Your organization's expenses, performance, and culture will be impacted by the decision to hire in-house or outsource. There are so many factors to consider when deciding between outsourcing and hiring. To help you out, this article provides a comprehensive comparison of in-house hiring in-house vs outsourcing pros and cons.
Need more support for your organization? Then, keep reading for an overview of the differences between hiring and outsourcing, and decide which option is right for your business.
Outsourcing vs Hiring: What’s the Difference?
When you outsource a task or project, you hire outside resources to help you complete the work. This may include freelancers or agencies that specialize in a particular type of work. In contrast, in-house resources refer to your employees or yourself. When you hire in-house, new or existing employees handle the task or project.
In-House Hiring Advantages and Disadvantages
Hiring in-house offers several advantages, but it also comes with downsides. Take a look at the pros and cons of in-house hiring.
Pros of Hiring In-House
Here are the five main advantages of hiring in-house. In-house hires get to know your organization. They commit to your business, but they also take a lot of resources to support.
Hiring in-house expands the skills of your organization — When you hire in-house, you expand what your organization can do. With outsourcing, you also get this advantage, but you don't have as much control.
You set the schedule and salary for your team — You control your in-house team. Although you have to take into account what the competition is doing, you still get to set the schedule and salary for your in-house crew. This can give you greater control over your costs.
Your team is flexible and invested — In-house employees can be flexible. If your needs change, you may be able to train your employees to do new tasks. As employees, they become interested and invested in supporting your organization.
In-house employees have greater familiarity with the organization — The very nature of in-house hiring meaning means that people work in-house. They get to know your organization inside and out. Someone who works for themselves or another company may not develop the same level of familiarity with your business.
Collaboration is easier with in-house teams — With in-house teams, you can more easily collaborate. Your team members have on-site availability. However, with so many companies switching to remote schedules, this advantage is dimming.
Cons of Hiring In-House
For every positive of hiring in-house, there is also a drawback. While the advantages of hiring in-house are primarily focused on control and organizational familiarity, the cons are focused on costs, abilities, and recruitment challenges.
Hiring in-house is significantly more expensive than outsourcing — When you outsource a task, you simply pay someone to do the task. Hiring in-house requires you to incur a range of other employment expenses such as benefits, paid time off, employer's share of payroll taxes, office space, and supplies.
You may not have enough work to justify the costs of a full-time employee — Often, you may not even have the need for a full-time employee. With outsourcing, you can find someone to do exactly what you need.
Finding quality talent can be challenging — When you hire in-house, you have to post ads and shift through hundreds of resumes to find the right talent. If you make a choice that you regret later, it can be very difficult to make a change.
The recruitment process is time-consuming — Finding and recruiting the right talent for in-house hiring takes a lot of time and effort. When you outsource, you don't just outsource the tasks you need, you also avoid this part of the process.
Absent employees cause lags in productivity — When you hire in-house, you are relying on a single person or potentially a team of people to handle something for you. If they are ill or on vacation, you will suffer productivity lags.
Outsourcing Advantages and Disadvantages
When comparing In house vs outsourcing pros and cons, you'll find that there are pros and cons for both options. Here is a look at the advantages and disadvantages of outsourcing
Pros of Outsourcing
With outsourcing, you outsource every aspect of a project from recruiting the talent to doing the work. You can just sit back and rely on the experience of the freelancers or the firm you hire.
Outsourcing is cost-effective — With outsourcing, you only pay for what you need. If you need more or less help as time goes on, you can easily scale up or down as needed.
Outsourcing provides a simpler onboarding process — When you hire an employee, you go through a lengthy onboarding process to get them on payroll and signed up for benefits. Then, of course, you may even need to train them. With outsourcing, you can just dig in and get started.
You can rely on outside expertise when you outsource — Outsourcing lets you access the expertise of skilled professionals from outside your organization. Because operating a business requires so much specialized expertise, this aspect of outsourcing can be invaluable.
Outsourcing saves time — Working with an outside expert saves time on everything from recruiting to workflows.
Outsourcing is ideal for short-term projects — Outsourcing is the perfect solution for many short-term projects. Whether you need new IT infrastructure, help writing new marketing materials, or any other short-term projects, an outsider can provide what you need.
Cons of Outsourcing
In some cases, you simply need to hire in-house to handle certain tasks. Outsourcing doesn't make sense in every situation. Here are some of the potential drawbacks of outsourcing.
Outsourced employees may struggle to collaborate — Outsourced employees are often excluded from your company’s main communication channels. This can create collaboration challenges, but this is also a simple issue to mitigate.
You have less control over outsourced employees — When you outsource, the people you hire don't work directly for you. While you can expect them to complete work timely and professionally, you can't necessarily dictate exactly when or how they complete a task.
Outsourcing can introduce potential security risks — Working with outsiders can bring security risks to your company especially if they have access to your data and files. Protect yourself by carefully vetting any people or companies you work with.
How do You Decide Between Outsourcing vs Hiring?
The right answer depends on your business's needs and objectives. In most cases, you will likely end up with a blend of outsourced help and in-house team members. In-house hiring is ideal for tasks that you need firm control over. It's also typically the best option for long-term projects or anything that gives you an added competitive advantage.
In contrast, with outsourcing, you benefit from others' expertise for a short period of time. Then, you can move on to other projects as needed. Beyond short-term projects, you may also want to outsource tasks that aren't part of your company's core competencies.
The key to making the right decision between hiring in-house and outsourcing is to evaluate your company's needs thoroughly. At The Payroll Company, we provide recruitment, payroll, benefits management, and other HR services to businesses. Want to see if our services can help your business? Then, contact us at TPC for help navigating the decision of in-house hiring or outsourcing.