Hire or Outsource?

20th October 2017

I tend to talk to business owners a lot about outsourcing, and when and why you should consider it. (It’s only natural that it comes up a lot, because we offer an outsourced finance department service.)

Every once in a while, a business owner will tell me that they prefer to hire an employee rather than outsource important functions. They see an employee as the golden standard, and outsourcing as a compromise.

“Hiring a new employee is always the Rolls Royce option, surely?”

Perhaps it’s a natural assumption – but it’s not necessarily true. Often it’s quite the opposite.

You see, the compromise comes when you can only hire one person to do a big job like managing your finances.

Pick someone who has a low level of skills, and all the high-level parts of the job will get neglected. Meanwhile, someone with high-level skills won’t want to do the low-level stuff. Most individuals can’t or won’t do it all.

When you outsource to a reputable company, by contrast, you are usually hiring a team – not an individual. You get access to a wide range of skills and capabilities and can get a well-rounded service.

Of course it’s not just the team itself – you're also getting access to proven, ready-made systems, processes and technology which an employee rarely if ever brings with them.

If they have the knowledge, they need to build the systems for you from scratch. But why do you want to reinvent the wheel? It will slow your growth.

“OK,” the business owner I’m speaking to usually says next.

“That’s all very well, but my own staff are always going to be more dedicated to my company than outsiders – surely that’s a given?”

Well, actually, it’s not.

We find that clients expect higher standards from us than from their own staff. Employers don’t really feel they’re “buying a service” from their own employees, whereas that’s exactly how they feel about outsourcers – quite rightly.

It’s human nature to cut a bit more slack for someone you work next to every day, rather than someone employed by a different company at a different site.

And let’s be honest. Your employees aren’t always 100% focused on and dedicated to the job, right? Every company has their fair share of problem staff and appointments they regret.

The company you are outsourcing to, by contrast, has a commitment to deliver the goods to you – and with a good contract in place there is a cast-iron guarantee that they will do so.

They don’t perform? They’re easy to get rid of. Try getting rid of your under-performing staff, by contrast….

Still, the idea that your own employees are the Rolls Royce option is definitely right in one regard. They are nearly always more expensive than outsourcing.

I’m going be looking at some of the mostly hidden costs of hiring an employee in my next blog.

In the meanwhile, if you want to discuss how an outsourced finance department might help your company grow faster and more smoothly, then let’s talk.

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