Are we getting good value?
On the surface, one would think that paying other shareholders a profit to do what you're already doing wouldn't save money (unless there are real cost efficiencies that cross corporate boundaries). But an inefficient internal service provider can be more expensive.
But most benchmarking or outsourcing studies don't answer the question, "Can I buy this particular product/service for less outside?" Instead, they compare high-level summaries of costs (sometimes called "towers") with past outsourcing deals for other companies.
This doesn't tell you much. Are your service levels really comparable, or are you getting more, or a higher quality, of services that those other companies. Are you really less efficient, or have you found ways to make better use of internal services to leverage the business? Are there attributes of your business (such as location or market niche) that drive higher costs, whether internal or outsourced?
Also, at this high level, the only options you're provided are in-house versus outsourcing entire functions (or major portions of them). But it may be that your internal service provider is very cost effective at many of its products/services, and only a few are good candidates for sourcing.
Benchmarking studies which compare your spending to others in your industry have all the same problems. In addition, you can't buy from your competitors; so the comparison provides no realistic opportunity to reduce costs.
To do this, internal service providers need to publish a catalog of their products and services with rates based on fully burdened costs. All items in the catalog need to be things their customers actually buy. And rates have to be based on a cost model which associates all indirect costs with just the right products and services.
Anecdote: The Outsourcing Shell Game
Anecdote: You Cost Too Much
Speech abstract: You Cost Too Much!