The arithmetic of insourcing
When a service operation insources a function previously held by a contract partner, the math is rarely linear. A note on what queueing theory reveals about the true cost of replacement headcount, and why the answer is rarely "more agents."
The instinct in service operations is to replace volume one-for-one. Queueing math does not scale that way, particularly when the inbound mix is bimodal. A scenario approach that compares fully insourced, hybrid, and queue-managed options produces meaningfully different cost and service profiles, and the cost-optimal solution is almost never the headcount-naïve one.
Operations