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July 25, 2022

In House vs Outsourcing: Pros and Cons

There are many benefits to outsourcing, and like all things, there are also some drawbacks. The key is understanding the pros and cons and then making an informed decision.

Why You Should Consider Outsourcing

You’re here because you have found yourself in the middle of a great problem. Your company has become so successful that you need to expand and develop your product and services, but you don’t have the infrastructure or staff to keep up.

This is a great problem because it means you have achieved the success you dreamed of. Standing at the edge of a journey with two paths can be scary. Which approach do you take? What if you make the wrong decision? How do you go back and fix taking the wrong path?

These are all legitimate questions. Awesome OS understands what you are going through right now, and we hope we can help you make the right decision for your business or help you navigate a way off the path you are on.

This is what we exist for, and this article is the first step in determining which direction to take.

In-House Pros

  • Your retain all control
  • It helps build company morale
  • You have oversight of management

Keeping your new development project in-house comes with many benefits. Outsourcing is not the answer to all your problems, nor should it be.

You possess particular strengths and weaknesses as a company. You should never outsource those areas of your company that are your greatest strengths. Instead, focusing on your shortcomings should be where you consider choosing an outsourcing partner.

Below are a few reasons why keeping your development in-house can be beneficial.

You Retain All Control

Retaining control of all aspects of your company is the most significant benefit of keeping your development in-house. When you tackle your new project internally, you have complete control over who you hire or assign to that department, what infrastructure you purchase to support it, and how that department or service is managed.

Control is perhaps the single biggest reason why companies choose to keep development internal. From the hiring process to the daily workflow and how your team works, keeping your development processin-house allows you more oversight. However, this alone should not be why you choose to ignore the benefits of outsourcing. More on that later.

It Helps Build Company Morale

Keeping in-house teams working on projects means that you will be assigning your existing staff to work on it or hiring new employees. Your in-house employees want to know they are appreciated, and giving them new responsibilities with excellent benefits can aid in that endeavor.

Job security means a lot to your full-time employees, and demonstrating your trust in their abilities assures them that they have that security. When company morale is high, so too is productivity. This means fewer mistakes like incorrect order fulfillments or defective products. Additionally, this has a cascading effect on the customer experience.

You Have Oversight of Management

Keeping your core business and development teamin-house means you will have direct oversight over who manages it and how they manage it. Having this element of control is a great benefit. We all know that poor management leads to poor productivity and low morale. Outsourcing means you lose managerial control. Therefore, you have no oversight over leadership.

Controlling managerial functions and oversight is significant to your long-term success. A good manager can take a struggling department and turn it around seamlessly. A poor manager can take a department functioning at a high standard and break it down overnight.

In-House Cons

  • It’s hard to control costs
  • Talent is hard to find
  • It demands extra time and resources

Okay, now that we have discussed a few reasons why keeping your new project or development in-house is beneficial, let’s discuss why it may not be. There’s always bad news, but at least we started with the good news, right?

It’s Hard to Control Costs

We mentioned earlier that a benefit of keeping your services in-house is the ability to control who, what, when, where, why, and how. We didn’t exactly use that terminology, but that’s what you maintain control over. However, you cannot control the unforeseeable costs associated with your new development.

Factors such as the market, inflation, political instability, and global pandemics can influence your costs considerably. For instance, the cost of manufacturing anything from computers to automobiles has risen significantly since the COVID-19 pandemic started. Why? Because of chip, metal, and labor shortages mainly.

These are things that you have no control over. Therefore, keeping your department in-house allows you to take on cost fluctuation risks.

Talent Is Hard to Find

Depending on your new development, you may not currently possess a talent pool capable of tackling it. For instance, if you are starting a new marketing department but do not have anyone working for you with experience or education in marketing, you will have to recruit people to fill the gap. However, that may prove to be difficult if your location limits you.

It Demands Extra Time and Resources

Time is the one thing you can get more of. The demands on your company created by your success cannot always wait for you to establish the necessary departments and infrastructure to tackle them. That clock just keeps ticking whether you want to or not.

For example, suppose you are an eCommerce company that started as a small operation and has now outgrown your ability to keep up with customer demands. In that case, you may need to expand your online capabilities and logistical resources. These improvements take time and money.

If you don’t outsource, you will continue increasing demand without the tools or resources to mitigate it. This can lead to unfulfilled orders and defective products, resulting in decreased customer satisfaction. Unfortunately, this can have a reversing effect on your success.

