Whether it’s accounting, administration, inbound marketing, or even sales – hiring A-players is usually complex. The question of whether or not you should hire in-house staff or outsourcing your work isn’t new, but each decision is a huge difference and can make a big impact on not only your day-to-day business, the outcome of your project but your overall bottom line. In the latest episode of our podcast “Content and Coffee” Kimia of Ghostit and Sean of North Digital talk about the pros and cons of each decision, the considerations of each decision and what it looks like for your bottom line.
Every business will go through the decision-making process of whether or not to hire in-house workers or outsource certain work that needs doing. Usually, these considerations are most strong when you have work that needs to be done that isn’t part of your core business.
There is no clear-cut answer on whether or not hiring internally versus hiring externally is better – it really depends on the work and factors that are subjective to the business at hand. Although no absolutely right or wrong answers, there are considerations that you need to take into account between the two options that will help your decision-making process easier.
Before we get into it, we want to be fully transparent and put it out there that both North Digital and Ghostit would fall into the outsourced agency category that supply services as a solution to companies – in other words, we market as an alternative solution to hiring in-house.
We look up key positions in job banks to see if people are currently hiring for people to complete services that we offer. This doesn’t just serve as an outbound sales strategy but it also allows us to understand what our targeted customers are looking for, understand their specific concerns around outsourcing work and identify any cost-saving opportunities.
Let’s dive in
Outsourcing Work – The good and the ugly
· Zero training costs
· Faster onboarding process
· Less time to complete a project
· Concentrated expertise
· More flexibility
· Ability to shop around
· Ability to research
· More expensive up front
· Not a member of your team
· Not as personally invested
· Short term
Besides the first couple sessions of consultation and explaining your business and what you are looking for, there really isn’t a “training period” if you are hiring externally. The services you are paying money for will come with ready to go experts in their field, requiring little to no training time which translates into dollars saved on what would be two weeks to three months of paid training.
The amount of time it takes for an outsourced hire to get working on a project is usually dramatically shorter than if you were to hire internally. You don’t have to wait for them to “Settle in”, they can get started on the project right away, increasing your turnaround time on projects and tasks.
Hiring internally also means there are labor laws you need to abide by. If after 3 months you are unhappy with the work they produce, it is extremely hard to let them go without a valid reason. You have the flexibility to let partnerships go if they are not working for you.
Being open to hiring externally means you can try out all the different services out there without having to commit long term if you’re unhappy with the results. You have the ability to shop around for what works best for you.
Finally, when you are hiring internally, your research is limited to what the prospect has publicly shared and the references they’ve provided. Outsourcing your work allows you to conduct deeper research into considered options and candidates. You have access to reviews and testimonials. Since these types of resources rely on good PR, their information is much more accessible and not limited to what they only want you to see. There are also external websites that provide reviews and testimonials that you can research as well. Clutch, for example, is an excellent resource for agency reviews.
Of course, the downside to all this is whoever you hire externally will never be a true member of your team. They won’t be able to brainstorm with you, exchange ideas, or provide creativity and insight outside of their assigned project. The costs are also generally more expensive up front because you are paying a fee for service.
When You Should Outsource
· Projects and duties are not expected to be ongoing within the same scope of practice
· You are a small business with not a lot of funds to spare
· The function required is not a core component of your business model
· You are under a time constraint to get the project done
Hiring Within – the good and the ugly
· Personally invested
· Increased human and knowledge capital
· Competitive advantage
· Greater familiarity with business
· Cross training and learning
· Clashing work cultures
· More expensive
· Time consuming
· Potential turnover
Hiring for in-house staff is a much more complicated process that involves many parties in your organization. You are hiring for the long term, meaning you need to ensure that the person will be a good fit culturally, and with excellent work ethic. This requires a long recruitment and selection process that generally goes through your Human Resources Department. This can be time-consuming and costly. However, if you do manage to find a good hire you can bet on the fact that they will be more invested and engaged with your organization than an outsourced hire. An in-house hire reports directly to you, their loyalty is with your business whereas an outsourced hire is generally employed by another organization or they are a freelancer.
Hiring in-house means you are increasing your human and knowledge capital. The skills and knowledge carried by this individual will remain in your organization, enabling cross-training, and knowledge sharing among your team. If you do hire an A-player, you also have a competitive advantage over others in your niche.
Finally, the in-house staff knows the ins and outs of your organization. They are better prepped to deal with unintended consequences, unexpected problems and foresee issues ahead of time because they know how your organization runs. Hiring in-house staff whether internally or externally, sends a message to your team letting them know that their opportunities for career advancements, and that you care about our employees.
When You Should Hire In-House
· You are a medium to large sized business with a strong brand
· Activities are highly confidential, leaks and information can damage your business
· The work is not isolated e.g. projects and tasks require a level of dependency on other staff members
· You have a specific work culture
· Function is a key component of your business
· You are a medium to large sized business with a strong brand
· You have more work than just one or two projects within a similar scope – projects are continuous
Before you decide whether or not to hire in-house staff or outsource your work you need to list out the specific pros and cons that apply to your business. Identify all costs including time lost for administration, tax etc.
Determine if the project (or projects) you need to be completed is a core function of your business.
Do your research on both options e.g. what services are out there, and what is the current unemployment rate? If the unemployment rate is low chances are there are not a lot of skilled people out there currently looking for a job.
Remember, decisions around staffing are not black and white. You can carve out specific positions while still outsourcing certain projects for completion. Hiring is much more complex than what people think – especially if you want to remain competitive in your market. Take your time to do thorough research, and don’t be afraid to restructure positions, projects, duties, and tasks as necessary.
If you have any questions about this podcast or our blog, give us a shout at firstname.lastname@example.org!