Should You Outsource or Hire Permanent Staff?

It’s a question business owners often find themselves grappling with, that being whether to outsource the processes concerned with their supply chain or to rather hire permanent staff. It’s mostly small business owners who might either be starting out or are realising some steady growth who are often torn between the two, otherwise experienced business owners know that outsourcing perhaps wins as the favoured option over hiring permanent staff.

As self-centered as it may sound, it’s not really something which comes from a place of self-righteousness — not at all in fact. The savviest of businesspersons knows that some of the best work comes from freelancers or other companies and small businesses which have a singular focus and pride themselves in providing a service, product or component which goes into the production of a final product. This means that you’re dealing with a complete entity which is independent of the administrative jurisdiction of your own business and so any regulations you’d otherwise have to comply with in relation to your employees doesn’t apply in this instance since they’re essentially your suppliers and business partners and are not your employees.

What this would mean is that you don’t have to worry about things like employee tax reporting, workplace health safety and environmental issues, extensive human resource management, etc. You’re paying for a service or for the supply of whatever it is you need to run your own business and subsequently only have to worry about aspects of your business such as marketing and just getting the final output delivered.

So I think it’s becoming clear that outsourcing is perhaps the way to go over hiring permanent staff, but obviously, this has to be within reason. Sometimes it’s just not possible to keep outsourcing certain segments of the production line particularly if you rely a bit too heavily on one or more of them and you simply can’t afford to have to wait at any point in time because your supplier is out of stock, too busy or cannot fulfil your order for whatever reason.

Another factor to consider is that outsourcing and even consulting works out to be more expensive than maintaining permanent staff, but that only applies to certain tasks within the supply chain. Figuring it out is merely a matter of comparing the industry standards with regards to permanent salaries and what the going rate for consultants is. Generally, you’ll have to pay a consultant a lot more than you would a permanent employee, quite simply because that extra bit which must be paid covers the would-be benefits freelancers and consultants otherwise aren’t entitled do.

So when you outsource and the cost of doing so works out to right about the same amount as paying a permanent employee and catering to all their workplace needs (including employee benefits), you would go with outsourcing based on the administrative freedom it gives you and not necessarily to save on costs.

In the end, it’s all about the best way to get the job done and while the likelihood is that it would be through outsourcing, sometimes you inevitably hire permanent staff as that works out better in some situations.

Colin Shaw

Colin Shaw

Colin has been in the finance market for over 20 years and specialises in best business practice to make an organisation profitable. The only man for the job when it comes to numbers and accounts with a keen talent for simplifying finance for the wider market.
Colin Shaw
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Written by Colin Shaw

Colin has been in the finance market for over 20 years and specialises in best business practice to make an organisation profitable. The only man for the job when it comes to numbers and accounts with a keen talent for simplifying finance for the wider market.