A relatively new term of art, insourcing represents the flip side of outsourcing and, to some extent, a reaction against this growing practice of sending finance work to outside providers and the risks associated with it. In some ways, it is a highly evolved form of temp work that requires an extremely high skill set; in others, it's a much more informed version of consulting in which specialists do not observe a company from the outside, but rather operate as an integral part of the finance team. Insourcing–or co-sourcing as it is sometimes called–gives a CFO the same kind of control he or she would have if a project or function were staffed internally. These senior-level insourcing specialists work alongside full-time staff–sometimes even managing them. Eventually, after sprucing up a company's processes in a functional area, they will pass the baton–and knowledge base–along to those who will be staying. "Organizations may well need to learn to shift their staffing paradigm to something that involves a series of shorter-term relationships, rather than an either-or choice between full-time employees or complete outsourcing," says John W. Boudreau, professor at the Marshall School for Business and research director of the Center for Effective Organizations at the University of Southern California. "There is a growing array of demographic, social and economic forces leading to this outcome."

In the finance and treasury arenas, popular areas for insourcing include financial analyses, audits and the preparation of public filings. But over the last year or so, insourced expertise has begun to be used in other areas of specialized training where regulatory changes, such as financial risk management and taxes, have made it hard to keep up. Many managerial insourcing efforts began in the late Nineties around the growth spurt that accompanied the technology bubble, but most really enjoyed their biggest growth in this decade after the regulatory response to the Enron Corp. scandal began to kick in. "New accounting rules, new regulations such as Sarbanes-Oxley, the ongoing challenges of managing multinational companies–all that complexity adds up to a lot more risk, a lot more to get done, a lot more that you just can't handle with a stagnant workforce," says Steve Giusto, CFO of Resources Connection Inc., another insourcing provider. "[Insourcing is] a much more effective and efficient way of handling the new complexities."

While Delta Air Lines Inc. may have faced a different set of challenges from MEMC, control and visibility were uppermost in the airline operator's decision to insource the information technology (IT) and technical accounting skills needed to do the deep audit necessary as part of Delta's annual compliance with Sarbanes-Oxley. Insourcing allowed Delta to augment its team and remain in control of the additional resources to guide their work and drive efficiencies. Delta would not have had the same visibility with outsourcing–and would not have had the same degree of certainty that the assembled talent was of the same high quality, explains David C. Rogers, director for enterprise systems and financial controls at the $17.2 billion airline operator based in Atlanta. "We wanted to be in the ownership seat and to own those controls," says Rogers.

Working with Resources Connection, Rogers has used insourcing in such areas as finance, IT and compliance. Although he remains of the opinion that maintaining a strong core competency is key to finance and compliance, he also recognizes that it can be difficult to find all the skill sets a company may need in a full-time person, and some may simply lie outside those core competencies. Rogers notes that successful insourcing is usually the result of a combination of planning, flexibility and a willingness to try a different approach. He points out that as Delta emerged from bankruptcy and began "fresh start" accounting, one of the insourced staff turned out to be key in working with the various business areas to design controls related to the various complexities of fresh start.

Beyond Sarbanes-Oxley, the proliferation of complex new accounting rules is also feeding the quiet insourcing revolution. Cabot Corp., a $2.5 billion chemical company based in Boston, turned to Resources Connection when it had to address the tricky technical financial reporting issues presented by FIN 47. (FIN 47 is a clarification of FAS 143, which calls upon companies to record liability costs, such as hazardous waste disposal and asbestos abatement, associated with retiring an asset over the life of the asset and not suddenly at its sale or closure.) Cabot lacked the finance staff to address the burdens that FIN 47 placed on the company. "FIN 47 implementation required a huge amount of planning and coordination, as well as significant complex mathematical calculations," says Jim Kelly, Cabot's controller. "But it was hard to justify hiring someone full-time for the position where there are peaks and valleys to the work. The Resources Connection person who worked with us on [our FIN 47 liabilities estimates] had worked at the Securities and Exchange Commission (SEC) and brought great technical accounting skills."

