With the prominence of MSMEs rapidly increasing, one of the most relevant questions to answer is whether it’s better to hire or outsource when the need comes. There are a lot of factors to consider when evaluating the value of each option. As an existing business owner or manager, it has become essential to understand these considerations in preparation for future growth and expansion.
For those just starting out, it’s equally important to have a clear idea before jumping in. This article discusses the advantages and disadvantages of both choices.
Advantages of Outsourcing
Technology has opened doors that would not have been possible a mere decade and a half ago. Innovations in communication now allow people to work from virtually anywhere and anytime. This created fresh industries that have the potential to help businesses realize their goals much simpler than before.
Outsourcing gives business the opportunity to employ work from a larger pool of candidates that do not need to consider proximity and work schedule. If done right, it can also lead to a more cost-effective solution compared to hiring full-time employees. When tasks are outsourced, it also frees up in-house employees to do more critical work.
According to Entrepreneur.com, outsourcing can also help businesses bridge the knowledge gap within their organization that they don’t always know they have.
Advantages of Hiring
The most obvious advantage of hiring employees is that there are fewer obstructions for communication, interaction, and collaboration. Working in the same place gives you a better sense of your employees’ capabilities and how best to maximize their potential.
Hiring employees, full-time or part-time, is a two-way commitment. There is generally a certain degree of loyalty afforded by fully-employed workers who go to the same workplace as you.
Culture building is one of the newer concepts of the modern workplace. Having full-time employees can help you better shape the culture of your business. In turn, their contributions and ideas about the subject will have more weight because of their exposure. According to Forbes, good work culture increases productivity.
Disadvantages of Outsourcing
The considerable advantages of outsourcing are also accompanied by many disadvantages. The first one is the difficulty to communicate. Even if your outsourcer belongs to the same region as you (which is not always the case), the channels of communication that technology has enabled will always have gaps compared to face-to-face interaction. And when they do live in a different region, chances are there will also be a language barrier to overcome.
Different time zones can also disrupt your workflow. It can be difficult to have to wait for another day before a particular issue is dealt with because your outsourcer lives on the opposite side of the world.
Even locally outsourced staff pose challenges. The lack of personal interaction can sometimes lead to detachment. Ultimately, the quality of the work may suffer.
Disadvantages of Hiring
One of the biggest cons when hiring is the expense. Often, you can find a similar or better-skilled employee elsewhere at a fraction of the cost it would take for you to hire. This simple concept has been responsible for the mass outsourcing of tasks like customer service and technical support. Plus, hiring someone means you pay their wages regardless of whether they have actual work to do.
The truth is there is no clear winner between hiring and outsourcing. The smartest move to make is to outsource tasks that your people are not skilled to do (yet) or tasks that only exist from time to time. Outsourcing work to accounting firms, online survey providers, IT teams, and couriers can be a good idea. On the other hand, you should hire full-time employees for full-time work.