Outsource or hire? How to know which is right for your business

For small and medium-sized businesses (SMEs) in the growth stage, demands on your business can often outstrip the capacity of your small team to deliver (at least during the standard workday).

And that’s before taking into consideration all of the other secondary and tertiary tasks that SME’s have to manage, like human resources, accounting, invoicing and legal services. Surprisingly, despite consistent staff shortages, SMEs are less likely to outsource tasks than large corporations, according to Statistics Canada survey data.

Outsourcing and hiring in-house each come with their own set of advantages and disadvantages. Generally speaking, small and medium-sized businesses can often benefit by outsourcing some of the following tasks:

• Recruitment
• Information technology
• Accounting
• Marketing
• Training
• Legal Services

But what works for your business will depend on the stage of growth you’re in and your specific business needs. To help you evaluate your options, let’s run through some of the pros and cons.

Outsourcing

Pros:

• Expertise: outsourcing can help you tackle tasks that are outside of your core expertise, like marketing, web development, or copywriting
• Time and Cost: outsourcing is cost-effective and efficient – hiring a full-time employee with a specific skill set can be expensive and time-consuming
• Scalability: outsourcing can help you scale your business rapidly by bringing on required expertise quickly
• Focus: outsourcing allows you to maintain focus on your core business, and spend less time on administrative tasks
• Flexibility: outsourcing is more flexible – pay only for the services you need, when you need them

Cons:

• Buy in: freelancers are less committed to the success of your business – they are unlikely to be as passionate about their work as an in-house staff member
• Quality: while many freelancers will produce work of high quality, there is less recourse if you find the work is not up to expectations

Hiring In-House

Pros:

• Commitment: in-house employees can be more personally invested in their tasks and the success of the company
• Culture: hiring full-time employees can help you diversify your workforce and build an inclusive company culture
• Talent Development: full-time employees can be trained to fill future gaps in your organization and encouraged to grow with the company

Cons:

• Scarcity: finding quality talent or candidates with specific skill sets can be difficult, and you may have jobs that need doing before you’re able to find the right candidate
• Time: talent recruitment is a time-consuming process, especially if you don’t already employ dedicated human resources staff
• Cost: hiring in-house is typically more expensive, given the need to offer competitive salary and benefits to attract quality candidates

Which is right for your business?

Both!

With apologies for the trick question, the truth is that most SMEs will need to both outsource and hire permanent staff as they grow and expand. That’s because, in general, it makes sense to outsource certain tasks until your business is large enough to require a permanent employee to handle them.

As you assess your needs, remember that hiring in-house is often a better option for activities that are core to the success of your business, while outsourcing can be an excellent option for secondary or tertiary functions needed for your business to operate, like recruiting, training or legal services.

Finally, consider a third alternative: using online or app-based platforms to handle certain tasks such as accounting, marketing or invoicing. Click here to read about the best digital tools to level up your business.