Yesterday I revealed 5 different tasks any business should outsource, regardless of it’s size, industry & niche. But when it comes to needing new skills, how do you decide whether to outsource or hire?
Today I want to share with you the pros and cons of both outsourcing and hiring, to help make your future decisions that bit easier.
- A lot of outsourced tasks can be carried out remotely, anywhere in the world. That means you have access to a much larger pool of candidates, compared to if you were looking to hire locally. This means you can find not only the best, but the most cost effective. Win-win!
- Outsourcers usually have multiple clients at any one time because they are not needed on a permanent basis. This means you’re able to get the skills you need and tasks completed without investing in a full time or even part time hire. You can pay on a project by project basis, with no contracts.
- With the lack of a contract, you’re also able to stop working with the outsourcer with immediate effect. This is mainly a positive for situations where an outsourcer is just not performing as you hope and you’ve given them the opportunity to improve to no avail.
- Last but not least, outsourcing mundane and basic tasks frees your permanent staff up to work on more valuable and skilful work. This will increase their morale and also mean your business gets more out of them!
- Whilst one of the pros is being able to get what you need done without investing in a permanent hire, it does mean that any agreements are less binding. Whilst most outsourcers I’ve ever used have been very reliable, some just are not because there is nothing binding. A sad truth unfortunately.
- Similar to the first con, even if your outsourcer is reliable and fulfils what is agreed, they will be less engaged than a hire. Because outsourcers are only used on a limited basis, and they have multiple clients, they are just not that engaged with your business and believe in what it does. Outsourcers are also less close to the team they are helping as a result. And this is even more so for outsourcers that work remotely.
- Speaking from first hand experience having been an employee in a business which outsourced a lot, it can also be demoralising. One way it does this is by revealing how easy it is to outsource tasks that the employees are doing, meaning they feel threatened and have no job security. There is however an argument from the owners perspective that this fear would generate more effort from the employees, it also means they just pack up and leave! And honestly, it’s generally not a great feeling for the employees who deserve better.
- Lastly, the quality of work you’ll get from an outsourcer can vary. Whilst you have a larger pool of candidates to pick the most skillful, it’s harder to ensure quality with outsourcers especially remote outsourcers. As such, you may have to go through several outsourcers to find the one that provides the quality you desire. Although as mentioned you can easily end the contract if you’re not happy with performance.
- Whilst most outsourcers are reliable, you will typically get more reliability out of an employee who works only for you, than an outsourcer who has multiple clients.
- Plus, your employees will be vastly more engaged with your business and team, than an outsourcer. That is because they’re more heavily involved with them day-to-day, and have a much bigger stake in the business so they want it to succeed. Even for hires who work remotely far away from the rest of the business, they will still feel like a part of the work family than outsourcers.
- As a business grows, so will it needs for more skills and people. This can be very motivating for your current team, as they want to keep rising the ranks and becoming more valuable. This is just the opposite case when you hand over new work to an outsourcer.
- Compared with outsourcing, you will typically have a smaller pool of candidates to choose from. This means you have less choices in terms of both skill/experience as well as cost.
- Hiring means you agree to pay the employee a set wage for a set number of hours worked, regardless of whether there is work for them to do! That means, unlike with outsourcers where you pay for what you get, you may have situations where you’re paying your employees to twiddle their thumbs! A solution to this is outsourcing certain tasks until your business is large enough to need a permanent employee solution to those tasks.
- Speaking of contracts, you have to pay a certain wage for a set period of time regardless of the quality of work delivered. There are of course many ways of mitigating this. Having a tough recruitment process will weed out any unsuitable candidates, whilst also having a probationary period of say 3 months upon the start of recruitment, where you’re able to sack the employee on the spot if they do not perform is also a good option.
So which is best, outsourcing or hiring? Drum roll please….
They both have their own pros and cons, and are useful for different businesses at different stages of their growth.
Even the most resourceful, expansive corporation still needs to outsource some tasks, whilst smaller businesses might need to outsource more.
Here’s a few tasks often outsourced depending on the size of a business:
Small — Recruitment, Cleaners, IT, Security, Accounts, Marketing, Training, Legal
Medium — Recruitment, Cleaners, Security, Legal
Large — Legal
You’ll notice the list gets smaller the bigger a business is. This is usually because larger businesses have the resource to hire permanent positions for certain tasks, whilst smaller businesses don’t have the resource nor the need for permanent positions for certain tasks.
And there is your answer. Every business needs to outsource, it’s just an inevitability. However as a business grows it will need to rely less on outsourcing, and can focus on hiring more. I truly don’t believe there’s a single corporation on the planet that doesn’t outsource at least one task. Not even the biggest of big corporations.