We often meet new clients and local businesses that are flourishing and growing beyond their expectations. They soon face the challenge of deciding whether or not to employ new staff or outsource their work to meet a growing demand.
This week we’ve been looking at the options available when employing or outsourcing. The decision is ultimately one that best meets your business needs, budgets and work load. Nonetheless, you should consider the pros and cons of both sides before you act. It could be the difference in the success of your business moving forward.
Firstly, you might ask, what exactly is outsourcing? Outsourcing is hiring an outside consultant, service provider (like The Business Hut), or agency to manage a portion of your business. They might have specialised skills, specialised equipment or perhaps provide seasonal work.
Areas of work that you might consider outsourcing include marketing, SEO, website development & maintenance, administration, bookkeeping, credit control, telesales, call handling, social media and IT maintenance. In short, it is possible to find an outsourced company to cover nearly any job, if you so wished!
The benefits of Outsourcing
- Simpler onboarding process. Finding the right company to outsource to is an easier process than finding a new employee because most companies will want your business. Instead of managing the training and payment of recruiting, holiday and sick leave, an external company is a simple agreement.
- Guaranteed continuation and no down time. Unless you’re working with a small agency, outsourcing your work guarantees that there are no unscheduled stops like vacation breaks, sickness or scrambling for a replacement on long service leave.
- Concentrated expertise. Specialised companies are usually able to recruit experts with deeper experience. Because they work on a range of projects, they have wider knowledge of the subject which will benefit the quality of your project or work required.
- No need to invest in equipment. If the role requires specialized equipment like design tools or software, you will be responsible for sourcing these for an employee. When you outsource, the contractor carries this expense.
- Save money by paying for the time spent on the work only. Outsourced providers will want to get the work completed quickly and to a high standard so they can move onto other work that they have
- If you’re VAT registered – Reclaim VAT from VAT registered outsourced providers.
The downside of Outsourcing
- Finding a high quality service provider at the right price
- Good service providers can be very busy, so you’ll need to make an agreement on time spent on your project and ensure you get the flexibility where you need it
Signs you should consider outsourcing
- You are a smaller business and don’t want to take on the responsibility of employing a member of staff for the long term.
- You are not sure if you will have the work demand to continue after the current project finishes and cannot justify a permanent position.
- The function you are looking to outsource is not a core part of your business
- You don’t currently have an office, or work from home, and you don’t feel that you could provide an employee with a place of work.
The difference between bringing an employee into your team and outsourcing can have a huge impact on your day-to-day work activities, the outcome of your project, and – of course – your bottom line.
Organisations that reach capacity many consider hiring new staff to meet demands. There are four constants in the hiring process; Recruiting, Selecting, Training, and Motivating. You need to allow yourself enough time to make the decision to recruit. Waiting until you require the new staff member will leave you with a gap whilst you search, so prior planning is essential. You will then need to select a candidate that adds value to your organisation and can become a high quality employee. Once the candidate is hired there will be introductory and continuous training that needs completing. Building your business with staff members will also mean providing motivation for them to be included in your company’s vision and goals. Many companies claim that “people are our greatest” asset, but does your business have the time, effort and finances to make that statement your reality.
The benefits of Employing
- We are social animals! We love to work in a team and build on the office environment with teamwork among employees. Feel the corporate spirit!
- Knowledge and skills developed by working on your projects is kept in house and is available for later use.
- An employee has greater familiarity with your organization, simply because they are onsite all the time. This can be helpful when you need something working on quickly.
The downside of Employing
- You need to invest a time in honing your management skills and dealing with different personalities and unique approaches to working.
- There are bigger overhead costs, including employee benefits, taxes, insurances, equipment, training & HR. With your employees, you pay them a fixed salary, no matter what your financial situation.
- The hiring process can be lengthy and costly. Preparing a new member of staff – from recruiting costs, through to training and setting them up with new equipment and benefits could prove more expensive than first anticipated.
- You pay for holiday and sick leave.
- As stated by HSE (Health and Safety Executive). “It is an employer’s duty to protect the health, safety and welfare of their employees and other people who might be affected by their business. Employers must do whatever is reasonably practicable to achieve this.”
- You are required to follow strict guidelines on hiring and firing. Unless an employee is under probation you must follow guidelines before dismissing them. This can be a costly process if you feel that you have a inefficient employee on your team.
Signs you should consider employing
- You require full time staff that are customer facing and account manage your projects – building specific customer relationships
- The function is a key competency of your business
- You are very large organisations with a strong employer brand
- The activites involve highly confidential or trade secrets that could damage your business if made public
It’s useful to consider whether a function or task is better completed in-house or by an outside provider. How much input do you need? Many companies end up with a hybrid model. You might have employed staff to complete key aspects of the day to day business tasks, but outsource the bookkeeping or marketing. Some businesses might have an in-house marketing manager who outsources and oversees individual marketing campaigns.
The right answer for you comes down to skills, money and time. As outsourced service providers at The Business Hut, we are able to provide support without the need for contracts or tie-ins. You can read more about what our existing clients think over on the testimonials. Get in touch to discuss how we could provide your business with quality support – call us on 01858 289 189 or email firstname.lastname@example.org.
Thanks for reading!