When it comes time to expand your business, your highest cost will always be staffing.
While growth always spells an exciting time for businesses; it can also come with the stress of trying to figure out the next step for your business: staring at a list of priorities, how can you make the most bang for your buck when it comes to a new hire?
Luckily, the business world is changing, with outsourcing becoming an increasingly popular option to offset the costs, stresses and lengthy timelines required of recruitment. Everything from small, one-off projects to day-to-day admin to C-Suite level roles can be outsourced, typically at a far more competitive price than that of an internal hire.
That said, there are always going to be different pros and cons when it comes to hiring in-house versus outsourcing, and even times to consider a hybrid of the two.
The difference between the two
In addition to the clear difference in working style, the best way to weigh the differences between hiring and outsourcing is to look at the pros and cons of the two.
Hiring typically plays into company culture, allows you more control on a day-to-day level. Companies who elect to hire in-house are often compensated with:
- Complete control and oversight over hires
- The ability to manage directly
- All training being retained internally
- The ability to reorganise staff
- Encouraged internal retention and engagement
- More opportunity for day-to-day engagement
The hurdles associated with in-house hiring, however, give many businesses pause:
- In-house hires are significantly more expensive, with business owners having to consider salary, social security, pensions, training, benefits and all recruitment costs such as recruiter or advertising fees
- In-house hiring requires a greater level of legal responsibility, especially when it comes to aspects such as payroll, pensions and benefits
- In-house hiring tends to be much slower, with longer search periods as well as longer notice periods for prospective employees
Alternatively, outsourcing prioritises a high level of specialisation with access to a blend of support staff at a more competitive cost. Companies that work with outsourced support typically benefit from:
- A cost tailored to your required time commitment
- A higher level of expertise (that would usually be out of budget for a full-time hire), including access to an array of staff, ensuring that the right people do the right jobs
- Higher flexibility/scalability, with projects and retainers being able to scale up or down according to needs
- Access to a higher-level of specialised tools and tech that may otherwise be harder to come by as a business
- Incredibly fast turnaround due to the specialist workforce that knows how to work efficiently
- Access to a greater talent pool with a greater diversity of skills
This is especially in cases of outsourced support via an outsourced services company, who can bring in a number of experts with unique skillsets as needed.
These outsourcing benefits are offset by some business’ concerns of:
- Less direct control
- Data security (though this is highly debated, as any trained and reliable outsourcing professional will have data security handled)
- Less work-place culture integration
| Pros | Cons | |
|---|---|---|
| Hiring | • Complete control and oversight over hires • The ability to manage directly • All training being retained internally • The ability to reorganise staff • Encourages internal retention and engagement • More opportunity for day-to-day engagement | • Significantly more expensive, with business owners needing to consider salary, social security, pensions, training, benefits, and recruitment costs such as recruiter or advertising fees • Requires a greater level of legal responsibility, especially for areas such as payroll, pensions, and benefits • Much slower, with longer search periods as well as longer notice periods for prospective employees |
| Outsourcing | • Cost tailored to your needs • A higher level of expertise that would usually be out of budget for a full-time hire, including access to an array of staff, ensuring that the right people do the right jobs • Higher flexibility and scalability, with projects and retainers able to scale up or down according to needs • Access to a higher level of specialised tools and technology that may otherwise be harder to access as a business • Incredibly fast turnaround due to a specialist workforce that knows how to work efficiently • Access to a greater talent pool with a wider diversity of skills | • Less direct control • Data security concerns (though this is often debated, as trained and reliable outsourcing professionals will typically have robust measures in place) • Less workplace culture integration |
There is also the option of hybridising the two, such as having part of a role handled in-house, with more routine tasks outsourced. A great example of this would be a company with an in-house financial director and outsourced bookkeeping.
Once you’ve considered your business’s needs, goals, budget, and plans, you will have a better idea of which of the three options is best suited to your company.
Consider your business’ needs & goals
Most important is to consider your company’s needs and goals. These will inform the best path forward for your business.
If work is constantly evolving and a high level of contact is needed day-to-day, it may be a job for an in-house team member.
However, the more specialised the work, the better an outsourced professional may be.
One common myth is that core tasks, such as bookkeeping, should not be outsourced; this is precisely the type of central business function that, depending on your business model, may require a high level of expertise, but not a full-time internal hire, and should be outsourced.
Some key questions business leaders should ask themselves are:
- How long do you need access to these skills?
- How close of an eye do you need on this project/role?
- Does the job require deep team integration?
If you need indefinite access, complete 24/7 oversight and total integration for the job to be successful, in-house hiring is the way to go.
If any of those points are negotiable – especially when it comes to access and integration – outsourcing or hybrid may be the way to go.
If you’re uncertain of the level of help you need, it’s worth reaching out to some outsourcing service providers to learn more about how they work. Outsourcing professionals are known for the flexibility, and oftentimes are able to work within company culture and provide a high level of contact despite not being an internal hire.
Reflect on your budget
As with most business matters, budget is key when making your decision.
If you have unlimited budget to play with and think that you can hire top-level talent to retain full-time, in-house hiring will typically be the way forward for you.
If budget is a concern, outsourcing will almost always be the more cost-effective option, with costs going towards access to a full team of experts as opposed to just one individual hire.
Think about the future of the role/team
It’s also key to consider how your team and the position are due to change over the coming years.
Some more questions to ask yourself are:
- What will your business needs be going forward? Are they things that can flex around outsourced support, or do you need someone who will learn and progress specifically within the environment of your team?
- What are you plans for this role? Does it have a strict plan for progression that is not conducive to outsourcing?
Again, if high-touch, total-integration is needed to succeed, in-house hiring may be the way to go.
If not, outsourcing is the route to explore.
A great example of a job that won’t change drastically in the coming years, but does require a level of expertise, is payroll; outsourcing would be perfect for jobs like this.
As ever, if you’re not sure about the right path for your business, it’s well worth speaking to a professional about whether outsourcing versus in-house hiring is right for your team.
Craig Shorto (main picture) is the Managing Director of Offshore Group, one of the Channel Islands’ most trusted providers of outsourced financial services. Based in Guernsey and Jersey, Offshore Group supports local businesses, corporate service providers, intermediaries and international clients with reliable, practical solutions in accounting, payroll, tax and financial control.
