When you need help, will you outsource or hire?

by Sean Boyce

It’s very likely that you started your company with merely an idea for a new product and perhaps a partner or two. If you bootstrapped at the beginning, you no doubt worked long, hard hours doing everything that you could by yourself. At some point, however, you will need help. It could be when you receive outside funding, when you have gone as far as you can without technical help, or when you finally realize that there are only so many hours in a day.

When it comes to adding people and skills to your organization, many different factors come into play. You may need to fill in the gaps left by your own skills. In other words, if your specialty is marketing, you would probably need IT personnel or other types of technical help. Certain tasks are finite, such as some training or consulting functions, so you wouldn’t want to create a permanent position for that. And for on-going, very specialized needs you will want to hire professional firms on an outsourced basis.  Even companies that have a CFO on the management team generally hire an outside accounting firm to do their taxes. And unless you are running a mega-sized corporation, you probably don’t have an attorney on staff full time.

If you are considering adding new people to your company, it’s important to consider the pros, cons, and tradeoffs between outsourcing and hiring.

The benefits of outsourcing

When fulfilling a need for the kind of expertise you don’t already have, the pool of potential talent for these positions is large, thanks to sites such as Freelancer and UpWork, so it will take much less time than hiring a full-time staffer. Outside specialists are often good at very specific disciplines, so you can get a highly skilled and experienced person to do the limited job you need. On the other hand, outsourcing basic or mundane tasks will free up your permanent staff to do higher level work.

Outsourcing comes with risks

While the vast majority of outsourced talent are capable and responsible, not all are reliable, and the quality of their work can vary tremendously. Because they may have several clients, they are less engaged and loyal than an in-house hire, so you can’t always count on them to be a member of your team. There’s always a chance that hiring an outsourced professional will demoralize your employees and make them feel less secure in their jobs. But the biggest risk is to your company’s proprietary assets and intellectual property, which should be protected as much as possible.

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The best reasons for in-house hiring

Employees hired for full-time, in-house work are more reliable and more engaged in your business. They tend to be loyal and vested in the business’ success, because their own success depends upon it. And they are often very motivated to become valuable and rise through the ranks. If you have intellectual property to protect, full-time employees are bound by contracts and agreements that are more easily enforceable.

Full-time workers come with a high price

The hiring process takes time, can be expensive, and in some markets, good talent is hard to find. The fixed wages and benefits of full-time employees are often prohibitively expensive for a new company. And in-house hires get their salaries and benefits regardless of how much work there is for them to do, so this is not the most cost-effective method of getting the help you need for your business.

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