The Truth Behind the Debate: Outsourcing vs. Employees

If you are a small business owner and would like to move on, you will need to increase your workforce and productivity. You will have two options to improve your business: employing full-time workers or contractors and outsource some of the areas of work. There are certain benefits and disadvantages of each method, and you need to make a decision based on your business model, area of expertise, the cost of recruitment, and employee benefits you have to offer. Below you can find some important facts on outsourcing and employing people to help you make a decision.


Morguefile license Image by Seemann

Outsourcing for Short Term is More Effective

There are several benefits of outsourcing seasonal or low level jobs. You will not have to pay insurance and other costs, and commit yourself to employing someone. If you set a target for the person or company you employ as a freelancer, you will be able to calculate your employment costs much easier. You will know exactly how much it will cost you to get one job done, and this will have a positive impact on your financial planning. You can save money on short term projects by outsourcing abroad or to smaller agencies.

You Have More Control Through Employment

The main benefit of employing people is that you can communicate your expectations and standards better, They will join and take on the company’s values and mission, instead of simply performing jobs. You can find the right people for the job and maximize the knowledge of your company through attracting talent. Your employees will be focused solely on your company’s goals, instead of working on multiple projects at the same time. You can have more control on their priorities, and deliver essential employee training that will improve their productivity and compliance. You can also motivate employees better than contractors or freelancers.

You Will Have More Responsibilities as an Employer

The main downside of having employees as a small business owner is that you will have certain responsibilities. You need to calculate the cost of employing people, including their salary, benefits, insurance, training, and other costs. If you invest into training your employees for the job and they decide to leave, you will have wasted a lot of money and resources. You will need to recruit new people and train them. If you use hr consulting services to attract talent, you can make sure that the right people are picked the first time. Recruitment professionals can find you the right people for the job who are likely to stay with you and grow with your business.

You Have a Better Chance to Finding the Right Person through Employment


“Knowing Your Value in the Workplace” by Northern Virginia Chamber of Commerce (Fairfax Cha is licensed under CC BY 2.0

Employees are motivated by the job security and the benefits you provide them, and will stay if the job matches their skills and expectations. You can pick your employees, but cannot always pick your freelancers or contractors. Chances are if you have some urgent projects and you outsource the job to another agency, you will have little control on who does the job. This gives you limited control on how the tasks are performed.

Commitment Issues

Through greater control, you can increase the commitment of your employees to the job and your business, but you cannot do the same with freelancers. You can tailor the benefits you offer to each member of the team to their needs. Increasing the commitment level of employees is in your hands. In contrast, if you have freelancers or contractors, they will only care about getting the job done and getting paid. If you want to build a great workplace culture and are planning on creating a good working atmosphere, you will definitely need to pick the right employees. Employees who have a positive working relationship with you and their coworkers will be more loyal and represent your company better, giving you added benefits.

Employees Can Give You Less Flexibility

One of the main problems with employing people is the lack of flexibility of employment contracts. You cannot ask every team member to do ten hours of overtime. Employment contracts are more regulated today than ever before, and you need to ensure that your workers get a good work-life balance. Employing temporary staff might cost too much, and you will still need to train people to do the job. You might have to pay your existing staff to train temporary workers on the task, and this will increase your human resources cost significantly. You cannot change employment contracts every month, therefore, they give you less flexibility than temporary or outsourcing agreements.

Flexible Contracts Might Be an Option

If you would like to have full control over working practices and policies, build a team that performs to their best abilities, and is properly trained and motivated, you might decide to offer some or all of your workers flexible contracts. This is a good way of letting your workers schedule their personal appointments for times when they are not needed in the office, and offering extra hours when there is a high demand. Creating a flexible contract might not be appealing to all workers, therefore, you will need to consult with a professional and your staff to explore the options. Alternatively, if you have urgent projects you have to finish, you can trade extra hours to paid holidays and give your company and employees added flexibility. It is a win-win situation.

As a conclusion, if you are in an industry where the demand for your product or services changes every month, you might want to supplement your workforce with temporary workers or freelancers. However, outsourcing important business functions, such as accounting and customer service will give you little or no control on the processes and the standards. Think your business through and calculate the benefits and disadvantages of each employment option accordingly. Consider the flexible needs of your business, the training requirements of each job, and the long term outcome of outsourcing and employment.



Lynne Huysamen

Mommy to a pigeon pair, blogger and online marketer. Lover of chocolate, good books and buckets of coffee.

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