Outsourcing Versus In-House: Use the right tool for the job

Many duties that were traditionally performed by in-house staff at company can now be outsourced to outside companies.  That leaves decision-makers at businesses with the task of determining how to strike the most efficient and productive balance between in-house staff and outsourced services.  As with many areas in life, the key is to find the right balance.

Benefits of outsourcing

For many businesses, a reduction in expenses and increase in the quality of services and products can be achieved through outsourcing.  As an example, a business that receives only a few phone calls per day is unlikely to find it cost-effective to hire a full-time receptionist to handle those calls, given the expense of salary for that receptionist.  At the same time, sending those calls to voicemail is unlikely to create happy customers, and will certainly result in fewer callers becoming customer of the business.  For that business, it makes a great deal of sense to use a virtual reception service to handle the few incoming calls. The same logic would apply to a business that gets calls after-hours but which does not have a high enough after-hours call volume to justify a full-time receptionist around the clock.

As another example, consider the need to clean the offices that an accounting firm uses.  If the majority of the people employed by the firm are accountants who earn a high hourly wage or salary, it is not cost-effective for those employees to spend their time vacuuming.  Hiring an outside company to provide cleaning services after-hours is more cost effective than having the skilled employees handle cleaning (and the employees certainly appreciate it too). Hiring in-house cleaning staff would likely not be an efficient solution either, since there may not be enough work for a full or even part-time employee, time would have to be spent hiring/supervising that employee whose duty it was to clean, etc.

Benefits of in-house staff

In-house staff will always have their place in a business, despite the rise of outsourcing.  While it is easy to outsource the answering of a telephone, it is quite difficult to outsource highly complex tasks in a manner that is both cost effective and gets the job done.  Other tasks require access to sensitive information that the business wishes to keep in-house, such as trade secrets or other propriety information.  Still other matters are simply more efficient to have a small in-house team handle.

For example, at law firms an attorney benefits greatly from having a paralegal who can be trained to prepare pleadings that an attorney will use in court, and to do so in just the manner that the attorney finds to be ideal.  The only way that can be done in a remotely efficient manner requires a paralegal who works closely with the attorney over a period of time.

The character of the business matters too

Even in a hypothetical situation where we were considering two businesses that had identical suppliers, provide the same goods/services, have identical office space, have the same number of employees, etc., it would still not be possible to  say that the two businesses should make the same decisions as to outsourcing/in-sourcing.  That is because the character of each business, which is in large part set by the decisions of the owners and managers, are relevant too.  As an example, a law firm that mainly handles divorce cases may maximize its use of technology and draws clients who appreciate that technology.  Another law firm may still use typewriters and have a client base that abhors technology. When deciding what/how to outsource, those differences must be taken into account.

Finding the right balance

The right balance between outsourcing and in-sourcing involves figuring out what is most efficient for your particular business.  What is efficient for one type of business may not be efficient for another.  Indeed, what is efficient for one business in a particular industry may not be efficient for even a very similar business in that same industry.  It is only after careful consideration is given to the workflow within the business, the costs and savings, and the nature of how the business is operated can the right answer be reached.

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