Many businesses think that outsourcing is the solution to all their problems. And it is, sometimes. But discerning when to outsource and when to hire a new employee is a constant challenge for businesses. Leaders have to look at their needs from many directions to ensure that the decision is not just a financial one, but also a strategic one. Here’s how the best leaders are figuring this out.
What Part of the Business Does it Impact
When leaders are looking at what they should hire in house and what they should outsource, they often explore the level of impact the role has and what part of the business it affects the most. SEO companies, for example, may need to have staff who can create content that drives traffic and a facilities team who can handle minor building issues, but they aren’t necessarily going to need a full time plumber or contractor on staff. Facilities maintenance is far different from operational strategy.
When a pipe breaks, the facilities teams are the ones who are going to be researching plumbers near me and finding out who can fix the drywall and electrical that got damaged from the water. Leaders understand that having a plumber on staff is not an effective use of resources, but contracting them out when there is an issue, is.
Is the Work Getting in the Way of Strategy
Sometimes companies get stuck in the weeds of their work which leaves no room for strategy and forward thinking. They are just trying to survive the day-to-day tasks that keep the company operating. They are working in the business instead of working on it and that distinction matters. The urgency of just getting the work done keeps people scrambling without any space for creative thinking or innovating.
When leaders are trying to find ways to outsource, they take into consideration how to get the work done while making strides to come up with fresh ideas. A good leader might choose to outsource basic tasks to give the most creative team members more space to think outside the box. This can help a company come up with new products and new ways of doing things. Once the expansion happens, then they might consider opening up new permanent roles within the company.
Comparing the End-to-End Cost
Looking at the outsource versus hiring in-house question is also a money question. How much does it cost to hire someone for the company instead of outsourcing specific tasks or hiring a contractor to do it short-term? This cost is measured in dollars spent on salary, benefits, training, and time.
Leaders may discover that they need a role long-term and it’s more cost effective to hire a new person or they might learn that a qualified contract will be adequate. It’s crucial to look at the full financial picture and what the task or tasks bring to the table that will increase the ROI and help the business be more successful as well.
The Legal Nuances of Outsourcing and Contracting
There are a lot of legal questions that need to be asked about the work a company is doing before they just jump in and contract out to people. When a company hires an outside worker and calls him or her a contractor, it doesn’t necessarily mean that they are one. There are IRS rules that must be followed so that the business doesn’t get itself into hot water.
Some of the things to consider are whether the role is a duplicate of something that they hire for in house, what scheduling requirements they expect from the person, and the overall relationship between the contractor and the business. Businesses who treat their contractors like employees are more likely to get themselves into trouble because it’s harder to know where the line is between the in-house hire and outsourced one.
Examining Cybersecurity and Other Risks
Hiring a contractor who can access company systems comes with a huge risk. When leaders are trying to figure out if they should hire out or get someone on the payroll, they need to look at the cybersecurity risks that they might face. Contractors who have access to sensitive information pose a greater risk to the company even when NDAs are signed.
With access to proprietary information and even customer data, it can put the company at a big risk. Any outside contact with their systems also opens them up to the potential for cyberattacks. Even with the best security in house, if the contractors’ systems are not as secure, it can open up ways for hackers to get into the company databases.
