The pros and cons of outsourcing

Authored by Hiscox Experts.
4 min read
Two people working at a laptop and writing on paper
For small business owners, knowing when to outsource work is an important part of growing your company, but while there are advantages to taking work outside of the company, there are also risks involve. Here, Expert Market’s Head of Organic Customer Acquisition, Ian Wright, details the pros and cons of outsourcing for his SME.

There are three reasons people might want to outsource work. The first is that outsourcing work can be cheaper than doing it in-house, especially if it is outsourced to a country that has lower labour costs than the UK.

The second reason to outsource work is that there is more work to be done than can be handled by the internal team. So you can choose to outsource work to fill this gap in either the short or long term.

The third reason to outsource work is to use people who are specialists in specific tasks. Need to shoot and edit a video? A decent Mac will make it possible to do it yourself, but an expert videographer can probably do a better job in less time.

Outsourcing can seem like a simple solution, but there is a lot to consider beforehand. Perceived lower costs are often the primary reason businesses opt to outsource rather than use in-house resources. On top of differences in wage rates, lower costs can come from paying only for delivered pieces of work and not paying per hour worked. Thus you can know your costs upfront.

This can be a huge advantage for industries that compete primarily based on price. If you find your costs constantly exceeding the price you’re able to charge it’s time to at least look into outsourcing as a way to reduce your costs.

If you outsource based on workload, you should start before you have too much work as finding, training and managing outsourced workers can take time and you don’t want to be doing it when you already have a lot on your plate.

If you’re outsourcing based on skill, you simply choose to do it when you require a skill no one in your team possesses.

There can also be some serious pros and cons of outsourcing, rather than keeping it in house.

It can take a lot of time to find, train and manage outsourced workers. The work delivered can be inconsistent, both in terms of quality and reliability and it also can be difficult to assess the skills of others if you don’t have at least some of them yourself.

Ultimately it may end up not being cheaper in the long run.

Some of the bloggers we’ve hired at Expert Market have been pretty poor. They give good samples, but then the work they delivered had to be edited and uploaded, which took up lots of time.

Another time we worked with a designer who went AWOL for months and did not respond to e-mails.

However, this is the exception rather than the rule. It can be much cheaper and help you scale your workforce quickly and smoothly. It may also give you access to a range of skills your internal team may lack.

For example, at ExpertMarket we would outsource if we needed blog posts written for us or data collected or collated the team doesn’t have time to do. We work internationally so we may also outsource if none of the team has the necessary language skills.

Overall it makes clear business sense for an SME, such as ours, to outsource. It can be cheaper and quicker than making a new hire (even if only temporary). However, as with anything, it is important to ensure you have a clear cost/benefit analysis worked out.

Ian Wright is the Head of Organic Customer Acquisition for Expert Market (external link), one of the world’s fastest-growing B2B marketplaces. In his 10 years of experience in online publishing, he’s worked with companies selling everything from auto insurance to franking machines. When he’s not stuck in front of his computer, he enjoys long-distance walks and recently become the first Canadian to walk London’s Tube Network above ground which he blogs about (external link).

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At Hiscox, we want to help your small business thrive. Our blog has many articles you may find relevant and useful as your business grows. But these articles aren’t professional advice. So, to find out more on a subject we cover here, please seek professional assistance.

Hiscox Experts

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