Ep #2 Outsourcing – The Difference Between Outsourcing vs Direct Hiring

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Hey there, hi there, hello there! This is Outsource HQ, the podcast headquarters for end-to-end outsourcing services. I’m Adam, your host.

Business expansion, needing more people, its a friction point for businesses. Great, brilliant news that you need to scale up your workforce. But now here’s figuring out exactly what and who you need so you can get tasks done as fast as possible, without a hitch in your operations.

Now that you also have the option to outsource because you’ve heard of it and every business is doing it, it’s another choice that can cause you to freeze up. What mode of hiring would fit your business best?

Should you hire directly or outsource? Both are great options.

Here’s what can help you pick one or the other.

Direct hiring means you are directly employing someone to work full-time or project-based, but more traditionally for permanent positions with salaries and benefits.

Consider direct hiring when:

The tasks are your business core services. You know your brand’s core values and philosophies. Keep these responsibilities in-house to build your brand into your product and services.

You’re at the stage where you’re building your company’s identity and foundation. At this stage, it’s better to hire a team who can grow with your business, and who can, later on, manage your growing teams when you outsource or hire more people.

Direct hires become your core team. They grow with you. They grow your business with you.

But it also means employment expenses: taxes, benefits, the whole shebang. And if your direct hires are not yet at the level of expertise you need, the time and financial costs of training.

Next, there’s outsourcing. This means you are contracting tasks and responsibilities to third-party service providers. You either directly contact an agency or you post a job to a marketplace. Your outsourced hires provide support to valuable business operations.

Consider outsourcing when:

The task is in the background and repetitive. This can eat your time and drain your energy. Outsource engine room tasks so you and your team can focus on growth.

The task’s success is fast, temporary, or experimental. Outsource seasonal campaigns like special holidays or demand peaks.

You need expertise. Marketing, SEO, among others– you don’t want to lose time and money DIY-ing this to mediocre results.

The task is non-core but ongoing. Reporting and analytics, content writing, and web development. Outsource tasks that need to be maintained from time to time.

So with the criteria for direct hiring and outsourcing outlined, perhaps now you have an idea of what fits your current needs.

Google, Microsoft, and Amazon are outsourcing part of their business operations. Ecommerce giant Alibaba outsourced its web development to the US in hopes to reach an English-speaking audience.

Slack started from an unstyled prototype to the fun and interesting platform we know today by outsourcing the entire look and feel of their brand.

When deciding between direct hiring and outsourcing, you can also consider the three maturity stages of business: Starting, Scaling, and Selling. For now we will focus on Starting and Scaling.

  • At the Starting stage, you want both direct hires and outsourced providers to access the expertise you need to take off.
  • At the Scaling stage, outsourcing can help you meet the demands of growth, and in this stage, the hires you had in the Starting stage can help you solidify your business structure while your outsourced hires support your core team.
    Every time you launch or try something new, every time you have a marketing push, you go back and forth with Starting and Scaling stages.

Your direct hires form your core team while outsourcing helps you answer demand as you move through those stages.

The best way to find the right mode of hiring is to try which works for you. And your outsourced hires can very well become your core team, too. Take them on full-time. Reward with benefits and bonuses. It’s a sweet arrangement without the usual overheads.

Well, that’s all the time we have for this episode, Expanding your business is tough but I hope we managed to help you out with your ideas for the future.

In the next episode, we’ll be helping you play matchmaker between your business and your outsourced team. Catch you later.