Outsourcing vs Hiring In-house: The Pros and Cons to Your Business
The question of hiring in-house versus outsourcing is one as old as time. From companies that employ over 1,000 staff to the solopreneur, the fact that there are times when you need more manpower will always come about.
Unfortunately, there is no easy answer to this question and much depends on your individual situation. There are two sides to every coin, so let’s look at some of the aspects of hiring in-house versus outsourcing.
Hiring In-house Staffs
Salary – As with all staff that goes on your payroll, you will have ultimate say over how much they get paid. True, you will have to take into consideration industry guidelines and how much everyone will be willing to work with, but the final say is up to you.
Remember though that losing staff can cost you far more than their expertise – hiring and training staff takes resources and losing staff means that you will have to reinvest those resources in any new hires.
Training – When I mentioned resources, part of that goes into the training of a new employees. Hiring highly skilled employees is often quite expensive and even then, it is likely the new staff will need to be trained to do things in a manner acceptable to your company specifically. This occupies the time of both the trainer and trainee.
Smaller companies such as the solopreneur may find this especially challenging as it means you – the boss – is occupied training new staff even though you are taking on manpower to ease your burden.
Managing – Having more staff also means that the staff will need management, which translates into the even higher overhead. Again, smaller companies will find this more challenging as it means that the benefits of taking on more staff are slightly negated in the time you must spend managing them.
It’s much easier to agree upon pay rate and schedule availability with someone in-house. Knowing their schedule and availability aids in business planning processes and knowing the cost of keeping them on staff assists with long-term budgeting.
Time sensitivity – If the things you are looking to outsource have the potential to affect your business at a moment’s notice, hiring in-house may be the way for you to go. Yelling out for help across the hallway is much faster than trying to reach an outsourcing partner who may or may not be in the same time zone you are.
Also, remember that companies you outsource to have many clients and may not necessarily place your job as their top priority. What you save in time on training may be lost in a shuffle of resources out of your control.
The WHSR Example – Team WHSR makes the best of both worlds by having a closely-knit group of people who are experts in various field band together. The team works together to achieve specific goals, and each contributes a vital part of the effort and yet are not part of the same company.
This structure works for us and serves to both reduce overhead while taking full advantage of highly-skilled individuals.
Outsourcing Your Workforce
Exact Skills at Exact Prices – When outsourcing, one of the key benefits is that you only need to outsource to whomever can do the job – exactly who does that at the firm you outsource to isn’t within your scope of concern.
This is especially useful when trying to achieve a one-time objective such as building a corporate website. By outsourcing the job, you are using experts who if you hire in-house will become obsolete after the site is up.
All you need to be concerned about is the price of the maintenance of the site after the job is done. eCommerce website builder software such as Shopify have cut this overhead even more and Shopify pricing makes this endeavour affordable over the long run.
Skills are not transferable – That being said, making use of outsourcing means that those skills go away the moment the contract is over. Your company doesn’t gain these capabilities over the long run so if you are interested in specific skills to expand your business, outsourcing isn’t for you.
Fast Turnaround – Since their payday depends on getting your job done quickly and correctly, companies you outsource to will be greatly motivated to do the job well. Their business reputation is also on the line.
Outsourcing companies also are used to dealing with the various needs of different clients and have the capabilities to manage things on their own. This means that they can hit the ground running and have the experience to manage your expectations.
One-size Fits All – Outsourcing firms have a tendency in some cases to try one-size fits all solutions that they will customize a little to suit your needs. This is especially common for outsourcing firms who are accustomed to working with specific systems or tools. This isn’t the same as building a complete in-house solution which may be perfect for you.
Of course, how exact the fit is for you could be enough but bear in mind that you may end up paying for a solution with answers that you don’t really need at some points.
Outsourcing vs Hiring In-house: Which is Right for You?
To be honest, this is very much a personal preference in many cases. I have experienced it from all four ends of the spectrum (being outsourced to, being hired to do specific jobs, hiring full time and being hired full time) and have to say there are always situational pros and cons.
As a safe guideline, I recommend deciding based on following your business core. As a rule of thumb, consider what you are outsourcing for and then compare it to your core business. Take for example this scenario: You are a sporting goods retailer with a physical store and want a website done.
Since you’re a sporting goods store, it is likely that you will want to focus on your core business – selling sporting goods. Taking on staff with the skills necessary to create and maintain your website doesn’t make economic sense – so, outsource!
If you need to increase your sales, look towards hiring in-house. Firstly, it is a core portion of your business and serves to expand on what you have. Secondly, you remove the possibility of conflict that having two separate sales entities may result in.
Conclusion: Always Build on Your Core Capabilities
Although these points are all valid, you should know that the decision for solopreneurs is even more critical. By deciding to expand your workforce you need to be clear that your business can sustain the overhead long-term.
Choosing to hire in-house opens a whole can of worms that can rapidly change your financial situation and bring your business down around your ears. Remember that thanks to the digital revolution, the world today is pretty much borderless.
Finding the right outsourcing partner isn’t as difficult it may be and there are many out there who are simply dying to get a chance to work with you. In fact, limited partnerships could also work too, if your skills complement each other.