The difference between bringing an employee on staff and outsourcing the function makes a huge impact on your day-to-day work activities, the outcome of your project, and – of course – your bottom line.
The bad news: there’s no clear cut definition of when to outsource and when to keep the work in-house; each situation is unique and you must assess each decision on its own characteristics to ensure you have the right fit.
The good news: there are clear definitions of the benefits between the two options; so making a decision is merely a process of working out what you need.
To make this a little easier for you, we’ve put together a list of the steps to take to decide between inhousing and outsourcing a function.
Before you figure out whether to outsource, you need to identify what areas you can outsource and where you need help right now. Those areas might include:
When you’re considering the financial difference between the two options, remember to include the costs of your time and emotional energy. While hiring in-house is generally cheaper on paper, there are a host of responsibilities that go along with managing a new staff member. These include ensuring you have enough work on an ongoing basis and providing training and advancement opportunities. Don’t forget that you will also need to invest in equipment and a place to sit for the new employee!
Some functions that need to be performed by a business are not actually part of the business model; rather, they are part of running the business itself. For instance, for some businesses, online marketing activities are a key part of their competitive advantage, and their ability to turn over millions of dollars rests on this performance. For others, online marketing is simply what they do to maintain sales, but their core capabilities rest in manufacturing or design. If the function you need help in is not a core function of your business model, outsourcing will probably create fewer headaches for you.
Do you have a unique culture within your organization that really defines why your customers love you? Every company creates their own culture, and even if you find a close match in an external agency or freelancer, they will never be 100% yours. You can more easily instill culture in a full-time employee
There are always market realities to consider. You may prefer to have someone in-house, but if you can’t find the technical or marketing talent, outsourcing may be in your only option. When making the decision, you need to consider the scarcity of skills in the market and whether you will get the level of professionalism you need for the budget you have.
Remember, when it comes to making a decision of inhouse or outsourcing you don’t need to choose either/or. It’s reasonable that one of your projects may be better off with an employee owning it while your another may be better off with an external company managing it. Even within a particular project, an external contractor could take care of one small part while the rest is managed in house. Design the solution that works best for your needs and the market realities.
Photo courtesy of Vic.
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