What is a make-or-buy analysis?

A make-or-buy analysis is a decision technique comparing the costs, benefits, and risks of producing a deliverable internally versus purchasing it from an external vendor. Factors favoring make include keeping core competencies in-house, maintaining control over quality and schedule, protecting proprietary information, and lower long-term cost when demand is high. Factors favoring buy include lack of internal expertise, lower cost through vendor economies of scale, reduced management burden, and flexibility to scale resources.