In-House vs. Outsourcing – California Business Journal


As your business grows, you’ll have to decide to bring on more staff or outsource the increased workload to contractors. While it might be tempting to default to hiring a new employee, it’s not always the best path.

Sometimes relying on freelancers or business process companies makes more sense from a financial and human resources standpoint.

There are a few main factors to consider before deciding to keep work in-house or farm it out to other firms.

The amount of potential work

First, determine whether there’s enough ongoing work to justify the expense of an employee. For instance, occasional needs for notarization services should be outsourced to mobile notary firms like this. That way, you won’t be paying an in-house notary who may end up underutilized.

In general, you’re better off hiring freelancers for short-term projects that won’t increase workloads beyond a few months. But if you’re anticipating enough long-term work that will overtax existing employees, it’s time to bring someone new onboard.

That said, quality contractors may not always be available when the work is. You could be left high and dry or be forced to pay higher rates to attract contractors. Consider all the pros and cons and weigh each of them before making a final decision.

Existing skill sets and gaps

Does the work you need involve skills or knowledge your existing team doesn’t have? In that case, it may be advantageous to bring in a contractor to handle or guide those tasks. Some businesses choose to establish long-term relationships with one or more freelancers who have specialized skills.

For example, suppose your small in-house marketing department doesn’t have any staff videographers or film directors. Still, the team needs to produce one or two new commercial videos every quarter.

Rather than try to cross-train and change a current employee’s role, it’s more cost-efficient to work with an experienced contractor. The freelancer or business already has the equipment, knowledge, and skills to execute commercial concepts. Your business wouldn’t have to invest in any of that or potentially alienate a good employee.

In-House vs. OutsourcingLevel of desired control

One of the disadvantages of sending work a freelancer’s way is you lose some degree of control. Your business usually can’t dictate how or when the independent contractor completes work. While you can specify quality standards or guidelines, a freelancer oversees the job from start to finish.

You’re in charge of training, resources, and guidance with in-house employees. You know when and how work is happening. It’s also easier to make modifications and catch quality issues before they spiral out of control. Hiring staff is better if you need to keep proprietary information secure or influence final deliverables.

Final thoughts

Small businesses sometimes find it more cost-effective to use freelancers because they can scale up and down on a dime. This way, employers don’t have to worry about the expense of a full-time employee who may not have much to do. Businesses with tighter budgets can hire freelancers when work’s available and end up spending less.

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