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Should You Outsource or Keep the Project In-House?
August 17, 2022
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As your business grows, you’ll likely see the scale of your projects follow suit. At some point, you might even need to involve more people to help tackle new demands or stay current with long-time clients.

While you can certainly hire the help you need to work on projects in-house, another possibility is to outsource the extra work. Both are viable options, but here’s how to decide which one is best for your business now and in the long run.

What to expect if you keep the work in-house…

First, review the pros and cons of keeping the project in-house. Some advantages, like retaining control over the project and timeline can outweigh some of the downsides, such as the costs associated with hiring and training new staff. Depending on your industry, startup costs and other expenses can reduce the effectiveness of keeping a project in-house.

Pros of managing the project in-house

  • Control: When you have the project, you control the timeline, the quality of work and who is assigned to the task.
  • Maintain control over your brand and voice: If the project is something you consider reflective of your values, keeping it in-house prevents you from having to tweak or adjust the final product to match your brand.
  • Employees can perform the task in the future: If the project results in ongoing maintenance, keeping it in-house can ensure that your employees will be able to manage the process in the future, potentially reducing long-term costs.

Cons of keeping the project in-house

  • Requires you to hire more staff: The cost of hiring staff might be more than outsourcing. More staff is also an ongoing expense that can add up over time.
  • Managing the budget can be difficult: You might be surprised at how difficult it can be to keep costs under control when you keep a project in-house. Overtime, ongoing training, and other aspects of the project can add to your expenses and make it harder to project the actual cost.
  • Takes focus away from other projects: Some tasks and projects, like accounting and payroll, marketing or website management, can be tedious and time-consuming and actually take focus away from projects and tasks that provide a greater return.

Tools to manage in-house projects

If you decide to keep the project in-house, you might be able to use technology to manage the projects. 

Some business owners know they need help managing the books and payroll but might not be able to afford an accounting or payroll service. The right accounting software can reduce the time spent on these tasks — and there are options that are free or require just a small monthly fee.

Other tools include project management programs like Monday and Asana, as well as integration and automation tools like Zapier. With the help of these tools, it’s possible to keep some tasks in-house while reducing their costs and managing outcomes.

What to consider before outsourcing work…

In some cases, outsourcing can make more sense than keeping a project in-house. In fact, 80% of small businesses expected to outsource some of their functions in 2021, according to business-to-business platform Clutch. 

Pros of outsourcing

  • The project is handled by professionals: If you can find a firm or freelancer that specializes in the task or project, you might get an outcome that is more professional — and you might have it done faster.
  • Manage your budget more effectively: Depending on the project, it’s often possible to pay a flat rate for the project or less overall than you’d pay a full-time employee, since you’re not paying them to work a full 40-hour week. This can help you plan your annual budget more effectively.
  • Mundane tasks are off your plate: Some ongoing projects can be difficult to maintain, and it can cost more in the long run if you have to train someone to do them in-house. Outsourcing these tasks can improve efficiency, leaving you free to focus on bigger-picture tasks.

Cons of outsourcing

  • Finding the right fit can be time-consuming: Depending on the project, it can be time-consuming to find the right fit, and you might run into roadblocks if you select a firm or freelancer who doesn’t deliver exactly what you want.
  • Loss of control: When you outsource, you give up some control over the process and outcome. You need to be willing to either accept that or swallow the cost of reassigning the project to another firm.
  • Quality might be lacking: You might have less control over the quality of the project, which can have an impact on your company’s reputation. 

Roles to consider outsourcing 

By 2023, Statista reports that medium-sized businesses will be spending $545 billion on outsourcing, while small businesses are likely to spend $725 billion.

Small businesses tend to outsource for short-term projects, eliminating the need to bring on more staff. Medium-sized businesses, on the other hand, are more likely to spend less on outsourcing, but they tend to make longer-term investments in outsourcing ongoing roles.

Depending on your company and its strengths, some of the roles that can make sense to outsource might include:

  • Marketing and advertising
  • Customer service tickets
  • IT functions
  • Website design and management
  • Accounting, payroll and taxes
  • Scheduling and appointments

When deciding whether to outsource or manage something in-house, think carefully about your strengths and weaknesses, budget, project timeline, and what you hope to accomplish with the freed-up time. If a task or project can be done more effectively and efficiently by someone outside the organization, outsourcing probably makes sense. 

On the other hand, if you can train someone to handle a task over the long term, or if the project reflects your company’s strengths, you might be better off setting up systems designed to help you keep it in-house.

Bottom line

Depending on your budget, goals, timeline, and other factors, it can make sense to outsource a project rather than keep it in-house. However, before you move forward, consider the potential costs of outsourcing and compare them with the expenses and opportunity cost of managing a complex and time-consuming project in-house.

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