Outsource or Hire?
It's a decision YOU have to make.
According to the US Small Business Administration, 56% of US small businesses with 100 employees or fewer have fewer than 5 employees. With so many tasks involved with running a business - everything from hiring employees to administering benefits to processing payroll and serving customers, growing businesses are faced with the challenge of getting the work done. So how can they get the extra help they need? Do they hire additional staff members or outsource job functions?
To outsource or not to outsource? That is the question.
A growing solution among many business owners is outsourcing. Outsourcing is contracting any function, operation, job or process to a third party, as opposed to its being performed by a staff member. Outsourcing could be using a payroll company to process payroll or contracting with an outside vendor to help you manage your information technology. Here are some of the advantages of outsourcing:
- Cost and efficiency savings. Outsourcing administrative tasks can save you valuable time. And in business, time is money.
- Access to specialized expertise. You may be able to tap the expertise of contractors with specialized knowledge at a fraction of what it would cost to hire them as part of your staff.
- Reduced overhead. Outsourcing can save the costs associated with additional employees, such as larger office space, more computers and increased benefits.
- Flexibility. Outsourcing provides additional flexibility to manage the ebbs and flows of your business. For example, if you operate a seasonal business, you can contract for additional employees in your busy season versus having to pay staff members all year long.
- Ability to focus on core job functions. One of the biggest advantages of outsourcing functions is that it frees business owners to focus on core business functions rather than on the tasks that aren't making your business money.
Some of the areas that are most frequently outsourced include information technology, human resources administration, accounting, marketing and security.
The drawbacks of outsourcing.
Of course, as with any major business decision you make, it's important to consider the disadvantages, which include:
- Loss of control. One of the hardest things for business owners to contend with is relinquishing control to a third party. It's the main reason why you will need to choose your strategic partners wisely.
- Security. When you turn over job functions, you are sacrificing the security and confidentiality of your company information.
- Potential decreased quality of your product or service. You must remember that no one has more pride than you when it comes to the quality of your product or service.
Do your homework before you make any decisions.
So how do you know if you should outsource or hire employees?
- Identify where you need help or areas that are tying you up from growing your business.
- Determine if you require specialized expertise to fulfill this need.
- Assess the needs of the job and the costs of hiring an employee. Be sure to consider all the costs, including recruitment costs, benefits costs, etc.
- Think about the growth of your business. Do you need assistance due to seasonal growth or because you want to expand? If the former, you'll want to outsource. If, however, you are expanding, a full-time employee may be what you need to manage future growth.
- Consult a business attorney to help you decide the best option for you. If you enter into an agreement with a firm to outsource, you'll want legal help to review the contract, to make sure your interests are protected.
The important thing to remember is to proceed with caution. Take the time to do your homework to make the best decision. In the long run, it will save you a lot of time and headaches later on.