As an entrepreneur, there comes a point in time when running your business can become overwhelming. Deciding between outsourcing vs in-house can be tricky. You want your top talent to be working with you, but will you look for it outside or find it from your in-house team? Outsourcing and in-house both have their pros and cons so you need to think long and hard about which you will do.
While it has its own advantages, outsourcing is not always the best option. There are tasks that can be outsourced and tasks that are best to stay in-house. Deciding whether to outsource or stay in-house involves taking into account certain factors. In this article, we aim to help you decide whether to outsource or stay in-house.
Why Should You Outsource?
- Advantages of Outsourcing
- Disadvantages of Outsourcing
Why Should You Stay In-House?
- Advantages of In-House
- Disadvantages of In-House
Should You Outsource or Stay In-House?
Why Should You Outsource?
Outsourcing can free your staff from getting overwhelmed with tedious and repetitive tasks so they can focus on their core responsibilities. But maybe you are having second thoughts about outsourcing because you don’t know if it will work for you. Here are the pros and cons of outsourcing to help you decide.
Advantages of Outsourcing
By outsourcing, you delegate some of your tasks or projects to a third-party provider. Outsourcing offers a wide range of benefits to its users.
1. Access To A Pool of Experts
An outsourcing provider can help fill up knowledge gaps in your in-house team. For example, if you don’t have someone on your team with an accounting background, you can delegate it to an outsourcing firm with a ready accounting team. If you are just a small business owner and don’t have the budget to hire a full-time accountant, it might make sense to just outsource the function.
The outsourced team are experts in their field so you can count on their experience to finish whatever task you delegated to them. So if your team does not have certain skill sets to get the job done, outsourcing might be your best option. Independent contractors have specialized degrees and have the necessary certificates to back up their expertise.
If you lack knowledge in an area that is not crucial to your business, you can easily outsource it. You can also outsource mundane tasks so they won’t consume the time of your in-house team. When outsourcing tasks, you should consider time constraints. Your aim is to save your business time while attending to customer needs. In these areas, outsourcing can help a lot.
One of the top reasons businesses outsource is cost cutting. With outsourcing, you don’t have to worry about things like salaries, benefits, wages, and training costs. It is more affordable than handling tasks or projects in-house. Even if you pay hourly rates, it will still be lower than what you will pay an in-house team.
Contractors are also used to stay on or under budget. With an in-house team, costs like training, raises or bonuses, overtime pay, and more can pile up. Plus, you will also have to pay for the utilities, rental fees, taxes, and others. On the other hand, the outsourcing provider will shoulder these expenses so you don’t have to worry about it.
Hiring an in-house team can be expensive. It does not make sense to hire a full-time employee for just a part-time project. You are better off outsourcing such kinds of projects rather than handling it in-house.
Whether you are looking for contractual, full-time, or seasonal employees, outsourcing has the flexibility to adjust to your needs. The provider can give your business the manpower and resources that you need more quickly. With an in-house team, you will have to go through a lengthy process in hiring a new employee.
Outsourcing allows you to only hire when you need employees. Depending on your project timeline, you might only need the contractor for a short period of time. They can work on hours when you need them. They can work 30 hours or 5 hours a week depending on your need. You can always contact the provider when you need them.
Filling up an in-house team is time-consuming and time might not be a luxury for some of your projects. The flexibility of outsourcing can provide you the manpower you need on demand. You can even hire them on a project basis without the candidates going through a long hiring process.
4. Focus On Core Resources
With several projects and tasks on their plate, your team might be overwhelmed that they might want to get some load off their shoulders. Outsourcing frees your team from time-consuming and menial tasks so they can focus on their core competencies and improve on their main responsibilities.
Doing the menial tasks may be outside of their typical day-to-day tasks and can significantly interrupt their workflow and output. By outsourcing these time-consuming tasks, your team can greatly reduce that burden so they can focus their time and energy on their core tasks.
Hiring a third party for the tasks on your plate can make your work manageable. With outsourcing, you don’t have to ask someone on your team to do additional work and overwhelm them in the long run. An outsourced provider can help lighten up the load of your employees.
Disadvantages of Outsourcing
Outsourcing is not a magic pill that can address your business needs. It is not perfect and has its own flaws. Here are the disadvantages of outsourcing.
