Outsourcing vs. In-House Hiring

At some moment in the journey of scaling a business, you reach a point when you have to choose between setting up in-house recruitment or outsourcing the process. What are the merits of building your own recruitment team? What benefits do you get if you go for outsource recruitment instead? We all have had that internal debate of outsourcing vs. in-house hiring. In this blog, we will run you through each option and tell you everything about outsourcing as well as in-house hiring.

What Is Outsourcing?

In our debate of outsourcing vs in-house hiring, let us start with what is outsourcing first. It is a business practice in which a company hires a third party to perform tasks, handle operations or provide services for the company. In addition, the outside company arranges for its own workers or computer systems to perform the tasks or services. That is to say, either on the site at the hiring company’s own facilities or at external locations. Companies today can outsource a number of tasks or services. They often outsource IT services, including programming and application development and technical support. In addition, they frequently outsource customer service and call service functions. They can outsource other types of work as well, including manufacturing processes, HR tasks and financial functions such as bookkeeping and payroll processing.

Companies can outsource entire divisions, such as their entire IT department, or just parts of a particular department. This is sometimes called contracting out or business process outsourcing. It can involve using a large third party provides, such as a company like IBM to manage IT services or FedEx Supply Chain for third party logistic services. In addition, it can also involve hiring individual independent contractors, temporary office workers and freelancers.

Benefits Of Outsourcing

Continuing on the topic of outsourcing in our debate of outsourcing vs. in-house hiring. Let us learn about some of the benefits that come with outsourcing your work to a third-party provider. The benefits of outsourcing are as such: 

• Low Labor Costs:

• Lower labour costs can improve a business’ bottom line. Therefore, many outsource to businesses in developing countries where the cost of labour is cheaper.

• Fewer Regulations:

• • • Developing countries often have fewer regulations, which can also reduce the cost of labour and increase productivity.

• Flexibility:

• When outsourcing, it can help a company stay lean and mean which makes it easier to adapt to changes. They don’t have to spend a lot of money on resources and equipment that may become dated soon so instead, they pass that risk to an outsourcing firm.

• Reduced Overhead Costs:

• A company’s overhead cost can be reduced as the outsourcing company uses its own facilities, equipment and personnel to complete the tasks. In theory, it is all possible to engage in massive manufacturing ventures out of a room in your house if you outsource all the manufacturing.

In addition to this, outsourcing can be ideal for short-term projects, in which talent is only needed for the completion of a one-off project. It takes much less time to find talent and the projects can not only get completed quicker, as well as the product can possibly reach the market faster.

What Is In-House Hiring?

Let us move forward from outsourcing in our outsourcing vs. in-house hiring debate. Now we will learn about in-house hiring and the advantages that it brings. In-house hiring refers to conducting an activity or operation within a company, instead of relying on outsourcing. This occurs when a firm uses its own employees and time to keep a division of business activity, such as financing, in-house. That is to say, it is an activity performed within the same business, using the company’s assets and employees to perform the necessary work. This is the opposite of outsourcing, which involves hiring outside assistance, often through another business, to perform those activities.

A firm may decide to keep certain activities in-house. A process that is at times referred to as insourcing, such as accounting, payroll, marketing and technical support. While it is common for some companies to outsource those divisions, a firm may maintain flexibility in those operations by keeping them in-house. In addition, it may allow the business to exert higher levels of control over the actions of the divisions by keeping the services and personnel under direct control. Depending on the kind of data that would have to be provided to an outside party, it may also pose fewer security issues.

Benefits Of In-House Hiring

The final part of our outsourcing vs. in-house hiring debate. We will be learning about the benefits that come along with in-house hiring and how it can help your business. Some of the examples are as such:

• Face-to-face conversation can offer more engagement between employees on the same project, which may help propel progress. These in-person discussions can help create new energy, which sometimes leads to bigger ideas.
• Being able to offer a salary and room for growth can make in-house hires less of a flight risk. These employees may also be more vested in the long-term voice of the company.
• Intellectual property may be more likely to remain confidential. You can also have employees sign a non-compete contract. That is to say, it can prevent them from taking ideas if they leave the company.