As a business owner, your main objective is to see your business grow. If you are just starting out, it is normal that you want to be hands-on with the management of your business. Eventually, however, as your business starts to grow, managing your business starts to become overwhelming. Some tasks may keep you from doing what a business owner should be doing.
To effectively manage your business, you need to off load some of the tasks so you can focus on being ON the business instead of IN it. Outsourcing allows you to focus on managing and optimizing the core areas of your business. Some functions that are tedious and repetitive are better off delegated to an outsourcing partner.
If you are just managing a small business, you may have limited resources or do not have the technology to get things done. Outsourcing can take care of this problem as the provider will customize solutions according to the needs of your business.
When it comes to outsourcing, there are two possible options you can consider: Hire In-House Staff or Outsource to a freelancer. Each has its own pros and cons. Knowing the advantages and disadvantages of both options will help you decide which route is best for you and your business.. In this article, we shall cover the following topics:
- Hiring In-House
- Advantages of Hiring In-House Staff
- Disadvantages of Hiring In-House
- When To Hire In-House Employees?
- Steps In Hiring In-House
- Outsourcing to Freelancers
- Advantages of Outsourcing Freelancers
- Disadvantages of Outsourcing Freelancers
- When to Hire Freelancers
- How To Hire Freelancers
- In-House or Freelancers: Which Should You Choose?
To Hire In-House or Outsource?
As a business owner, finding the best talent to help you grow your business is crucial. While you might want to handle every aspect of your business to make sure that things are done right, eventually it’s going to become overwhelming that you need to find some help. The future of your company will depend on several factors and one of them is the skill level of your workers.
Aside from the talent, the financial aspect is another concern. Most business owners think that it is faster and cheaper to do the functions themselves. Bookkeeping and administrative functions—no problem.
But unless you are highly trained in many disciplines, you are better off looking for some professionals who can accomplish what you want in a way that can save you time and money. As a business owner, the first thing that will come to your mind is to bring in some in-house staff.
Hiring in-house
Hiring in-house simply refers to assigning a project or department within your company. If you are considering taking this route, you need to know the pros and cons of bringing in full-time employees to handle some functions.
Advantages of Full-time Employees
In-house employees give you the following advantages:
Easier coordination and supervision
Full-time employees are ideal for certain types of jobs and roles. They may be employed to carry out certain projects. For example, for tasks that may require constant coordination and teamwork such as software development, it is important for the employee to be under roof and working together. Hiring in-house is needed for projects that require a great deal of coordination and supervision.
Face-to-face
Physical conversations offer more engagement between you and the employee when working on the same project. This could result in an increase in morale and a better understanding of the project and also for faster progress.
Long-term relationship
Once you decide to hire someone that you think is the right fit, you’re investing in their talent, time, and future. You would want them to stick around for future projects and help the company in other ways. To ensure their loyalty, you need to give them different office perks such as salary increase, room for growth, and others to keep them motivated.
Familiarity with organization
Hiring in-house ensures familiarity with your organization. They will be in your office all the time. This will be helpful when you need to get a project out quickly. In addition, this can also prevent duplication of work efforts which happens in communication from employees to the contractor.
Disadvantages of Hiring Full-Time Employees
While it has its advantages, hiring full-time employees also has its disadvantages:
Hiring and retention can be costly
Keeping full-time employees satisfied with their job and convincing them to stay comes with a price. Good full-time employees are not cheap. When hiring in-house, you will need to pay them insurance, paid vacation and sick leave, and other benefits to ensure that they stay motivated.
Training of employee never stops
Not only is filling up a job vacancy difficult and time consuming but also training the employee to perform their jobs based on your set guidelines. The training of the employee never stops. You will need to constantly update their skills, knowledge, and more. You want to make sure that they will be the right fit to your team culture.
Finding quality talent can be tough
When hiring in-house, you want to ensure quality talent. Unfortunately, it can be tough especially in smaller cities. Most of the top talents may already be employed. Aside from that, interviewing and negotiating can take time.
When Do You Need To Hire Full-Time Employees?
Knowing when to hire full-time employees can be a challenge for any business. You cannot be an employer who wears many hats all the time. At some point in time you will need to beef up your company with new employees. But when is the right time to do so? Here are 5 signs that it’s time to hire new people for your business:
- Your business is growing
A growing business is a good sign for you and your bottom line. However, it also means more work for your team. This is one of the indicators that you need to bring in new people. You don’t want to land a new client that will only become disappointed with your service.
- Your employees are underperforming or unhappy
Boosting the morale and productivity of your team is important in ensuring their satisfaction and happiness. If you are not currently paying attention to employee performance or work attendance, you may need to come up with solutions. If nothing happens, hiring in-house may be your best option.
- Your business goals have changed
It’s not uncommon for companies to increase quotas or expectations for a department. However, when you have new goals, then you may need to hire new people to achieve that goal. For example, if you want to deliver better customer service, it might be time to hire new phone and chat representatives. If your sales team has new revenue goals, you may have to consider adding new talent to the department.
