In-House or Outsourced? How Do You Decide?
Because the internet has connected people worldwide, the outsourcing industry has grown by leaps and bounds over the past two decades. Another reason for this growth: Outsourcing gives entrepreneurs access to a greater pool of talent and low-cost labor. Their ability to delegate responsibilities helps them free up more time.
But outsourcing is not always the best option: Many business owners, in fact, are starting to figure out that not all work should be outsourced. In some categories, like customer service, outsourcing can even make a bad impression with customers.
In other categories, outsourcing can mean subpar work, such as with communication or writing duties. Then there are the times when entrepreneurs wish they had outsourced sooner, as that would have meant less time wasted while they (unwisely) tried to do everything in their business.
Though finding competent people in virtually any line of work is possible, what works with one business may not work for another. So, what are the pros and cons of outsourcing, and how do you decide?
Benefits of outsourcing
Writing in LinkedIn, Charlett Adams described how, after becoming owner of a commercial cleaning company in 2011, she found herself inundated by client demands and meetings. So, she tracked her time and thought carefully about what roles to outsource: She hired a bookkeeper, a CFO-level person, an IT person and someone to handle her marketing, as well. By outsourcing, she freed up the time she needed to focus on her company's growth.
You may want to emulate Adams's example. If you take the time to think strategically about what you aren’t good at, what you don’t have time for and what you need help with, outsourcing might benefit your business. If you leap without looking, though, outsourcing could end up costing you more than you bargained for.
The main benefits of outsourcing boil down to three things:
- Access to a larger talent pool
- Cost savings
- More time
Roles to outsource
With the caveat that different businesses have different needs in terms of the tasks that need to be completed and the roles that need to be filled, here are several examples of roles that can be outsourced:
- Marketing. This includes inbound marketing, email, social media, content and even SEO or search marketing.
- Website. Outsourcing the design and development of your website allows you stay on the cutting-edge of best practices and saves you countless hours pushing pixels.
- Customer support. Poor customer service is simply unacceptable, and could be the downfall of your business. But some businesses, such as SuperFastBusiness, have found a hybrid solution: SuperFast succeeded in getting its customer-service team to handle inquiries via a ticketing system, and teaching team members what their response should be in various situations.
Outsourcers can be found on freelancing sites like Upwork or Freelancer. If you have a WordPress site and require ongoing help, WP Curve is a great resource to tap into. There are many other services available depending on what you’re looking for.
Risks with outsourcing
In September 2010, Virgin Airlines had to ground all flights for nearly 24 hours, leaving 50,000 passengers stranded. The problem? Virgin had outsourced its internet booking, reservation, check-in and boarding system to IT provider Navitaire. The latter company was tasked with identifying and resolving mission-critical system failures within a short period of time; but on this occasion, things didn’t go so smoothly.
Not everything you outsource will necessarily have such an immediate and drastic impact on your business. If the problem you need to solve is occurring on the other side of the world, all you can do is trust your vendor to deal with the issue in a timely and competent manner.
Benefits of in-house
Brian Scudamore, founder and CEO of O2E Brands, said his company used to outsource overflow call volume to a Vancouver-based call center. Alas, O2E Brands saw conversions begin to decline and its company culture begin to slip. This is when it decided to make customer service 100 percent in-house again, and it hasn't looked back.
While keeping certain functions in house may not save you any money, it gives you more control over the quality of work that’s produced and the ability to better define and preserve your company culture.
Any aspect of your business that you believe is a differentiating factor or unique selling proposition should be kept in house.
Roles to keep in-house
Thanks to technology, there are many ways to put your business on autopilot without outsourcing. With these tools, there is always an upfront cost and time investment, but automation -- or semi-automation -- can free up a great deal of time and save you from having to hire experts in every department. Business owners can automate:
- Social media, with Buffer or MeetEdgar
- Email marketing, using a tool like Drip
- Customer service, using software like Temper to to measure analytics
- Content, since you can schedule posts in advance of their being seen by your audience
- Payments for subscriptions and even affiliates, using gateways such as Stripe
- Accounting, using tools like QuickBooks, which will import transactions from banks or payment gateways.
- Customer support, using a tool like Zendesk, can be efficiently managed.
Again, the exact roles to keep in house will vary from one company to another. Oftentimes, however, it is best to keep in house, functions like human resources, security and succession planning, and to maintain your company culture in house as well.
Risks to keeping everything in house
Conor Wilson, co-founder of Sproose, wrote on Fora that he used to struggle with not being an expert in his field, thinking he had to know everything there was to know about a specific niche before establishing a business in it. Then, realizing that he could leverage outsourcing to build his business, Wilson thought about what problems he could help solve, and settled on laundry pickup and delivery.
Like Wilson, many entrepreneurs are paralyzed by the overwhelming number of options available. They concern themselves with every step, thinking they need to know everything. This is, perhaps, the biggest trap of all -- not getting started. Outsourcing offers a low-cost way for entrepreneurs to go into business for themselves, and tap into the knowledge and expertise of skilled and qualified people, without the added risk and cost of hiring full-time employees.
Not all roles are right for outsourcing, and not all roles need to be full-time in-house hires either. As management expert Peter Drucker has often pointed out, keeping experts around for the few times you need them is too costly and entirely unnecessary. On the other hand, outsourcing all aspects of your business without thinking about your customer could end up killing the momentum you’ve built up.
Truly, the worst thing you can do is not get started. You can always course-correct as you learn more; but if you’re taking no action with work that needs to be delegated, you’re just slowing progress in your business.