In-House or Outsource? The Pros and Cons to Help You Decide
We are living in a gig economy. People are much less committed to their jobs. According to Intuit, in 2016, the percentage of Americans in the gig economy was 34%. It is expected to grow to 43% by this year. But, not every situation is suited for outsourcing. Sometimes you need people in-house. There are pros and cons to both situations.
Pros of In-House
Face-to-face conversations can offer a deeper level of engagement for full-time employees. Especially when people are working together on the same project. In-person discussions develop a level of energy you simply can’t get through Skype. This type of engagement can lead to new and refreshing ideas.
In-house hires are less of a flight risk. That’s because a business has the opportunity to offer workers salary, benefits, and room to grow. This, in turn, makes people more loyal.
With an in-house team, there’s more of a chance to build and enrich company culture. An outsourced team is slightly more disconnected. Freelancers aren’t typically interested in company culture since they’re not coming into the office.
When you’re working in-house, tech solutions can be solved faster. Especially if there is an IT team. House employees can direct all of their attention to quickly fix a problem. A freelancer, on the other hand, may prioritize differently. They work more on a first-come, first-serve basis.
In-house technology and marketing teams tend to interest outside investors more. They provide higher valuations for them. If you’re a small business looking to grow or need additional funding, you may want to take that into consideration.
As a business owner or manager, hiring in-house gives you the chance to monitor and work closely with your team. The quality of communication is at a much higher level, ideas are shared easier, and everybody is physically in the same space.
Cons of In-House
Finding quality talent is harder then it ever has been before—especially if you’re in a small city. Most of the top talent may already be taken. Not to mention, the best employees will expect medical, dental, 401 (k), etc. Contractors typically work for a fixed rate with little to no expectations.
Large offices cost money. The more employees you have, the bigger the office you need. Not to mention utilities and all the other bells and whistles. Additionally, unlike freelancers, you have to pay most employees benefits, OT, and other things.
In-house employees must be vetted, onboarded, and continuously trained. The onus falls on the business for ongoing education of the brand. Locating, interviewing, negotiating, etc. can all take time. None of these responsibilities come with a contractor. It is their obligation to know your brand. Plus, with freelancing sites, it typically takes only minutes to find people (if they don’t find you first)!
Pros of Outsourcing
Freelancers are responsible for their own education and they typically sell themselves in niche topics. This allows a business to easily locate the right talent needed for a project. Most contractors are pros with targeted discipline (think digital marketing or SEO) which is why they require little to no training.
Additionally, hiring a freelancer gives you access to a global talent pool. As long as you can communicate, hire anyone in the world. It’s pretty easy these days.
As previously mentioned, finding a contractor is very simple due to the prevalence of online agencies and recruiting platforms. There is no need to “have someone come in.” And since they have niche talent, there is typically only a short interview required to see if it’s a good fit. That means projects get done faster.
Outsourcing can be ideal for short-term projects. That’s because the talent is only needed for the completion of a one-off task or job. Many freelancers are paid on a per-project basis which also helps to reduce costs.
There’s cheaper talent in different markets. Outsourcing allows you to use dollar arbitrage to find different price points for the same task.
Focus on Main Tasks
Outsourcing enables a company to focus more on their main tasks and drive growth.
Cons of Outsourcing
Make sure you have all your contractors sign an NDA! There is the risk of having your intellectual property stolen when working with freelancers. It’s important to not rush into things and take the time to gain some insight into who you are hiring.
People lie online. Everyone knows that. If you don’t properly vet your talent, you could end up with someone who exaggerated their skill set. After all, you’re not meeting these people face-to-face, so it’s a lot easier to fib. Most sites have ratings on a freelancer‘s profile, so be sure to check before sending an offer.
A contractor doesn’t know your brand that well. They’re not in the office each day, so they don’t know your company culture. And most, to be honest, probably don’t care. Additionally, different locations can have varying styles in terms of engineering, design, and content. For example, there is a big difference between American English and British English. So if you need a series of American blogs written, it would be a big mistake to hire a writer from the UK (unless they were well-versed).
Different time zones can make for gaps in communication, and if it’s far enough, it could make meetings during the workday almost impossible (think New York and India). Writers and developers typically take the most time. There can be delays, at times, and an overall lack of focus. Especially if the freelancer is working on multiple projects for different clients.
Since freelancers work for themselves, they will expect more pay for the same work. Some high-rated software engineers make upwards of $300 an hour, so get ready to spend upfront.
Lack of Loyalty
Contractors are not your employee so there is no telling them what to do. There is simply the contract and deadlines. That being said, it is likely the freelancer will be paying attention to their highest paying client/s. So be prepared if you’re on a budget.
Common Roles to Outsource
When it comes to outsourcing, there are some jobs within a company that are easy to send out. Here are a few examples of what you probably don’t need in-house:
- Marketing: This includes things like digital marketing, content creation, SEO, SEM, and email marketing.
- Web development and design: This allows a business to stay on top of their digital presence at all times.
- Customer service: Ticketing systems enable a more streamlined process for customer support.
Roles to Keep In-House
There are many roles you should also keep in-house, but that’s because they can be easily automated. You can put things on autopilot without the need to outsource if you have the right tools. Here are a few tasks to consider:
- Social media: That includes content creation and scheduling for automated posting.
- Email marketing: There are many platforms out there where you can set campaigns to run behind the scenes.
- Payment systems: For customer subscriptions, products, and services.
- Accounting: Many people are already familiar with QuickBooks, but there are many other platforms as well.
When it comes to in-house hiring and outsourcing, three things are always considered:
Ultimately, it should be guided by your business needs. The most competitive brands typically use a combination of both, so don’t be afraid to test a few things out until you get it right!