- There’s a talent gap
Talent gap happens when a function created in your company can’t be managed by existing team members. A talent gap involves not having enough junior team members to support your more experienced staff. The senior employee may be doing the work intended for junior level employees. While this may be a good idea, hiring senior level people might create holes in your business workflow that should be filled with junior-level team member.
- You’re restricting your business
When it’s time to restructure your business, it may not only require shifting resources and responsibilities but also adding new people to your team. Restructuring is also a good time to fill up holes in the company that you may have previously ignored. These gaps may be filled by adding new or dedicated positions.
Steps In Hiring In-House Employees
Creating an effective hiring process is crucial to finding the right person to fill up open positions in your team. Here are 5 steps on how to hire the right candidate for your open positions:
- Prepare an effective job description
The more clearly you describe the requirement tasks, working conditions and advantages of the position, the less time you will waste examining and rejecting unsuitable applications. An effective job description should include the following:
- Position title – Avoid using a title that is unique to your company and make sure that it is easily understood by everyone in your industry
- Information about your company – A few lines about your company and what you can offer to the successful candidate
- Job Description – This is a summary of the most important tasks that the successful applicant will perform. Highlight what makes the position unique and exciting
- Qualifications – Who is the ideal candidate for the position? List down in order of priority the important attributes and qualifications.
- Application process – Clearly state the items you want to receive (resume, reference, other documents) and whether you want the application received by mail, fax, or email. Set a deadline on submission of the application.
- Use the right recruitment tools
How do you promote the job opening? Your choice of method will depend on your company’s budget and the type of candidate you are looking for. Using more than one tool increases your exposure. Make sure to track the results. You can choose from any of the following:
- Online job boards – This is the simplest and most effective way of reaching job seekers. However, due to the sheer number of jobs available on these websites, it is important that you make your job ad stand out from the rest. General online job boards include Craiglist, Indeed, Jobstreet, and Kalibrr.
- Social media – Social media sites like LinkedIn have become effective tools for recruiters. Not only do these sites allow posting job ads on your accounts but they can also help you identify and recruit candidates possessing specific skills.
- Advertising – Posting job openings in traditional media can be effective as long as you choose a publication that caters to the type of candidate you are looking for. Advertising in industry publications or newsletters of professional groups can lead to a nice payoff.
- Employment Agencies – Employment agencies can be costly but can save you a lot of time by handling the advertising, screening, and reference checks. They will only send the applicants that meet your requirements. They can even interview the applicants on your behalf.
- Your website – If your website has enough traffic, you can use it as a recruitment tool. You can create a career section or post vacancies on your home page.
- Word of mouth – Simply telling your employees, friends, and colleagues about a vacancy is a proven recruitment strategy. Some companies even offer a referral fee.
- Do initial screening
Once you have enough resumes and shortlisted candidates, start with initial screening. The more careful you are at this stage, the less time you will lose later. You can screen candidates through the following methods:
- E-mail or telephone – Ask the candidate more information to help you decide if you want to move on to the next step. You can also gauge their interest in this process.
- Standardized Testing – This will help you find the applicants whose skills, talents, or values closely match your ideals. Tests can help you assess cognitive skills, emotional intelligence, character, work preferences, and others. The test should be administered by testing specialists.
- Ask for their portfolio – Assessing their previous work can be a great way to determine the fitness of a candidate for the position. You can ask for their portfolio to get an idea of what they can do.
- Interview the best candidate
The interview is your opportunity to confirm the candidate’s qualification and fitness to your expectations and company culture. There are two types of interview questions:
- Behavioral questions – These types of questions help predict future behavior by asking about previous behavior. You can assess the candidate’s self-confidence, creativity, and problem-solving skills.
- Situational questions – Present the applicant with some potential situations they could face on the job and how they will deal with them. This can help you gauge their knowledge, skills, and work methods.
Avoid asking them personal interests as this could get the interview off track and may annoy the candidate who wants to separate work and private life.
- Make the job offer
When you have selected a top candidate, call, and make a job offer. If possible, give them a few days to make a decision. The common practice is to send a letter of offer indicating all the details discussed over the phone.
Outsourcing Freelancer
When hiring a full-time employee isn’t feasible, you can consider outsourcing to freelancers. More than a third of small businesses currently outsource a business process. Outsourcing can improve your business efficiency and bottom line. Outsourcing has its own advantages and disadvantages.
Advantages of Outsourcing
If you are still having second thoughts about freelance outsourcing, here are some advantages you might want to look at.
Outsourcing is budget friendly
Freelancers will deliver the best work at a reasonable price. When you hire a full-time employee, you will need to provide them with a workstation, which is already an expense on your part. Freelancers work at the comforts of their home, in a coffee shop, or any place where there is an Internet connection.
Aside from that, you won’t have to pay them insurance, medical and dental benefits. They will only charge you a flat rate based on their expertise and knowledge of the subject. If you have short-term projects, you will only have to agree with the freelancers on the fee for the completion of the job.
