There are many different functions that keep a business afloat and allow it to be as successful as it can be. When it comes to how you handle these processes and keep them going, there are two options: do you hire more workers in-house to handle them, or outsource them to a company that’s ready to take them off your hands?
While in-house allows you to manage long-term costs and gives you more control over how exactly those processes are handled, outsourcing can be much more cost-effective for small businesses that aren’t ready to pay the hiring or equipment costs required to handle the extra work, or for those who don’t have enough of that work to justify a full-time hire.
It’s not a question of whether it’s better to hire internally or to outsource. That can differ depending on the processes in question, as well as your business’s current position. However, it is important to consider what factors cause you to lean one way or the other, and that can differ from task to task. So let’s look at a few examples, and when you should outsource or when you should hire internally.
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Your Marketing
All businesses need a solid marketing strategy to help get them off the ground and to reach their target market, then continue to reach them to bring in leads and steadily convert them into customers. However, aside from the fact that different marketing platforms require different levels of expertise, and media requires artistic skill to create, marketing can also take up a lot of time. Marketing is often worth outsourcing when a business needs specialist campaign skills but does not yet require a full internal team. For example, a startup might outsource paid ads, SEO, content writing, graphic design, or social media campaigns to an agency because these areas require different tools and expertise. This is especially true if marketing is more of a seasonal need for your business. On the other hand, if your company relies on its community, customer education, and storytelling on a regular basis, having an internal marketing manager or team might make more sense.
Your Accounting
When we talk about accounting, we can be talking about bookkeeping, or we can talk about the work of chartered accountants, which includes tax preparation and advice. Most businesses outsource this immediately, as bookkeeping, payroll, VAT returns, tax filing, and annual accounts can often be handled more efficiently by external accountants who already understand compliance requirements. There simply might not be enough to justify hiring someone to do it internally. As the business grows and the finances get more complex, however, you may find it justified to have someone to stay on top of it year-round.
Your IT
Given that we live in an age predominantly running on digital technology, IT is often one of the first things outsourced by any company setting up a real office or scaling to the next level. Outsourced IT makes a lot of sense when the business mainly needs technical support, cloud setup, cybersecurity monitoring, software installation, or occasional troubleshooting. Those who just need to complete transitional IT improvements or take care of the occasional technical issue might be served just fine by an expert provider. However, IT should be brought in when you have enough work to keep a team busy full-time, such as a very large digital scope, or if your systems become mission-critical, as ecommerce or SaaS businesses might find.
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Your HR
HR can be outsourced when the business needs help with contracts, payroll administration, benefits, recruitment screening, or employment law templates. This is especially useful for small companies without enough staff to justify a full HR department. When you simply want to set up your initial HR strategies and policies, reduce compliance risks, and handle repetitive admin work, outsourced teams can do that just fine. However, the more teams grow, the more that company culture, retention, and employee development become persistent priorities. If you’re frequently hiring or dealing with routine team conflicts, then integrating might provide your employees with the more direct support that they’re in need, and make sure that you’re always kept on the right path.
Your Customer Service
A lot of businesses use outsourced customer service when volume is their primary concern. When you get a lot of relatively simple questions or issues from customers that don’t require a whole lot of expertise to handle, or you get support requests outside of working hours, then you might use an external call center or live chat to handle them for you and to redirect customers to where they want to go. However, customer support should be brought in-house when service quality strongly affects loyalty, reputation, or repeat sales. A premium brand, technical product company, or subscription business may need internal support teams who understand the inner workings of the services much better than an outsourced provider is likely to, resulting in customer success, happiness, and hopefully retention.
Your Legal Needs
Legal work is often best outsourced because most businesses do not need full-time solicitors or compliance experts. External professionals can handle contracts, trademarks, disputes, data protection advice, leases, and regulatory questions when needed. There are many such instances where you’re going to need specialist knowledge without the cost of a full legal team. But that doesn’t mean that you can’t integrate some of that expertise when needed. When your business deals in a compliance-heavy industry where it might be subject to more scrutiny, then having a legally trained compliance officer or risk awareness specialist in-house can make sure that you’re never falling afoul of the laws and regulations you ought to keep in mind. Having full internal legal teams does tend to fall more to enterprise businesses, only, however.
With the examples above, hopefully you have a better idea of when outsourcing makes more sense to you, vs when you should hire to fill those positions instead. Again, the answer can differ from company to company, process to process, and even year to year. You may have to eventually change your answer, which is fine, too.
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