Expanding your small business is an exciting step, but it comes with challenges, especially when deciding whether to hire new employees, keep tasks in-house, or outsource them. The right approach requires careful consideration of your business needs and growth objectives.
That’s why we at Remitly have created this guide to help you navigate the decision-making process. Whether you’re looking to scale quickly or build a strong, long-term team, this guide will provide valuable insights to help you make the right choice for your business.
Hiring vs. outsourcing: key considerations
Deciding whether to hire in-house employees or outsource tasks is a choice that can affect your business’s operations and growth.
When you hire in-house, you’ll be bringing employees into your company to work under your direct management, either on-site or remotely. These new hires become part of your organization, contributing to its long-term goals and culture.
Outsourcing, on the other hand, involves contracting external individuals or agencies to handle specific tasks or services. These professionals operate independently and are not part of your internal team, often working remotely. This has benefits and drawbacks, depending on the type of task they are completing and what you’re trying to achieve in the long term.
Assessing business growth and skill requirements
As your small business expands, determining whether to hire in-house or outsource depends on two critical factors:
Business growth considerations
- If a role requires deep company integration, long-term commitment, and cultural alignment, hiring in-house is often the better choice.
- If flexibility and access to specialized expertise are priorities, outsourcing can provide a scalable business solution without long-term commitments.
Skill requirements
- Some positions are more focused on specialized, evolving skills that could be essential for your company’s future direction. In these cases, hiring in-house is a great choice.
- Your business can handle short-term specialized tasks more efficiently through outsourcing.
Weighing these factors can help you understand when to build an internal team and when to rely on external talent.
Costs and benefits
Another main consideration in the decision between hiring and outsourcing is cost-effectiveness. Let’s examine the financial implications of hiring versus outsourcing in detail.
| Expense category | Hiring in-house | Outsourcing |
| Recruitment costs | Advertising, interviewing, and onboarding expenses | Typically minimal: may include agency fees |
| Salary and benefits | Salaries, health insurance, retirement plans, and paid leave | Payment for services rendered; no additional benefits |
| Training and development | Ongoing training programs and professional development | Limited training; providers bring expertise |
| Operational costs | Office space, equipment, utilities, and supplies | Lower costs as business owners can avoid expenses like office space and utilities, but service fees may apply |
| Long-term financial commitment | Ongoing salaries and potential severance packages | Contractual agreements; flexibility to scale services up and down |
Note: Specific costs can vary based on industry, location, and the nature of the work involved.
When to hire in-house staff
Having an in-house team creates a strong foundation for growth and helps keep everyone aligned with your business goals.
Identifying long-term needs for onboarding employees
Hiring in-house is the right choice when your business has ongoing needs that outsourcing can’t effectively meet. Here are key signs it’s time to bring employees on board:
- Core business functions: Roles like management, customer service, bookkeeping, and product development require internal staff who understand company processes and culture.
- Private knowledge and confidentiality: Employees committed to the company’s confidentiality can handle sensitive data, intellectual property, or strategic business insights.
- Consistent workload: If tasks require daily attention or close supervision, in-house employees offer greater reliability and control than outsourcing.
- Scalability and growth: If you’re planning to grow your business long-term, it’s a good idea to build a stable, dedicated team. This helps keep things running smoothly as you scale.
Now that you’ve identified when hiring in-house is the right move, it’s helpful to understand the benefits.
Advantages of building an in-house team
Here are some key benefits of building an in-house team:
- More collaboration: Employees working in-house communicate effectively, leading to seamless project execution and a shared company vision.
- Better control and oversight: Direct management improves quality control, ensuring efficiency and alignment with company standards.
- Commitment and loyalty: Full-time employees are invested in the company’s long-term success, fostering stability and long-term retention.
- Adaptability and problem solving: An internal team can quickly respond to challenges and drive innovation without relying on external providers.
