As a small business owner, you’re always looking for ways to maximize profits and keep costs low. One of the strategies you might’ve encountered is outsourcing. The latter is a tried and tested strategy that many big and small businesses used throughout their company’s lifespan. However, you might still have some doubts about hiring outsourced employees or just hiring someone full-time. This might be because of the costs you might incur or the trouble of finding the right outsourced service provider.
It’s important to know the pros and cons of outsourcing and in-house hiring.
Why Hire In-House
An in-house employee is more invested in the success or failure of your business. If you compensate them fairly and provide them with opportunities, they’re willing to go the extra mile for a project or campaign to succeed. They want to see the fruits of their labor and want to repay the trust and resources you invested in them.
When you invest in an in-house employee, they gain new skills or improve current ones for the benefit of your company. You keep talent in your organization which could possibly lead to innovations that provide you with a competitive advantage.
Hiring in-house also gives you control over the schedule of your employees. You establish the work hours, deadlines, and phases of the campaign or project you launch. You can dictate the shared working hours of every member of the team. You won’t have the same level of control when you outsource work. The outsourced team might be working in a different time zone or have multiple projects that consume their time.
Reasons to NOT Hire In-House
In-house employees provide your company with advantages, but they also come with disadvantages you might want to consider before hiring. A full-time employee incurs higher regular costs such as benefits, paid vacations, bonuses, training, certifications, salaries, and others included in their compensation package. These costs reduce your overall revenue. You continue to pay an in-house employee whether a campaign or project succeeds or fails.
A full-time employee may lack the skills and experience you need to launch a new product, enter a new project, or change the direction of your business. You must train them again and introduce them to new practices. An outsourced employee is ready to go the moment you hire them because you specifically look for their skills and experience level. They may also burn out depending on the workload you give them throughout the year. Their motivation and engagement may come and go depending on their stress levels and workload. You pay an outsourced employee by the hour or a negotiated term. You can ask them to work longer as long as you compensate them for it.
Pros and Cons of Outsourcing
Outsourcing allows you to accelerate the growth of your business because of the many advantages it provides. Outsourced employees are a cost-effective option because of the short-term nature of their collaboration with you. They don’t need the usual perks such as paid vacations, required benefits, certifications, training, and other similar investments you would provide their in-house counterpart. You might also be outsourcing to a country that has lower rates. The extra savings you gain allow you to reinvest in the growth and development of your company.
With outsourcing, you’re more flexible regarding the paid work hours you offer. If you need 20 hours this week, you can negotiate with your outsourced employees. If you only need 10 hours, that’s the time they commit to you. Outsourcing is ideal especially during seasonal fluctuations in your sales cycle. They immediately fill gaps when your in-house team can’t handle the influx of customers and work during your company’s high seasons.
Outsourcing allows you to hire first-rate and experienced experts in various fields such as IT, accounting, marketing, sales, and others. You can always find the right person with the specialization you need for a short-term project. You only have to worry about their fees and if they’re within your budget. Once you hire an outsourced expert, they fit seamlessly into your team. They can start the tasks you assigned to them immediately, with no need for training.
Outsourced employees reduce some of the workload of your in-house team. You can delegate tasks to them while your in-house employees focus on their areas of expertise. Your team won’t have to do redundant tasks or stretch themselves beyond their skill set. Your team will be more mistake prone when they do things they lack experience in. This distribution of work gets projects done faster without sacrificing efficiency and output quality.
Outsourcing provides many advantages to businesses; however, it also comes with disadvantages. One such disadvantage is poor communication between parties. An outsourced partner works with several clients and can’t provide you with updates every day. In many cases, you’ll have to ask for an update. You also have less control over the project and the staff working on it. You can provide them with the overall vision of the project or campaign, but the details to achieve it will be up to them. Outsourcing may have a negative impact on your company culture. Your in-house employees may feel that they’re inadequate or you’re planning to replace them. This affects their productivity and may result in poor quality output.
These are some of the pros and cons of outsourcing that you should factor in your decision-making process. An outsourced team is a “plug and play” option whenever you need expert assistance for projects or campaigns immediately. However, they’re not as committed as your in-house team. They don’t have the same level of investment in the growth and success of your company compared to full-time employees. Weigh all the factors before you decide to outsource. Review your budget and determine if you can afford to outsource certain tasks.
We at Robookkeeper can be your outsourced bookkeeping partner. We make it easier for you to update your books through our first-rate virtual bookkeeping services. We have a team of experienced virtual bookkeepers that can correct mistakes in your books and provide you with other bookkeeping services. We use first-rate cloud accounting technology to ensure the security of your financial data.