The debate about whether it’s smart to choose outsourcing vs. hiring is ceaseless. And because both options come with massive advantages, drawing the right conclusion is a bit of a pickle. Plus, since both business practices also entail a few downsides, the commotion that’s been going on around this dilemma never seems to cool off. So, before picking a side, make sure to read this brief guide. Should you outsource? Or should you hire in-house professionals? Learn the pros & cons, and take a peek at a few tested recipes to make the best decision.
Outsourcing: Definition & key points
This efficient and cost-saving business practice refers to hiring individuals, teams, or BPO firms outside of your company to get specific tasks done. In other words, it entails finding a reliable and skilled third-party provider to perform duties and services that were originally being completed in-house. Companies choose to outsource a wide range of roles. Moreover, positions and projects can be outsourced in basically any industry or niche. So, whether you need an external web development team, HR department, or customer support agents, you could reach out and outsource these essential services.
The basic difference between hiring and outsourcing
All businesses these days experience massive shifts and demand quick and effective solutions. So, there’s a major debate about whether it’s better to turn to insourcing or outsourcing. In fact, both practices come with amazing benefits and perks. But still, both also imply a few drawbacks.
But what’s the key difference? Let’s start with the basic dissimilarity. So first, these two approaches call for different contracts. In simple terms, all in-house work or activities are done by employees of a company. And there must be an agreement between the employer and each employee that outlines their collaboration, including both parties’ duties, responsibilities, and the benefits they’ll get. That way, companies fill their open positions one at a time, and this sort of employment is usually long-term.
Now, signing a contract with a BPO provider will cover some similar points. However, the very root of cooperation, expectations, and accountability is rather dissimilar. Since outsourced teams are separate from the primary company’s operations, they work very differently from in-house employees. And they get their onboarding, extra education, healthcare benefits, and everything else covered by the third-party organization they belong to (while the company that chose to outsource only takes care of these factors for its in-house staff). Plus, while insourcing requires a great deal of monitoring and involvement, outsourced teams operate pretty independently.
How to answer the main question – Should I outsource or not?
So, how to learn whether you should hire in-house specialists or find a freelancer, BPO company, or a temporary worker? The drill is simple. There is a set of questions that you should answer:
- How much time do I have at my disposal?
- Which are the skills that my in-house team lacks?
- How much will hiring skilled, new people cost?
Also, it’s crucial to estimate the importance of the parts of your business that you’re considering to outsource. If it’s a core function, it’s often better to hire a professional that will be dedicated full time and strive to reach your aims alone. However, if you’re in need of innovation, relying on a BPO partner could be the best option.
What are the pros and cons of outsourcing?
According to surveys, 54% of all companies across the globe choose to outsource parts of their work to reputable third-party providers. So, they can testify to experiencing the massive benefits of outsourcing. And here’s the list of key perks companies have gained this way:
- Improved quality,
- More efficiency and productivity,
- Saved time & money )faster and more cost-effective recruitment and hiring processes + lower operational costs),
- Steady scaling and growth,
- Higher RoI (return on investment).
Moreover, studies show that an astonishing number of startups choose to outsource too. So, even though this business practice used to be tied to big-time players and well-established companies, the tables have turned. And now, nearly one-half of new businesses delegate some parts of their workload to trustworthy teams outside of their inner circle.
However, there are a few potentially dangerous scenarios that could happen. If you don’t choose the right BPO company, there are all sorts of situations to beware of. The main risks and challenges you could face include:
- The inability to constantly monitor performance and retain control over certain assignments and approaches,
- A potential drop in your product or service quality due to the lack of continuous quality control,
- Some security risks and the extra precaution that has to be taken in order to protect sensitive information.
Now, although there are some troublesome situations to keep in mind when hiring a BPO company, do know that if you select the right provider, most of these scenarios won’t happen easily.
What are the pros and cons of hiring in-house?
Untangling the infinite knot of reasons to compare and analyze outsourcing vs. hiring means knowing the best and the worst factors that accompany both practices. So, let’s start by mentioning the key benefits of hiring in-house:
- In-house employees are more accessible and often more reliable since they work for the company itself, while their third-party allies usually juggle multiple clients or projects.
- Staff hired full-time are usually more engaged with your business, including its core values, team culture, and all the elements that are somewhat unclear to outsourced workers and squads.
- People who join the company and stick with it for quite a while are easy to motivate by growth and new learning opportunities. They often seek a bit more than profits and are keen on amplifying their sets of skills to progress along with their team.
On the other hand, it’s not all that dazzling & lavish. Sure, there are some crummy practices that can spoil even the best insourced teams. But there are a few massive disadvantages that all employers must beware of:
- Hiring vs. outsourcing means choosing between a tiny pool of potential candidates and an easy way to spot the best talent. Having a small pool to choose from cuts down on skills and experience, while it skyrockets the costs.
- Paying the employee a fixed wage for an agreed number of working hours regardless of whether there’s always the same amount of work to be done can be considered a major waste of money and time.
- Also, it’s mandatory to pay a predetermined salary regardless of the quality of work delivered.
So, what are the advantages of outsourcing over hiring in-house? Doing business with reputable freelancers or with a skillful and trusted BPO firm will help you overcome these common pain points. And more! But it will get you started on the right track, minimizing costs and meeting the most talented people in a snap.
Bonus tip: 3 Steps to take when hiring an outsourcing company
Finding the right outsourcing company that will match your precise needs and is within your budget can be a bit of a challenge. Aside from your new third-party partner’s reliability, expertise in your field, core values, and excellent reputation, there are a few other points to take into account. So, make sure to take the necessary steps and follow the tested patterns to nail your goals.
Timing is everything
The first thing is first – how will you know if it’s the right time to outsource? Well, there’s another set of questions to answer:
- Can hiring an outsourcing company help my team grow and scale more successfully (and painlessly)?
- Will it bring improved results in terms of productivity, skills, and prospects within my team?
- Will it lower the costs along with some risks and complications?
If the answers that come after some careful assessments turn out to be in favor of a third-party partnership, then go for it. Just make sure to do your homework, meet your potential allies, and pick wisely.
Studies show that US employers outsource more than 300.000 roles each year. So, maybe you wanna let a whole new team take charge of the essential duties too. If you do, ensure that your tasks will land in the expert hands. Moreover, be entirely certain that they’re punctual, reliable, and huge on secure processes. To do so, you should always double-check their market reputation and seek reviews, testimonials, and references from previous clients. In some cases, it’s even possible to ask for an extensive portfolio or to take a sneak peek into previous projects their team has successfully finalized.
Test ride is an option
Sometimes, it’s possible to give your brand new outsourcing partner access to a short-term project. And once you agree on the deadlines, let them do their magic. Then, see whether they have delivered what they promised. Was the predetermined time frame enough for them? Were your expectations met? Was the quality on point? Before you create a strong, lasting bond, make sure to have a glimpse of how they actually operate and what they’re truly capable of.
Follow this simple guide to untangle the hiring vs. outsourcing dilemma (And get the best results!)
The bottom line is quite clear. In the outsourcing vs. hiring battle, they’re both winners! Both alternatives do come with substantial benefits. You just have to determine which approach matches your current needs. So start by exploring what goes on within your own team. And give a once over to the goals you have set. Are they reachable? What seems like a smart choice at this point? Follow our guide & see how to play it just right.
And if you choose to outsource: find a matchless BPO partner!