Creating a company culture with in-house employees
Hiring in-house typically fosters a stronger workplace culture and better-defined company values. This includes:
- Building a shared mission and vision: In-house employees are usually aligned with the company’s long-term goals and internal strategies.
- Leadership development: Internal hiring allows companies to nurture future leaders who understand the business from the ground up.
- Team bonding: A well-integrated in-house team fosters innovation, teamwork, and a more productive work environment.
In summary, while it may require a greater financial investment, in-house hiring has many benefits, especially when you’re looking to grow your company over the long term.
When to consider outsourcing
Outsourcing works well for short-term, project-based tasks that are non-essential to your business’s day-to-day operations. These include:
- Time-sensitive projects: Outsourcing provides immediate expertise for tasks with strict deadlines, like marketing campaigns, shipping and logistics, seasonal product launches, or website designs without needing to train an internal team.
- Non-core tasks: Your business can outsource administrative tasks, customer support, and IT maintenance to keep your internal team focused on core business operations.
- Temporary workload increases: During product launches or seasonal spikes, outsourcing can help your company manage extra demand without overloading your team.
Outsourcing these tasks helps streamline operations and improve your team’s efficiency.
Benefits of outsourcing for specialized tasks
If you’ve decided that outsourcing is the right choice for your business at the moment, you’ll benefit from several important advantages:
- Access to expertise: Outsourcing specialized tasks like software development, legal services, or financial consulting ensures skilled professionals handle the work.
- Risk mitigation: Experts reduce the risk of errors and costly mistakes by using the latest knowledge, tools, and best practices.
- Advanced technology: Outsourced providers who specialize in their area may have access to cutting-edge tools that your business doesn’t have, leading to higher-quality work and more possibilities for innovation.
- Faster turnaround: Specialists complete tasks more efficiently, reducing delays and improving project timelines.
Accessing a global talent pool
Outsourcing to a global talent pool can help your company expand efficiently, especially when entering new markets or managing large projects.
- Diverse skill sets: Outsourcing gives access to professionals and service providers with specialized expertise that may not be available locally, such as designers or customer support agents.
- Faster to market: Leveraging global expertise allows you to complete projects faster. This gives you a competitive advantage, allowing you to introduce products or services to the market quicker than your competitors.
- 24/7 productivity: With teams spread across different time zones, outsourcing enables round-the-clock work, ensuring that projects continue progressing even outside of regular business hours.
As you evaluate hiring in-house versus outsourcing, a hybrid approach may also be worth considering.
A hybrid approach to talent acquisition
A hybrid talent acquisition strategy combines in-house teams with outsourced talent, giving your business the flexibility to optimize its workforce. This approach can help your company balance control and cost-effectiveness while adapting to changing market conditions.
Combining in-house and outsourcing strategies
By strategically deciding which functions to keep in-house and those to outsource, your business can maintain control over core operations while tapping into specialized talent for non-core tasks.
This helps your company build a flexible, efficient team, making it easier to manage complex operations and reach different business goals. For example, critical functions like strategic planning or client-facing roles can stay within your company, where culture and knowledge play a crucial role.
On the other hand, certain tasks like marketing, customer support, or software development may be outsourced to an external expert or third party with specialized skills without any long-term commitment.
Adapting to changing business needs with a flexible workforce
A hybrid approach allows your company to adapt quickly to changing business needs. As the market and technology evolve, combining in-house and outsourced teams lets your company meet demands more effectively. You can also scale operations rapidly based on the current needs of your business.
The hybrid approach provides flexibility in resource allocation. When the demand for certain products and services increases, your company can leverage outsourcing to expand capacity quickly.
When the demand slows, your business can rely on in-house teams to maintain operations with fewer costs. This adaptability ensures your company is not burdened with overstaffing or underutilization, but can still easily adjust its workforce to match business requirements in real-time.
