Outsourcing VS Inhouse

by | Mar 25, 2021

To do or not to do, that is the question on many growing businesses’ minds. As a business grows, it accumulates more responsibility, and therefore that to-do list becomes an ever-growing monster. At Cove Enterprise Hub we encourage working smarter not harder, so when you have your foundations in place and your workload has become a little too much for one person to shoulder, the next step in the right direction would be to invest in resourcing. 

There are only 24 hours in a day, and when you’re already doing as much as you can in your business, how do you scale? You do it by increasing the capacity in your business, which means hiring a new addition to take on some of the load. There are extreme benefits to hiring someone else, whether it be allowing you more time to focus on growing the business, the opportunity to land and serve more clients, or simply handing over the tasks that aren’t in your zone of genius.

But the question isn’t to hire or not to hire, it’s whether to outsource the work or to hire in-house. Let’s dive a little deeper to get a better understanding of the differences between the two.

Outsourcing to a Third-party

When a business outsources their work, they seek work from freelancers, contractors or other businesses, and there is a contract in place detailing the agreement of the work to be performed. 

Benefits of Outsourcing

  • Flexible contracts allows the business to not invest in long-term commitments
  • You pay only for the services/hours that you have contracted which frees up your cash flow for other business investments
  • The agreed price is what you pay – there are no additional employer-related costs and taxes 
  • After the contract is finished, there is no obligation to keep working with that contractor can be quicker to get started as you won’t need to set up a salary and paperwork
  • It’s great for seasonal tasks, i.e. contracting a bookkeeper every quarter for your taxes
  • Onboarding can take less time as you’re hiring people who already have the required level of education, expertise, and know-how

Outsourcing definitely has its perks, but when you contract a third-party there are also potential challenges. These can be related to:

  • The relationship could potentially be more fleeting, as a freelancer can take off at the drop of a hat, leaving you high and dry and in need to find a replacement, immediately
  • You are being restricted to an agreed schedule- whereas with an employee, they will be on your schedule
  • When the role is in changing hands, it gets more difficult managing confidential information
  • The pitfall about contracting a freelancer is ensuring the work is delivered to the agreed/expected standard. The lack of initial training can often create a phase where the contractor is picking up your ways of working.

It’s important that you take the time to weigh-up the pros and cons before making the right decision for your business. 

There are some tasks and roles that are better suited to be outsourced than others. The best place to start with outsourcing is the support activities within your business; those that help run your business but aren’t directly related to your product/service. 

  • Bookkeeping or an Accountant
  • Content Development and Creation
  • Marketing
  • Web development and design
  • Website Maintenance

Outsourcing can certainly help alleviate the capacity challenges by transferring work to an experienced service provider without much fuss, but it always comes back to how you operate and how you see yourself building your team. Maybe hiring is a better option for you.

Hiring an Employee

Having a team working alongside yourself is a goal that many entrepreneurs carry with them. Their dream is to expand their business, and hire a team to help them achieve it. Right now you may be wearing all of the hats and you’re feeling the constant hum of burnout around the corner…but with a team, you would be able to hire those best suited for the various roles, and focus on truly leading your business.

Benefits of Hiring

  • The team you onboard are on the business’ schedule. Which means they can fully commit to your business projects and tasks.
  • Your team members are investable. If managed and rewarded well, they are more likely to be with you long-term and help the business grow. The money you spend on their education and training can vastly help your business reach new heights.
  • Team members are more likely to be aligned on the vision of your business and are working towards the same goals
  • It’s a more supportive way of working; having a team with you through the ups and downs makes this entrepreneur journey a little less lonely.
  • You can manage the business’ values and ethics in a more controlled environment. You’ve trained the employee to work to your business’ standards.
  • Employees generally have a great deal of loyalty to the business, especially where they can see a future for their career.

Some entrepreneurs love to know that there is a team by their side, however, it would be faulty not to note that with hiring comes onboarding costs: time in bringing them up to speed, money spent on their education and development, employer liabilities, and not forgetting you will also be responsible for ensuring the correct taxes are deducted and paid.

As with outsourcing, you need to weigh up the pros and cons and decide what works best for you and your business. The following points may help highlight when its worth considering employing in-house :

  • You have enough work to create a permanent part/full-time position
  • You want to retain control over the skills and development of the team member
  • You want team members who focus solely on your business
  • You want to retain control over how a team member uses their time within your business
  • The positions you require to keep your business running cannot be easily filled by a third party

When scaling your business there is a lot that goes into the mechanics of actually building your business, brand, and team. Whether you require guidance on making the right choice or are in need of clarification- you can always contact us and we will help you with your business questions.