1. Risks To Intellectual Property
One risk of outsourcing is the potential exposure of your intellectual property. Keep in mind that you will be sharing some of your client information with the provider which could expose their confidential data. This makes outsourcing a risky undertaking because you are entrusting customer data to potential competitors.
You want to make sure that the outsourcing provider you plan to work with has some protocols or policies in place on how they will protect your intellectual property. One security measure you can check is a non-disclosure agreement. This will prevent the provider from revealing any information to your competitors. This is usually stipulated in the contract that you will sign with the provider.
Protection of intellectual property should be a top priority for both you and the provider. Ensuring the privacy of confidential information will help boost customer loyalty and satisfaction. On your end, determine which intellectual property you should disclose to the outsourcing firm and which you should retain.
2. Communication Barrier
One major issue with outsourcing is the communication barrier. The contractor may be working in a different time zone than yours which makes communicating with them a challenge. It can be harder to monitor your company’s progress if your partner is located in another part of the world. Less visibility often leads to less communication.
Communication can be a huge issue between you and an outsourcing provider whose native language is not English. It may be hard to get work done correctly if there is a problem with communication. Effective communication is the key to successful collaboration. What good will their skills be if you cannot communicate with your partner?
Make sure to choose an outsourcing firm that will address this issue. Choose a provider that will clearly communicate with you via phone calls, emails, and chats. The provider may have their preferred mode of communication to get instructions across early. Make sure that you are comfortable with these modes of communication.
3. Less Control
By outsourcing tasks, you will have less control over a project. Also, there is a chance that the contractor you are outsourcing may not be transparent with how they will handle projects. You will only give them the specs and will only get back to you when the project is done. In addition, you do not have a way of monitoring their performance.
Since the outsourced provider is not working on-site, it can be difficult to maintain the level of control you desire. By outsourcing, you give the contractor some freedom on how they will perform the task. While you can provide some direction on what you want to accomplish, the contractor you outsource will most likely do the tasks the way he sees fit.
Make sure that you work with the contractor to find the right balance. Trust is very important when working with an outsourcing provider. As long as they are trustworthy, having less control over the project won’t be much of an issue.
4. Problems with Quality Control
Despite the benefits of outsourcing, it is only good if you are receiving the quality you expect. Anything less than what is expected will lead to disappointment. As mentioned earlier, contractors work with different clients so their focus will be on the projects that offer higher pay. You have no assurance that the outsourcing provider will give you the perfect output or will meet your expectations.
Without quality control, the reputation of your business will suffer which could lead to loss of clients, sales, and profit. Ensuring quality can be a cause of concern if you want to consider outsourcing. You want to make sure that the provider you are looking to partner with has some quality control measures in place.
On your end, you want to make sure that you spend time screening the potential provider. Let them know right away that you expect the highest level of quality from them. Also, don’t expect instant results immediately.
Why Stay In-House?
If you are not sure whether outsourcing is right for you, there is always the option to stay in-house. Like outsourcing, retaining tasks in-house has its pros and cons.
Advantages of Staying In-House
Here are the reasons you should consider retaining functions in-house.
1. Suits Your Corporate Culture
It can be hard to find contractors who will understand and fit your corporate culture. On the other hand, your in-house team already understands and embraces your company culture. They already know what your company wants to deliver or solve using the products you developed. In addition, they are already aligned with your company’s mission, vision, and goals.
Knowing your corporate culture is important in keeping employees happy and committed to your organization. A recent study revealed that 77% of respondents would consider company culture when applying for a job. Building a strong corporate culture will not only lead to employee satisfaction but also attract prospective employees.
An in-house team that suits your corporate culture can enhance your brand image. It can also affect productivity levels for your in-house team. Strong company culture helps ensure that projects can be completed as a team.
2. You Can Utilize Their Current Skills
You already know the skillsets of your in-house team so you can build on those skills when assigning projects and tasks. If you have new projects in your pipeline, you can use those projects to upgrade your team’s skills.
You can use their current skills and train your in-house team. Handling an in-house team allows you to learn together and improve your capability as a team. Encourage your in-house team to continue improving their current skills or get certified. There are many ways they can improve their skills like becoming proficient in new software or platforms.
