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Hiring In-House or Outsourcing: Which Is Right for You?

By Caitlin Mazur - Nov. 17, 2022
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When your company needs a project or task completed, you can look to see if one of your current employees can take it on, or you can outsource it. This is often a complicated and difficult decision to make, which is why we wrote this article.

We’ve put together a list of the pros and cons of both hiring in-house and outsourcing, and we’ll walk you through steps to take to decide which one is best for your organization.

Key Takeaways:

  • Hiring in-house can save time and costs, and can get you an employee with whom you’re already familiar.

  • Oursourcing might make more sense if you are a smaller company, or if the work is temporary.

  • Choosing between in-house hiring and outsourcing depends on a variety of factors depend on your needs, and the best solution might be a mixture of the two.

hiring in house or outsourcing

What Is the Difference Between Hiring In-House and Outsourcing?

When you have a task or project that doesn’t fall under any of your employees’ job descriptions, you have to assign it to someone within your company (an in-house hire) or hire an agency or freelancer outside of your company (outsourcing).

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Benefits Of Hiring In-House

Assigning one or more of your current employees to the project has some definite advantages:

  • They’re invested. An employee will have greater buy-in to your company.

  • You know their training. Not only do you know what skills your employees currently have, but the knowledge and skills developed by working on your projects are also kept in-house and available for later use.

  • They know their way around. An employee has greater familiarity with your organization’s operations and personnel than an outsider. This can be helpful when you need to quickly get a project out.

    It can also prevent the doubling up of work efforts that can happen in communication from your employees to the contractor.

  • When you hire someone you have greater control of the schedule.

    Because everyone works at the same company, you know they generally work the same schedules. This makes for better collaboration, less lag time in communication, and faster turnaround times.

Downsides of Hiring Someone In-House

There are also multiple cons to in-house hires that you should consider.

  • Increased chance of employee burnout. If employees suddenly have more work, whether because they’re taking on an extra project or are covering for the person you moved to your project, they may become burnt out more quickly.

  • Higher costs. Hiring in-house means you have to foot the bill for all of the equipment and resources the employee uses, not to mention their full 40-hour-a-week salary and the salary of anyone you hire to cover their old responsibilities.

  • Lack of expertise. Often in-house hires don’t necessarily have tons of experience doing the project you’re assigning them, or they’re lacking a key skill that you need to train them in.

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Signs You Should Employ Someone In-House

It may be a good decision to hire someone in-house if:

  • You have a specific work culture that must be evident throughout everything you do and everyone you work with.

  • This function is a key competency of your business.

  • You are a large organization with a strong employer brand.

  • The activities involve highly confidential or trade secrets that could damage your business if made public.

Benefits of Outsourcing

Outsourcing brings more than a few unique benefits to the table.

  • Simpler onboarding process. Finding the right company to outsource to is an easier process than finding an employee to manage the project, replacing them in their previous role, and figuring out where they’re going to work.

    Typically, all it takes to hire an external company is a simple contract agreement.

  • Guaranteed continuation and no downtime. Unless you’re working with a small agency, outsourcing your work helps guarantee that there are no unscheduled stops like vacation breaks or sickness that will bring your project to a halt.

  • Concentrated expertise. Specialized companies are usually able to recruit experts with deeper experience.

    Because they work on a range of projects, they have a wider knowledge of the subject which will benefit the quality of your project.

  • No need to invest in equipment. If the role requires specialized equipment like design tools or software, you will be responsible for sourcing these for an employee. When you outsource, the contractor carries this expense.

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Downsides of Outsourcing

Outsourcing also comes with a few downsides that are important to consider.

  • Less control. You won’t have nearly as much say on how the project is completed when you outsource it. When you hire a freelancer or agency, usually you will give them your specifications at the beginning and then you won’t see it again until it’s finished.

  • Less focus on the project. Agencies and freelancers usually have multiple clients, which isn’t necessarily a bad thing, but it can mean your communication and overall project progress might be slower with a third party.

  • Damaged company culture and morale. If employees feel that you passed them up for a job they could do, it’s natural for fears of being replaced or laid off to arise.

Signs You Should Consider Outsourcing

You should consider outsourcing if you find your project checking these boxes:

  • You are not sure that the work will continue after this project or that there is enough work to justify an ongoing position.

  • You are a smaller business establishing yourself in the market.

  • The function is not a core competency of your business model.

How To Choose Between Hiring In-House and Outsourcing

To make this a little easier for you, we’ve put together a list of the steps to take to decide between outsourcing and in-house hiring a project.

  1. Identify All the Costs

    When you’re considering the financial difference between the two options, remember to include the costs of your time and emotional energy as well as your employees’.

    While hiring in-house is generally cheaper on paper, there are a host of responsibilities that go along with managing a new position. These include:

    • Ensuring you have enough work on an ongoing basis

    • Providing training and advancement opportunities

    • The disruption that the move will cause in other departments

    • Don’t forget that you will also need to invest in equipment and a place for the new employee to sit.

  2. Identify Business-Critical Functions

    Some functions or projects that a business needs are more vital to the business’s operations than others.

    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. This would be a business-critical function that is probably best done in-house.

    For others, online marketing is simply what they do to maintain sales, but their core capabilities rest in manufacturing or design. In this case, outsourcing to a marketing agency is likely the best option.

  3. Identify How Much Culture Matters

    Do you have a unique culture within your organization that really defines why your customers love you?

    Every company creates its 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 your culture in a full-time employee than in a third party organization with its own culture.

  4. Assess the Market Availability of Skills

    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 your only option.

    When making the decision, you need to consider the scarcity of skills in the market and whether or not you will get the level of professionalism you need for the budget you have.

Final Thoughts

Remember, when it comes to making a decision of in-house 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 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.

Author

Caitlin Mazur

Caitlin Mazur is a freelance writer at Zippia where she has written 140+ articles that have reached over 1 mil viewers as of June 2023. Caitlin is passionate about helping Zippia’s readers land the jobs of their dreams by offering content that discusses job-seeking advice based on experience and extensive research.

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