Implementing a hybrid model for streamlined growth
Implementing a hybrid talent acquisition strategy paves the way for streamlined growth. Your company can use outsourcing to scale efficiently in specific areas, and rely on in-house teams for the development and maintenance of critical business functions.
With this combination, your company can take advantage of the flexibility of outsourcing while maintaining the continuity and expertise of your in-house teams. To successfully implement this model, you might have to clearly define your in-house team core competencies and identify where outsourcing will provide the most value.
A well-thought-out hybrid approach equips your company to innovate, scale and grow efficiently, while being responsive to short-term demands and long-term objectives. By creating a workforce that’s adaptable and skilled, you can position your company for sustainable growth in the ever-changing business environment.
Making the right choice for your business
Choosing between hiring in-house employees or outsourcing functions is not a one-size-fits-all decision—it requires careful consideration of the specific needs and goals of your business.
Evaluating individual business constraints and opportunities
Before deciding, consider the key business challenges and opportunities that impact your ability to scale, operate efficiently, and remain competitive.
- Operational capacity: Determine if your business has the infrastructure and management resources to support in-house employees. If recruitment, onboarding, and oversight become time-consuming or overwhelming, outsourcing provides an alternative with fewer logistical challenges.
- Scalability considerations: If rapid scaling is a priority, outsourcing offers the flexibility to adjust workload demands efficiently. However, long-term business growth may require a stable in-house team to build expertise.
Aligning talent strategy with long-term business objectives
Sustainable growth is best achieved if your talent strategy matches and supports your long-term business goals.
- Company culture and vision: If your business prioritizes a strong internal culture, in-house hiring can foster deeper alignment with company values. However, outsourcing remains a practical choice for specialized roles that do not require cultural integration.
- Strategic growth: A hybrid approach can support business expansion without overextending resources.
- Industry trends: Consider current trends in your industry. Fields like technology and marketing increasingly rely on outsourcing for specialized tasks, allowing your business to remain agile and competitive.
Tips for effective decision-making
Making the right decision between hiring and outsourcing requires a careful balance of factors and smart decision-making. Here are some practical tips to guide you:
- Prioritize core vs. non-core activities
Identify which functions are central to your business’s mission and require ongoing investment in internal talent versus those that are less important and can be handled by external experts.
Core activities that shape your brand and customer experience may need an in-house approach, while you can outsource non-core functions like administrative work or IT maintenance.
- Weigh short-term needs against long-term sustainability
Outsourcing may help with short-term needs. But for long-term growth, think about how it might affect your company’s ability to retain institutional knowledge and maintain control over critical functions.
- Evaluate the cost of hiring vs. outsourcing
Cost is usually a big factor. When hiring full-time employees, consider all associated costs like recruitment, salary, benefits, and training. Outsourcing can be a cost-effective way to acquire high-quality skills without long-term commitments, but remember that service fees can increase, especially with ongoing contracts.
- Consider the risk
Hiring in-house may offer better control and a stronger commitment to your business, but it also comes with long-term obligations. Outsourcing offers flexibility but may present risks in terms of quality control, consistency, and reliability. Weigh these drawbacks carefully when deciding the right balance for your business.
By focusing on these key decision-making tips, you can make an informed choice that aligns with your immediate needs and long-term objectives.
FAQs
How do you decide whether to hire staff or outsource work?
Think about the task’s importance and duration. If it’s a long-term, key job or central to your company, hire in-house. For short-term projects or tasks requiring specific skills you don’t have internally, outsourcing is a good choice.
When should a company consider outsourcing?
A company should consider outsourcing when it needs expertise that is not available in-house, wants to save money on staffing costs, or requires flexibility. It’s great for tasks that are short-term, extra work, or projects that aren’t part of the company’s main focus, like marketing and IT support.
Why would a company choose not to outsource?
A company may avoid outsourcing if it wants full control over its work, needs to keep things private, or wants to maintain a strong company culture. For long-term or critical jobs, in-house staff are often a better choice because you can manage them closely.