If they have some hard and soft skills they need to develop, provide them an opportunity to enhance those skills. Professional development of your in-house team should be one of your core activities. You will help set them up for success if you will maximize their skills.
3. Face-to-Face Collaboration
The best way to prevent misunderstandings and miscommunication is face-to-face communication. Aside from that, the results can be more effective and within expectations. Face-to-face collaboration allows team members to engage with each other which could contribute to the success of a certain project.
Face-to-face communication can help invigorate team members which can sometimes lead to bigger ideas. Furthermore, it encourages engagement and participation and can help strengthen company culture and trust between team members. Brainstorming can be much easier when done face-to-face because it allows a better exchange of information.
Face-to-face communication helps boost overall productivity. It helps build a collaborative environment that will inspire and energize employees. As 93% of communication is nonverbal, we can never underscore the importance of face-to-face communication.
Disadvantages of Staying In-House
While it has advantages, staying in-house does have its disadvantages.
1. Higher Ongoing Costs
Hiring a full-time employee can be expensive. It also entails a longer commitment than outsourcing the work. When the project is done, the hired employee expects to have the same amount of work and pay.
If the hired employee will only handle one or two projects, it might be more affordable for you to outsource the task or project rather than handle it in-house. Also, unlike a full-time employee, a contractor will not be paid 40 hours of work weekly doing administrative, training, or waiting for the next task.
Aside from their hourly rates, you also have to pay for hiring. A full-time employee costs 125% to 140% of their salary. Plus, there are other expenses to worry about like healthcare benefits, certifications, training, continuing education, renovations, hardware and software, and others. If you are working on a tight budget, this could be a major issue.
2. Lack of Necessary Skills
There’s no such thing as “jack of all trades,” and your in-house team may not be one as well. They may not be good at everything. Chances are they may not even be able to complete a particular project successfully. You can’t force them to take on a project that is outside of their expertise. They may already be good at one thing and want to stay on track.
Furthermore, training your in-house team might be too time-consuming and expensive. In your effort to teach something new to your team, it might compromise what they already know well and the results will not be good. Besides, they might actually be apprehensive about stepping out of their comfort zone.
Making them excel at a new task is not always feasible. It will be like a balancing act for them. Too many expectations to meet is not healthy and may result in burnout. They only have a few hours in a day to be productive. Never assume that someone will want to take on new responsibilities.
3. Your Perfect Candidate Might Lack Enthusiasm
Enthusiasm is key to the success of a project. But if you ask them to take on a new project, they may not be that enthusiastic to accept the new role. The more you ask your team to do, the less productive they will become. Long-term productivity should always be more important as well as your team’s health.
Keeping your team motivated requires time and focus. You could end up backtracking to the detriment of your project and your team’s professional development. Always establish an open line of communication for them to express their concern.
Your team only has a limited number of hours during the week and chances are they are using all of them. You can shift your priorities to make room for new projects but eventually, you would have to choose which needs to be done. If you must decide between outsourcing and asking your team to put in additional hours, choose to outsource.
Deciding Between Outsourcing or Staying In-House
Now that you have an idea of the pros and cons of outsourcing and staying in-house, it should be easier for you to make a decision. The important thing is to always consider your business needs. Just because outsourcing worked for one company does not mean it will work for your company too.
If you choose to outsource, look for the mundane tasks that will not impact your core business. At the same time, you never want to become too dependent on contractors that your business won’t thrive without them. Most businesses opt for the hybrid approach. It will all boil down to your budget, timeline, and company culture.
Outsource Your Business Needs with airisX
Outsourcing allows your business to focus on your main competencies and operations and forget the hassle of sharp learning curves when the task falls outside your company’s core area of business.
By outsourcing to a leader like airisX, you will be able to scale up quickly by getting the right resources, processes and technological infrastructure. No matter what your scaling requirements are, airisX will give you the best optimized solution and you will be able to focus on satisfying your customers. Your back office operations will be simplified, giving your users a high-quality experience.
Our services are flexible and contracts are based on your specific needs. Whether you only need a one time project, additional skills for just a few hours a week, or you may need a multi-year contract for long term support and scalability, we’re able to provide. Whatever your requirements, your Solutions Architect can work with you to find the right solution. Contact us at firstname.lastname@example.org and one of our agents will get back to you.