Innovation Corner

Permanent link for Should you hire or outsource? on January 13, 2023

Businesses must add staff to grow and better serve customers. Deciding how to add staff can be a tough choice. Adding employees allows you to retain control over how the work is done, and is often cheaper over time than outsourcing. Outsourcing only allows you to specify the work product, but you can get fully-qualified people without the extra effort required to maintain compliance with labor and tax laws. So how to make this decision?

Entrepreneur Magazine has you covered. Here are 7 Questions to Help you Decide if you Should Hire Staff or Outsource. I think that the first two are particularly good rules-of-thumb:

  1. Do you expect the business growth to be short term?

  2. Is the workforce need a business differentiator?

Even for entry-level positions, hiring is an expensive and time-consuming process. You really don't want to make that investment if your need to hire is driven by a growth in sales, and that growth is likely to be short term. Outsourcing can look more expensive to a cursory analysis, but looking at the total costs it's usually going to be cheaper and easier for employment contracts of less than six months and in some cases it's cheaper for contracts of less than a year or so.

However, if you're being driven by a need to staff in a competitive advantage - Entrepreneur gives the example of a golf ball manufacturer needing to design better golf balls - then bringing someone onboard and keeping them creates long-term competitive advantages. This is an example of the three laws for making a company truly great that I'll share in a future blog post.



Categories: management outsourcing
Posted by Thomas Hopper on Permanent link for Should you hire or outsource? on January 13, 2023.

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