When to Outsource and When to Hire in House

Posted by Webmaster - June 29, 2012 - Blog - No Comments

One of the biggest strategic decisions many businesses have to make is whether to hire in house or outsource. There are many departments that this choice applies to. Should your order takers be in house or in a call center? What about support? Fulfillment? Tech and IT?

When should you outsource your work to an outside company and when should you hire your own staff to do it? Let’s take a look.

==> Communication

When it comes to communication, hiring in house is a clear winner.

With outsourcers, you often have to go through a system to communicate with them. You might use email, or have to wait for them to return your calls.

With someone in house, you can just walk down the hall.

If you’re outsourcing to a country like India, you may also have language barriers.

==> Costs

On the other hand, when it comes to costs outsourcers almost always win hands down. Usually when you outsource, you pay a per-item, per-gig or per-project fee that’s significantly lower than if you had to hire someone on staff to handle it.

Remember, staff costs aren’t just salaries. It’s also their share of the office space, medical insurance, the social security that you split and so on.

==> Scalability

Outsourcing is much more scalable. Hiring people is difficult to scale. If you suddenly get a huge surge of tech support volume for example, it’s very hard to hire a dozen high quality support staff overnight. However, an outsourcing firm can easily snap up the volume in a heartbeat.

The flip side is also true. If you suddenly get a lower volume of calls, if you’re in house, you still have to keep paying your staff per hour even if they’re sitting there doing nothing. With outsourcing, you don’t have to pay anything if you’re not getting calls.

==> Quality Control

On the other hand, quality is almost higher in house than when outsourced.

If you’re outsourcing your programming for example, you’ll almost always find that the quality of the work isn’t as high as what you’d get from in house programmers.

There are many reasons for this. They’re less accountable. They don’t have to look you in the eyes. Also, you can’t be as discerning – It’s much harder to hire the best when you’re only going by online profiles.

==> The Bottom Line

The bottom line is that a good general strategy to follow is to outsource only things that aren’t part of your core competence.

In other words, if you’re a tech company, don’t outsource your programming. Do that in house. However, if you’re a printing company that has some tech needs, you may very well want to outsource that.

The things that you need to excel at, do in house. The things that need to get done inexpensively, outsource.