After the FIN 47 success, Cabot found other ways to use insourcing. A year ago, after some employees transferred out of Cabot's treasury department leaving it undermanned, Cabot reached out to Resources Connection again and was assigned the former treasurer from a small company that had merged with a bigger one to help Cabot manage its derivatives. The key to the success, according to controller Kelly: "We ensure that at the end of the project, a full-time Cabot employee is sitting next to the insourced person so that the knowledge transfer happens naturally."

Not surprisingly, outsourcing rather than hiring has proven the biggest competition for insourcing, mainly because of the rigors of cost cutting and downsizing that have dominated corporate thinking for the past two decades. But outsourcing carries risks that, in a more regulated environment, many companies are loath to take. "Outsourcing and insourcing have always been driven by a risk/reward tradeoff," says Eric Clemons, a professor of information strategy and economics at The Wharton School at the University of Pennsylvania. "Whether or not you believe that outsourcing everything to India, for instance, offers the lowest execution cost, the operational risk of doing that with certain development projects can be staggering."

Clemons also emphasizes something he refers to as incentives-based risk: "With outsourcing, there is always the risk of the loss of control of ideas or content. To the extent that you insource someone, then you've controlled the possible loss of information and content just as effectively as if you'd hired that person."

Sometimes, Clemons says, the need for insourcing is driven more by political or even legal concerns. "It is not politically acceptable to fire a CFO because she or he needs time to take care of an aging parent or spouse or because the CFO is having a high-risk pregnancy," says Clemons. "Nor is it legal. Yet, you clearly cannot go without."

Finally, some jobs are just too big to outsource. In recent years, restructurings, turnarounds and IPOs have fed the need for emergency inputs of new skill sets. AlixPartners has made a name for itself by insourcing not merely specialized finance expertise, but rather entire management teams to companies usually clawing their way out of Chapter 11 bankruptcy or fighting to stay out of it. CFOs from AlixPartners march into these battle zones and set up programs to cut costs and regain a predictable cash flow–although they would be the first to admit that their skills and industry knowledge might not always make them suitable to remain in the slot once the company was ready to return to the work of growing its underlying core business. "The people we hire are like emergency room physicians," says Albert A. Koch, vice chairman and managing director of AlixPartners. "They're brought in where the business needs dramatic improvement and needs it quickly."

Private equity buyouts and restructurings have also brought in much work for insourcing specialty shops. When Christopher M. Anderson joined Burger King Holdings Inc. as vice president of finance and controller in February 2005, he came in with a clear sense of mission: The company, which had been acquired for $1.5 billion by an investment group led by Texas Pacific Group in 2002, was restructuring with plans to spin off Burger King in an initial public offering (IPO). Anderson, 39, who had previously served as director of finance and controller of a division at Hewlett-Packard Co., knew what was needed for Burger King to go public and, after making an assessment of the manpower at his disposal, saw that personnel changes were necessary. "I needed some extra resources to provide a safety net for me–to pick up the pieces and help us get ready for an IPO." At the time, Anderson's brother, who was a former CFO, an ex-Deloitte senior manager, a treasurer and then a CFO of a pharmaceutical company, was working at Resources Connection. Burger King's Anderson realized: "That's the type of person I need–a former controller, treasurer or CFO–somebody who could sit side by side with me and help me think through some of the issues."

The relationship with Resources Connection began with a couple of people: a former controller who concentrated on Sarbanes-Oxley controls issues and a former CFO who acted as a troubleshooter for all the projects needed to get ready for the IPO. "This wasn't a situation of having Resources Connection people come in to do all of our planning or all of our SOX work," says Anderson. "We were looking to plug holes." A year after the IPO, Burger King has filled most of those holes, so the company is not doing as much work with Resources Connection. "From a business standpoint, it allows me to flex up and down." Asked about the difference between an insourcing provider and a plain vanilla management consultant, Anderson says: "Insourced executives are more like individual contractors. The people are much more malleable to the culture of your organization. They're a cog in your machine and work alongside you. When I think about [insourcing], I think about somebody like my brother. And you know what? We got somebody like that."