Outsourcing vs Hiring In-House Employees: An Overview of the Pros and Cons

By
Real Estate Agent with Real State Company

Is outsourcing jobs a good idea? Or should you hire in-house employees instead? This article discusses the pros and cons of each, to help you make your decision

Your company needs more help, or maybe your current staff is handling tasks they're not qualified to do.

Do you choose hiring in-house staff or outsourcing jobs?

It's a decision many small business owners struggle to make. You want to ensure you're making a cost-effective choice, but you also want the highest quality work possible. 

Keep reading to compare outsourcing and hiring an internal staff.

Outsourcing Jobs

Outsourcing work means you hire another company or an independent contractor to handle a certain part of the workload.

Outsourcing companies often specialize in a certain type of work, such as marketing, HR, payroll, or recruitment. Some firms offer many different services, allowing you to keep all of your outsourced work with one company.

You can hire local companies, but many businesses turn to offshoring. That refers to outsourcing the work to a company in another country, such as outsourcing to the Philippines.

Specialized Services

When you outsource, you gain access to experts in a particular area. If you're running a small business, having access to an expert can be invaluable.

You can focus on your core business, which makes it easier to grow. The experts at your outsourcing company can focus on their specialty.

You might not be in a position to hire multiple experts in different areas. Outsourcing gives you access to those experts easily.

Cost-Effective

You'll often find outsourcing is more affordable. You can contract for just the amount of work you need. You're not paying a full-time staff member if you only need part-time assistance.

If you offshore your work, the cost is often much cheaper than you would pay an employee. 

Keeping your costs low helps you work with a tight budget. It increases your profit margin, which can improve your company's finances.

Flexible

When you outsource, you don't have to commit to full-time service. 

You can hire the company for a temporary project to fill a need. Maybe you need a new marketing campaign, so you outsource until it's complete.

If you hire a marketing team, you have them on staff year-round. You'll have to find work for them and continue paying them even if you don't really need them. 

Quick Starting Time

Hiring an employee can take weeks or months. During that time, you have to continue performing those duties or wait to get the services you need.

When you outsource, the work can start immediately. That cuts down on the delay, so your projects get up and running quickly.

You also eliminate the training period since the company already has its processes in place. When you hire your own employee, you'll likely need to train that person and ease into the regular workload.

Less Control

Despite the benefits, outsourcing has some drawbacks to consider.

You don't have as much control over how outsourced work gets done. The company you hire has its processes in place, which might vary from your methods.

Outsourcing might also mean the work gets done outside of your normal work hours. This can make communication difficult. It can also affect deadlines if you don't communicate them clearly.

You might be able to customize the work somewhat, but you ultimately have less control than you would with an employee.

If you don't hire a reputable company, you could receive inferior work or provide inferior customer service to your clients. This reflects poorly on your company.

Less Focus

An outsourcing company works with multiple clients all the time. They're not just working on your projects. 

This can mean your projects get less attention than you want. 

It's important to hire an outsourcing company that can handle the workload. Find a company that's equipped to scale up efforts when needed to complete projects on time.

In-House Employees

The other option is hiring in-house employees for your needs. You're responsible for recruiting, hiring, and training the employees.

In a small business, employees often take on multiple roles. You might hire an office manager who handles payroll, recruiting, and customer service.

Company Dedication

Hiring in-house means you have dedicated employees who only work for you. They offer dedicated services to your company during working hours.

Your projects get the focused attention you want because you're using internal resources. Since your employees are well-versed on your company's expectations and processes, you reduce the risk of confusion or misunderstandings.

Greater Control

You have control over the work completed by an employee under the IRS definition. This means you can decide how your employees to things, including the methods, tools, and other elements.

If you want things done in a certain way and you want to maintain full control over the processes, hiring an in-house person might be the best option. You have better control over the quality and can monitor the work as it gets completed.

In-Person Interactions

When you hire an employee, you have the person in the office. That local connection helps you build relationships and can improve teamwork.

When a problem arises, you can communicate directly with your employee without delay.

You also have the consistency of one person working on the project. When you outsource, you'll likely have different people handling projects.

Difficulty Finding Qualified Employees

One potential problem with hiring in-house is finding someone who's qualified for the job. Attracting the best talent can be challenging, especially for small businesses.

The recruiting process is often lengthy, difficult, and expensive.

Once you find a qualified candidate, keeping that person can be challenging.

Extra Expenses

Your employees are entitled to certain benefits. Those benefits add to the expenses of having people on staff.

You'll need to pay for things such as the salary, health insurance, paid time off, and other benefits.

Hiring an employee also means you have to provide space for that person, which can increase your overhead. You'll need a computer, work station, and any other tools the employee needs to perform the work.

You might have ongoing training expenses to keep your employees current on their area of expertise.

When you outsource, you're not responsible for any of those expenses. You pay the agreed-upon rate, and the outsourcing company handles the rest.

Choosing the Best Option for Your Business

Deciding between outsourcing jobs and hiring in-house comes down to your specific situation. Weighing the pros and cons of each helps you choose the most beneficial option for your company.

Head over to our archives for more helpful small business advice.

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