Make or buy analysis
Make versus buy · Outsourcing analysis
Make or buy analysis compares delivering a product or service internally with obtaining it from an external provider, using cost, capability, risk and strategic control as decision criteria.
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Simply put
What it means in ordinary work
It asks whether the organisation should do the work itself or pay someone else. The cheapest visible option is rarely the whole answer.
Why it matters
The choice can lock in capacity, skills, intellectual property and supplier dependence for years. A structured comparison makes those consequences visible before a contract is signed.
A hypothetical in practice
A hypothetical manufacturer compares expanding its own maintenance workshop with a managed service. The internal case needs new technicians and equipment, while the external case carries response-time and knowledge-retention risks.
Common pitfalls
Comparisons often omit transition costs, contract management effort, redundancy and the cost of losing internal capability.
An outsourcing decision made only on headline labour rates can overlook quality, security and service continuity.
Regional lens
How this lands where you work
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As-of date for date-sensitive regional content: 5 November 2026. Read the review policy.