Management Information System (MIS) Practice Exam

Which of the following is true about in-sourcing?

1. It involves employing external vendors for services.

2. It is the practice of transferring business operations back in-house.

3. It only applies to manufacturing processes.

4. It requires the outsourcing of all functions outside the company.

The correct answer is: It is the practice of transferring business operations back in-house.

In-sourcing is accurately described as the practice of transferring business operations back in-house. This typically occurs when an organization decides to handle certain tasks or functions internally rather than relying on external vendors or outsourcing those services. By in-sourcing, companies may aim to have greater control over their processes, improve quality or efficiency, and leverage internal resources or expertise that may have been previously underutilized. The other options present concepts that do not align with the definition of in-sourcing. For instance, employing external vendors for services pertains to outsourcing, which is the opposite of in-sourcing. The assertion that in-sourcing applies only to manufacturing processes is also limiting, as in-sourcing can occur in various business functions, including IT, customer service, and administration. Finally, the requirement to outsource all functions outside the company contradicts the very nature of in-sourcing, which is about bringing operations back in rather than shifting them out. Therefore, identifying in-sourcing as the practice of transferring operations back in-house effectively captures its essence and implications for business strategy.