When considering your sourcing options, you may find yourself trying to balance your hiring and outsourcing choices. Each one has its benefits and disadvantages depending on your business needs and requirements. But the question remains: Which is the best option for you? Let’s take a look at whether you should hire new staff members or outsource the work you need.
What is outsourcing?
The most basic definition of outsourcing is to “obtain goods or services from an outside supplier in place of an internal source.” In other words, you find a person or company that completes tasks externally. For example, if you need to complete this year’s taxes, it may be easier to hire a tax agency rather than try to do the entire thing internally.
There are quite a few benefits of outsourcing work. For small businesses, outsourcing can be valuable to get high-quality work done without having to search for the right person to hire internally. Normally, agencies or freelancers can produce well-done work because they are experts. You can hire them to do a task or work on a project, then terminate the contract because you have no need for the work anymore. On the other hand, if you hire a person, you will be spending a lot of your company’s precious resources on a permanent staff member.
According to Fortunly, 78% of businesses enjoy outsourcing work to a partner and about 300,000 jobs are outsourced each year. This is especially true for financial services, with 71% of financial service executives outsourcing their tasks. This method is popular because it can end up saving a company time, energy and money. Successful partnerships can assist both parties in reaching their goals. This is true for businesses of all sizes, especially since the beginning of the COVID-19 pandemic.
There are some cases where outsourcing is not the best option, despite its many advantages. As a business grows, it may not be worth hiring outside the company. For example, an owner may be used to hiring an external financial professional to balance the books, but as revenue grows, they find they would benefit from hiring a permanent CFO.
In addition, you may run into confidentiality issues. Most agencies and freelancers have policies, but an internal staff member is more likely to sign sensitive internal paperwork. Some outsourcing disadvantages also include a lack of flexibility. You’re constantly having to balance each business’s schedules, which could potentially cause friction.
Outsourcing could be the right choice for your business in several circumstances. For example, you may want to outsource certain complicated jobs like money management. A bank or financial institution can offer your team support on business money management. You can use any tools that they have at your disposal that you would otherwise not have. Your business may want to outsource work for a complicated project that needs more support or if you do not have the current resources for new staff.
Hiring a new employee
The other side of the coin is internal hiring. All growing businesses have to expand when their current employees can no longer manage incoming responsibilities. When tasks and projects are being completed without any kind of outsourcing, it is called an “in-house” completion. But is this the best option for you? Let’s find out!
When everything is completed in-house, you have more control over the quality of the work outcomes. It can be easier to pivot based on changing market conditions, and this increased flexibility holds some benefits. Here are just a few examples:
- They can become an integrated part of the team.
- Project questions can be answered quickly and efficiently.
- Communication can be easier.
- New hires can become extremely well versed in your company’s specific target audience, which may create a better customer-oriented production.
All this depends, of course, on your training and hiring abilities.
Finding the right person for the job can be difficult. You want someone who will mesh with the current team, bring new knowledge and experience to the table and go beyond meeting the basic job requirements. Recruiting the ideal candidate takes time, and the worst-case scenario is wasting money and time on someone who just ends up being the wrong fit. After all, you still want to maintain your bottom line.
The hiring process can be exhausting, especially in the current economy. According to the Bureau of Labor Statistics, there were more than 9.4 U.S. million job openings in December 2021 as compared to 6 million in June 2020. Not only is hiring the right person difficult, but you must also keep in mind that retention is equally as important.
However, you may want to consider hiring a new staff member if you foresee the current gap continuing far into the future. Your current employees might welcome an addition to take the weight off their shoulders. Remember that you can still seek advisement from outside sources and hire internally as well.
Deciding whether to outsource or hire a new employee can be complicated, but there are ways you can determine the best option for your circumstances. Keep in mind that as your business grows, your hiring power changes as well. Reevaluate the company’s standing from time to time and on a by-project basis.
To discuss your money management options with Bank Midwest, reach out today!
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