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Should you hire in-house talent or outsource?

Posted by Kanika Sinha

April 16, 2015

Hire or outsource – one of the defining questions for how we do business in the 21st century. So which is the better route?

Naturally, both have their pros and cons. In this article, I’m going to share some of the reasons you’ll want to carefully consider each angle, giving you the advice you need to be able to make a confident decision.

2013 saw the rise of a number of disruptive technologies including cloud computing, big data and mobility which have had a significant impact outsourcing and Business Process Outsourcing—from service agility to price structures to processes. In this environment, the number of service providers has also grown, providing many flexible avenues for getting work done without hiring permanent employees and infrastructure spending.

Benefits of hiring in-house

The benefits of building your own internal team are clear, making this route more common and naturally understood.  You can motivate your core team in various ways to support company goals in a “we are all in this together” kind of way. In this case, your talent is an asset in the same way your product or service is an asset. Plus, as long as you can keep everyone happy, salaried workers can also be pushed to work longer hours and take on more responsibility.

Downsides of hiring in-house

For all its benefits, there are the disadvantages. Some basic math suggests that hiring an employee can cost a small business owner 25 percent more than it would to hire a subcontractor to do the same work. The biggest factor is what you would typically pay for an employee’s Social Security and Medicare tax, worker’s compensation insurance, liability insurance, employee benefits, training, and so on.

Besides cost, although you may have a stunning group of dedicated, talented people working for you now, but changes are inevitable - competitors could lure them away with a better deal or lifestyle changes such as pregnancy or relocation could drive them away. Some of this can be controlled by staying two steps ahead of your competitors, and keeping the rewards and appreciation high. But for startups bootstrapping their way to success, budgets may not support staffing up on all the full-time hires you may want or need.

Outsourcing – many benefits, here to stay

If you even thought of outsourcing rather than hiring in-house, you may have searched and mostly found results related to doing business China or India. Outsourcing is often thought of as hiring cheap overseas labor. “Business Process Outsourcing” gets more respect

Outsourcing is growing.

Outsourcing overseas is actually declining due to increasing labor costs overseas and gaps in the quality in services such as call centers. But outsourcing in the US, is actually growing. The perfect storm of rapidly growing companies, driven by technology, and an improving economy, are fueling the growth of the virtual worker to quickly fill in the gaps without a long term commitment.

“On-demand” technology fuels outsourcing.

The “on-demand” economy is facilitating freelance work with apps, a trend making it easier to match employers with freelancers. In fact, venture capital for the on-demand economy according to Crunchbase was at $1.5 billion in 2013, growing from 78 to 117 companies being funded. So this trend is probably here to stay. Instant access to workers, instant gratification.

Imagine it, outsource it.

What are some good skills to outsource? With everything from someone to wait in line for you to finding someone to stand in as your spouse, if you can imagine it, you can find it. For getting help freeing you up in a typical workday, it makes even more sense. For example, managing your finances is not something you can avoid, and is easily outsourceable.

Financial services is an amalgamation of skills that include accounting and taxes, as well as managing retirement plans, stock options and payroll. One or two in-house hires can’t be expected to juggle all those responsibilities, but a team of experienced, highly-skilled experts can – and they’re available no matter where you’re located in the U.S.

Expert transparency, no commitment.

Full transparency without making a commitment to a permanent hire can be a beautiful thing. As discussed in one of our other blogs, managing your finances properly is time-consuming. It requires a significant degree of compliance and oversight to ensure that you’re keeping up with ever-changing local and national tax and labor laws and regulations. Being able to rely on an external source for immediate expertise is valuable and will keep you out of hot water.

But hiring the right permanent employee takes time and is ultimately more costly. Besides staying compliant and agile, you’ll know precisely where money is being spent, what’s sent to the IRS and why, when it’s being received, what options are available for shareholders, and much more. Because you’re in complete control of the entire process, you have the data and the people you need to be able to make decisions with confidence. It’s also very efficient – you only outsource what you need, no more, no less.

Downsides of outsourcing

For all its benefits, there are certainly downsides.  One of the most common issues is that it’s hard to find competent outsourced freelancers or teams.  Their skill-set may be amazing, but perhaps they don’t fit in well with the company culture or have a stake in your success.

Whether you hire in-house talent or outsource, be sure to research your options considering your company’s growth stage. After all, you want to do more than just make a great impression - you want to amaze, inspire and most importantly – evolve.  Choosing the right team to work with at every stage of your business’ growth can help you accurately plan your strategy for today, as well as the future.

When you’re ready to learn more about the benefits of outsourcing your financial management, step up to Escalon – we can let you know exactly what you’ll save by outsourcing and how to take control of your HR and finance management needs.


Kanika Sinha
Kanika Sinha

Kanika is an enthusiastic content writer who craves to push the boundaries and explore uncharted territories. With her exceptional writing skills and in-depth knowledge of business-to-business dynamics, she creates compelling narratives that help businesses achieve tangible ROI. When not hunched over the keyboard, you can find her sweating it out in the gym, or indulging in a marathon of adorable movies with her young son.

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