To outsource or not to outsource? This is the question that every business owner has to ask themselves, sooner or later. And, it’s time for you to face this decision, too – otherwise, you wouldn’t be reading this.
Of course, you need to weigh in on the pros and cons before making up your mind. To help you make a well-informed decision, Develux has prepared this overview of both benefits and challenges of outsourcing. Enjoy!
Table of Contents
- First, Let’s Talk About Pros
- It Will Cost You Less than In-House Hiring
- It Helps Bridge the Knowledge Gap, Fast
- It Gives You More Flexibility in Staffing
- 3 More Honorable Mentions
- Now, Let’s Move On to the Cons
- Communication Issues Are Always a Possibility
- There’s Room for Intellectual Property & Security Concerns, Too
- You May Not Get 100% of What You Had in Mind
- 3 Extra Honorable Mentions
- In Conclusion: Do the Pros Outweigh the Cons?
First, Let’s Talk About Pros
Needless to say, hiring an independent contractor is an appealing option. Most likely, cutting costs is the primary reason you’ve decided to look into outsourcing in the first place.
But is it the only perk you can expect? No, of course not. Here’s a detailed overview of the top 3 benefits of outsourcing.
It Will Cost You Less than In-House Hiring
It’s impossible not to mention all the financial benefits, of course. That’s because outsourcing a certain task or project allows cutting costs across the board:
- Since you don’t directly employ someone, you don’t have to worry about social security and unemployment taxes.
- Employees require paid vacation time, health insurance, and other benefits. Independent contractors don’t.
- Hiring costs. Yes, you can’t find an independent contractor in a snap of your fingers. But the costs associated with that search don’t even come close to the time and money you’ll spend on hiring someone in-house and their onboarding.
- Labor costs. If you hire someone in, say, the Philippines, their rates will be significantly lower. That’s because the cost of living isn’t as high as in the US or France.
It Helps Bridge the Knowledge Gap, Fast
So, your business has certain needs all across the board. You need someone to design a couple of ads, write a blog post or two, and maintain your IT infrastructure. On their own, these tasks aren’t enough to justify hiring three more employees.
Sure, it’s not impossible to find a jack-of-all-trades for a full-time position to do all of that. But they surely won’t be experts in every single field.
Independent contractors are pros in their niche, be it design or IT infrastructure outsourcing. They’ve been at it for years, and they are experts because they have the most important thing ever: experience.
That’s why if you want something done well and fast, don’t fret: outsourcing to the right contractor can make it possible.
This is especially important for startups and small businesses. Their resources are limited at best. So, they have to strive to make the most out of their buck.
It Gives You More Flexibility in Staffing
If the workload isn’t consistent enough, hiring someone means they’ll either work a full day or have a week without any substantial tasks. And, you’ll still have to pay them their salary, regardless of the workload.
In this case, outsourcing is your best solution. But it’s not the only way it provides for more flexibility in staffing:
- Finding a freelancer or independent contractor is faster than all the screenings, job interviews, and onboarding;
- It’s a lot easier to terminate a contract with a freelancer or independent contractor than with an employee.
3 More Honorable Mentions
Yes, there’s more! Here’s a quick overview of 3 more benefits of outsourcing that didn’t make the cut – but they’re still worth mentioning:
- It lets your team focus on the core tasks, therefore increasing its productivity on what matters the most;
- It grants you access to a larger talent pool – you have experts from all over the world to choose from;
- It can allow your business to run around the clock, thanks to the time zone difference.
Now, Let’s Move On to the Cons
Of course, if outsourcing were always 100% better than in-house hiring, you’d never hear or read nightmarish stories about it. But, as you already know, there’s no completely risk-free solution out there.
So, what challenges of outsourcing should you get prepared for? Here are the 3 most common ones.
Communication Issues Are Always a Possibility
Miscommunication (or lack of communication) is definitely the most common problem with outsourcing. There are just so many things that can go wrong here:
- Things will get lost in translation, even if you outsource locally. That’s because different people and businesses have a different understanding of quality, project management, etc.;
- Independent contractors aren’t always available 24/7 – so, you might end up waiting for responses for too long for comfort;
- If you outsource abroad, the language barrier and/or a time zone difference can also make communicating hard.
The good news here is, all of that is manageable. The golden rule here is, if you think something is obvious, put it into writing anyway.
In fact, put everything into writing. Specific deliverables, detailed task descriptions, and clear guidelines are a must. (And remember to double-check with the contractor that everything is clear.)
There’s Room for Intellectual Property & Security Concerns, Too
These concerns aren’t unfounded, unfortunately. During your cooperation, you might have to share sensitive information about your business. Unscrupulous contractors can use this know-how for their own gain later on – and you might never find out about it.
There’s a solution here. Sign a detailed contract – and make sure it’s being followed. The contract has to contain a solution for every undesirable scenario possible.
Don’t forget to add the conditions under which you can terminate your cooperation before your contract runs out, too. (It can be poor quality of work, missed deadlines, etc.)
You May Not Get 100% of What You Had in Mind
No matter how great the independent contractor is at what they do, they won’t know all the peculiarities of your business from the get-go. That often translates into a dissonance between what you expect and what you get from the contractor.
Let’s say, you found a freelance designer for creating a couple of ad banners. If you don’t provide them with a brand book, they’ll design banners that won’t look anything like your designs from before.
The root of the problem here is, actually, a lack of communication. But that’s good news: it just means you have to be thorough regarding your standards, values, and brand guidelines. And, don’t forget to define the quality assurance indicators – and add them to the guidelines.
3 Extra Honorable Mentions
That’s not all the challenges you can encounter when outsourcing. Here’s a quick overview of 3 other risks that you should be aware of:
- Sometimes, a certain cultural background is a must. In that case, you can still outsource, but locally.
- A lot of clients may mean a lack of focus on the other end. Then, your project may not get all the attention it needs, leading to sloppy or hasty work.
- You won’t have the means for day-to-day oversight. That can make quality control tougher and fixing mistakes more time-consuming.
In Conclusion: Do the Pros Outweigh the Cons?
Well, there are no right or wrong answers to this question. You have to take into account the peculiarities of your particular business, projects or tasks you want to outsource, and, of course, your budget.
In general, though, the pros are likely to outweigh the cons in your case if:
- The tasks you want to load off are tedious and mundane – and they can hardly be called your business’s core activities;
- You have one or several projects that require a particular kind of expertise you can’t get in-house at the moment;
- The workload will fluctuate on a weekly or monthly basis and/or is not going to be big enough to bring one more employee on board.