Let me start by defining what outsourcing is. Outsourcing is when a business or company enlists the service of people external to them to undertake certain processes or activities. The Cambridge dictionary defines outsourcing as the process of paying to have part of a company’s work done by another company. In essence, you are temporarily hiring someone or some people from outside your business or company to carry out tasks for you. Here are some interesting stats before I go any further; last year the global outsourcing market was worth around US$92.5 billion. It is reported that US$66.5 billion of that was outsourcing in the field of information technology (IT). In this article, I shall be looking at hiring versus outsourcing.
Arguments For Hiring Employees
Company Or Business Culture
When full-time employees are at a working premise daily it is much easier to build a company or business culture. Mechanisms are easier to put in place to make that happen if employees can be interacted with in person. This is even enhanced by the fact that these employees get to interact in person. Thus it becomes more optimal for rapport to be built amongst staff plus between staff and their superiors. Virtual relationships can never be as rich as physical ones.
Monitoring And Control
When you have employees physically on-site it is much easier to monitor and control them. The mere fact that employees get to be confined to workspaces where their superiors can see them primes them to be objective. This is unlike outsourcing where you will, for the most part, not be able to ascertain whether or not someone is really doing what they have been assigned to do.
Engagement And Immersion
Hired employees are much more engaged and immersed in their work. This is because they will be exclusively focusing on their roles and responsibilities. When they report for work their attention will be directed towards delivering on what is expected of them. This is not the same as outsourcing. Those who are outsourced from typically have several clients at any given time. This means they will be juggling more than one client at a time to meet the timelines. It is virtually impossible to be fully engaged and immersed in every work item.
Arguments Against Hiring Employees
Hiring employees is obviously costly especially when you compare to outsourcing. When you hire employees you will be faced with costs such as salaries, taxes, and insurance covers. Do not also forget costs about hiring and training of the employees. This is one of the core reasons why more and more entrepreneurs are turning to outsource.
Compromised Value For Money
Let me explain this so that you get what I mean. Let us suppose someone works from 8 am to 4 pm. At the end of the month, they are entitled to a salary simply because they are at work on certain days for certain durations. This means they can report for work and not do anything productive but they will still get their salary. When you look at the effective time they spend doing productive work it might not be equivalent to what they are getting. In essence as an employer, you might be paying more than the work they are doing.
Arguments For Outsourcing
When you outsource you just have to pay for the work done – not necessarily a duration. With outsourcing, you do not have obligations such as hiring and training. There are also no other costs such as insurance and taxes, amongst others. This makes outsourcing significantly cheaper.
When outsourcing you are usually looking at specific tasks which means focused attention can be given to them. Outsourcing providers are typically in a hurry to finish what you have assigned them so that they move on to other tasks. This, in a way, conditions them to produce results much faster. When outsourcing it is usually recommended that you pick mundane tasks. This will enable you to focus more on the core aspects of your business whilst the mundane tasks are being handled by someone else.
When you choose your outsourcing service providers you obviously settle for experts. Actually, there is lots of competition which mean you get to find experts who can deliver top-notch results. This means you can be sure that in the vast majority of times you will get your tasks exceptionally done well.
Arguments Against Outsourcing
Possibilities Of Data Privacy Invasion
There are risks of external people getting in contact with privileged information regarding your business. When you outsource, depending on the tasks involved, it might be inevitable for external people to be privy to how your business operates. Sensitive things like, for instance, intellectual property (IP), can get into the wrong hands through outsourcing. This is a serious risk when it comes to outsourcing.
People who provide outsourcing services might not have any bond with your business. They will mostly be rushing to complete what you have assigned them so that they do other assignments. Generally, they will be less engaged and that might compromise the quality of their work.
Effects On The Employed Staff
Employed staff might feel less valued when they see their employer outsourcing. This can seriously affect their motivation and work ethic in general. They might even calculate and realize, possibly, that you will be paying more when you outsource. There is a fundamental difference between how employees are treated and how outsourcing providers are treated. Employees will feel less important somehow.
Ultimately we cannot reach a conclusion where we say choose A or B. I believe a healthy mix of the two should be explored by businesses. There will be times for outsourcing and there will also be a time when hiring full-time employees is best. At the end of the day, you must not sacrifice productivity and the creation of business value on the altar of cost-cutting.