Freelancers are highly trained and specialized professionals
Freelancers have long been working in their respective fields already. They have the experience and specialization backed up with a long track record of success. Freelancers are often tasked to do web design & development, content creation, digital marketing, and search engine optimization.
Aside from that, when outsourcing to freelancers, you don’t have to invest in additional equipment, software, and other kinds of materials or supplies. Freelancers will provide everything that is needed to fulfill the tasks. All you have to do is pay the agreed money.
Finding in-house staff can prove costly from a training standpoint
With in-house staff, you still need to train them to perform the job under your guidelines. Freelancers, on the other hand, have the expertise in their area. If you hire them for web development, for example, they already have the necessary knowledge needed for that task.
Outsourcing provides better and easier talent acquisition possibilities
When selecting in-house staff, it will usually take a lot of time and energy to select the best candidate. On the other hand, freelance outsourcing is a faster option because you can acquire talents easier due to the plethora of web freelancer platforms offering their services in hundreds of fields, most of them with portfolios and ascertainable experience.
Disadvantages of outsourcing
Despite its advantages, outsourcing can also have its disadvantages.
Intellectual property can be exposed
Try to garner some insights on the freelancer that you will hire. You can check in LinkedIn and Facebook for some insights on the talent you hire.
Fake freelance profiles can exaggerate talent
When hiring a freelancer, check social media for reviews and ratings. Beware of freelancers that don’t have any rating or can’t be found online.
Different locations can have different styles regarding design, engineering, and content creation
A freelancer in London may have a different style than a freelancer based in San Francisco or New York. Choose a talent with experience in your country and area.
Communication gaps can be likely
Freelancers work in different time zones and different schedules. They work unpredictable hours. For example, you need to see the freelancer at a certain time. You need to clearly communicate with the freelancer when you want them to work.
Freelancers can increase the length of a project
Freelancers work on different projects. For this reason, they may increase the duration of your project and prioritize those that pay higher.
When To Hire Freelancers
As your business grows and more tasks need to be done, you need to decide on where to focus your energy. Generally, you would want to focus on the core objectives of your business. So when do you consider freelance outsourcing?
Tasks become too time-consuming
When a small task start to eat too much of your time, you should consider outsourcing. You should maintain or improve operations as your business grows. Processes should become easier and more streamlined not the other way around.
Some responsibilities are pulling away resources from higher priorities
If something has no direct contribution to your bottom line, it’s time to outsource it especially ifthat thing is keeping you from other tasks that has a meaningful impact on your business.
There’s a more cost-effective way of getting things done
Technology has made life much easier, especially for business operations. There are now a plethora of online tools for improving productivity.
How To Outsource To Freelancers
Outsourcing to freelancers is essential to your business but it’s not easy. It all boils down to knowing what to outsource and what to keep. Don’t make the mistake of assuming that outsourcing duties means doing those tasks effectively at a lower cost. While it can be true, it’s always not the case. Here are some tips to help make outsourcing successful.
Keep control of essential business functions
Keep tasks related to your competitive advantage in-house. Don’t outsource tasks that are related to your core business. Doing so would be detrimental to maintaining your company’s culture and overall health. It is a good idea to keep the hardest and most rewarding tasks in-house.
Consider outsourcing tasks when you lack expertise
Freelance outsourcing can be a way of filling up knowledge gaps. For example, if you don’t have someone on your team with accounting knowledge, the best thing to do might be to hire an independent contractor. This can be true if hiring a full-time accountant can be a waste of resources. Time constraints should also be an important consideration. The important thing is to identify areas of your business where outsourcing can help.
Decide what’s best for your business and consider the risks
When deciding to outsource, consider your business needs as well as the pros and cons. Don’t always compare your business with the competition. The business down the street might be a home design firm whose founder has an accounting expertise. If you are deficient with accounting, the best option for you is to outsource it.
Identify costs
When considering outsourcing to freelancers, you should remember to include the costs of your time and emotional energy. Hiring full-time staff may be cheaper on paper, but there are other responsibilities that go along with managing new employees. You may have to ensure that work will be continuous and provide training and advancement opportunities. Also, you will need to invest in equipment as well as a workstation for the new employee.
Identify how much culture matters
Another important consideration when outsourcing is your company culture. Even if you find a close match with a freelancer, they will never be 100% yours.
Assess market availability of skills
You may prefer to hire someone as a full-time staffer but if you can’t find the technical or marketing talent, you may have no choice but to find a freelancer. You need to consider the scarcity of skills in the market and whether you will find the right type of professional for your budget.
In-House or Freelancer: Which Should You Choose?
When choosing between hiring a full-time staff or freelance outsourcing, one will usually stand out from the other based on your needs.. There might be situations wherein one of your projects may best be handled by a full-time employee and another project outsourced to a freelancer.
Even for a particular project, some tasks may be best handled by a contractor and the other tasks managed in-house. Always consider what’s best for your needs and the market realities. The right decision will come down to thoroughly evaluating your needs.