Outsourcing Pros

  • It provides cost stability
  • It draws from a large talent pool
  • It allows you to focus on what matters

Now that we have discussed the pros and cons of keeping your new development needs in-house let’s discuss the alternative – outsourcing.

Outsourcing Provides Cost Stability

The number one advantage of outsourcing is cost stability. Cost stability translates into cost effectiveness. Remember earlier when we mentioned that keeping development in-house comes with unpredictable cost fluctuations? Well, with outsourcing, this concern is eliminated.

Let’s say you outsource your project management department to an outsourcing company, like AwesomeOS. Because we already have the infrastructure, talent, and equipment to provide these services, you do not have to pay for a mountain of startup costs. Additionally, you know what your costs will be upfront with guaranteed price stability.

Outsourcing Draws from a Large Pool of Talent

Outsourcing to another company means gaining access to a team of highly trained and experienced team members from time zones across the globe. In other words, your location is not limited when searching for new prospects to fulfill your employment needs.

If your business is located in a small town in northern Vermont, you likely don’t have many options for experts in highly specialized fields. With outsourcing, you do. The digital and remote work revolution has opened this door of opportunity even more expansive. Now, people from all over the globe can perform work without having to relocate.

Outsourcing Allows You to Focus On What Matters

Outsourcing creates space—a lot of it. Space to create and innovate. Space to focus on what you excel at. When you begin the process of outsourcing from the foundation of strength and weakness identification, you are technically smartsourcing. In other words, you are openly identifying what you are great at and admitting where you fall short.

Weaknesses are time-consuming, and eliminating them means you can focus on the strengths. This means you will have time and resources to amplify why you do what you do and innovate what you create. Therefore, outsourcing leads to innovation. To remain at the top of your game, you must remain innovative, and innovation requires space for creation.

Outsourcing Cons

  • You lose control
  • There can be communication complications
  • It can lead to workforce disruption

Outsourcing is not without its limitations, some of which we’ve briefly discussed. Here are a few examples where outsourcing falls short.

You Lose Control

This is the big one. We have talked about it a few times already. Releasing business functions to outsourced teams means you are letting go. While that may be a catchy Disney tune, it is difficult to do. Letting go of control means you share your success with someone outside of your company.

This means it is paramount that the company you choose to partner with makes keeping your vision, mission, and company culture at the forefront of what they provide.

The company you outsource to will have its one staff, employees, and manager, as well as its own culture. It is mutually beneficial to both parties that respect for priorities is maintained. Still, you will inevitably lose much of your direct control over daily functions and decisions.

There Can Be Communication Complications

Outsourcing creates opportunities for communication errors and breakdowns. This is primarily due to the reality that the company you partner with is not physically close to you. This means you will rely on digital and virtual communications as your primary form of communication.

Losing the ability to see your teammates daily causes consistent and effective communication issues. Therefore, when choosing a partner, ensure they make maintaining a solid bridge of communication a priority.

Outsourcing Could Lead to Workforce Disruption

We mentioned a path at the beginning of this blog. Some of you may have already chosen your path and realized it was a mistake, and some may still be standing at the crossroads. If you are a member of the former club, you may be in a situation where you have already hired new employees to fulfill your workforce demands.

If this is you, choosing to outsource means that you are effectively eliminating their jobs at worst or reassigning them to other tasks at best. Both of these options come with unique challenges and issues.

For instance, eliminating their jobs and letting them go will disrupt their personal lives and harm company morale. Conversely, reassigning them to a job or task they weren’t hired to do, are inadequately trained for, or are uninterested in performing, can lead to attrition.

What Path Will You Take

Outsourcing is not always a straightforward choice. You lose some control with outsourcing, and it can lead to communication complications and workforce disruption. However, outsourcing provides you cost stability, and allows you to draw from a massive talent pool and focus your attention on what really matters for your business.

Choosing the right partner for outsourcing is paramount in mitigating the concerns that come along with it. At AwesomeOS, we specialize in enhancing the customer experience, have a proven track record of success, and make your company’s mission and vision our own. We give you cost stability with guaranteed month-to-month contracts, honor your culture, and do our best to be available to you at all times.

Contact us today to discover what we can offer to help you in your company’s next adventure!

 

Sources:

Outsourcing vs. Subcontracting: What’s the difference? | Investopedia

Relationships and communication | Better Health Channel

4 Steps to Build Communication Bridges | Trish McFarlane

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