessive externalization. On the other end of the spectrum, banks that outsourced less than 8% tended to struggle with rigidity and inefficiencies caused by overly internalized IT operations.
But the ratio is only part of the equation. What matters more is how outsourcing is executed.
Keep the essential parts of your business in-house. Outsource the rest so you can focus on your core business functions.
Pavel Riegger, CEO Trask
And in some cases, the "right thing" may be to make a bold move—like transferring an entire IT function to an external partner. A striking example came in 2023, when Nordic-based Danske Bank sold its entire Indian IT centre—employing 1,400 people—to Infosys as part of a $454 million digital transformation deal.
Rather than scaling gradually, the bank chose to accelerate change by fully handing over a significant part of its IT operations to a trusted partner. It highlights how, in some cases, outsourcing becomes less about cost and more about focus, speed, and access to advanced capabilities.
Examples like these underscore a simple truth: choosing to outsource is only half the battle. How you execute it—through the right delivery model—makes all the difference.
Choosing the Right Delivery Model: It’s All About Scope
Project scope is often a hidden risk. Many organizations feel confident their scope is well-defined—until the project kicks off. That’s when delays and change requests start to pile up.
Even when the scope seems clear at the start, fixed-price projects require precise definition and consistent governance to avoid costly deviations.
Pavel Riegger, CEO Trask
Fixed Time / Fixed Price (FTFP) contracts work best when the project is smaller, standardized, and built around a stable, well-understood scope. They also require strong delivery governance on the client side. In contrast, Time & Material contracts offer greater flexibility and are often a better fit for complex or evolving requirements—particularly when iterative collaboration is key to success.
Compliance: Responsibility Can’t Be Outsourced
In regulated industries such as finance, energy, and automotive, compliance is a critical factor in sourcing strategy. New legislation like the Digital Operational Resilience Act (DORA) or NIS2 enforces specific obligations—even for outsourced IT services.
While SLAs, NDAs, and liability clauses help mitigate risk, ultimate accountability remains with the business. That’s why we recommend partnering only with vendors who:
- are ISO-certified and GDPR-compliant,
- understand sector-specific standards like TISAX in automotive,
- are prepared for audits and regulatory reviews,
- offer data portability in line with the EU Data Act.
Know-How Retention: Ownership Is More Than Delivery
One common objection to outsourcing is the perceived risk of losing critical know-how. Paradoxically, many companies expressing this concern still rely heavily on freelancers for their core systems.
Ownership isn’t just about who delivers the work. It’s about ensuring your teams understand the business context, can reuse what’s been built, and remain strategically aligned.
At Trask, our hybrid delivery models are designed to accelerate results through expert teams, transfer knowledge back to internal staff, and leave behind scalable, self-sufficient solutions—not long-term dependencies.
Pavel Riegger, CEO Trask
Where In-House Still Makes Sense
Insourcing remains a strong option when the capability directly contributes to business differentiation, when strategic alignment is essential, or when full control is needed for regulatory reasons.
However, keeping everything in-house comes with its own risks — especially when it impacts speed and cost. "If delivery slows down because you can’t hire fast enough, that’s not control—it’s exposure." Pavel Riegger, CEO Trask
When Outsourcing Accelerates Growth
Outsourcing is not a business strategy—it’s a tactical lever. A smart one, when used in the right context. It proves most effective in situations where organizations need to scale quickly without lengthy hiring cycles, enter specialized domains where internal expertise is lacking, or accelerate delivery without significantly expanding internal headcount.
Why outsourcing works:
- immediate access to specialized talent
- faster time-to-market
- lower internal costs
- scalable delivery capacity
Outsourcing today isn’t about saving money—it’s about scaling intelligently. Get the ratio wrong, and you risk overspending or underdelivering. Get the partner wrong, and the impact could be even greater—lost time, diminished control, or damage to your brand.
Get it right, though, and outsourcing becomes not just an operational boost—but a true enabler of growth.
