Hiring Internally vs. Outsourcing

What You Need to Know

The people on your project team are your greatest asset. After all, they are the ones who work assiduously to help bring your projects to life. Although there are plenty of options when it comes to hiring talents and adding new skills to your team, it is important to consider the cost, team dynamics, and efficiency before making your decision.

To help you handle your team expansion, we’ve compiled below some important points you need to know whether you are hiring internally, working with independent contractors, or getting the help of an outsourcing agency.

Hiring internally

While internal recruitment is an effective way to acquire new employees, it can be expensive and take a lot of time to get the right fit. 

However, hiring internally can help you build a local team of well-connected professionals who work together and whose career advancement is connected to your project’s success. Plus, it is easier for internal hires to align with your company’s culture and values.  

In a situation where a project build will raise the team’s skill levels and expertise, internal recruitment can also ensure that the knowledge gained stays within the organization, making the whole project more worthwhile. 

On the con side, internal recruitment is usually costly and time-consuming, especially now that skilled employees are a hot commodity. If your company is located in a region or country where talents are highly demanded, you will have to offer bloated salaries and pay expensive running costs, like medical insurance, office hire, pensions, and hardware purchases, to acquire new employees. Since internal hiring is expensive, your budget may not be enough to pay a large workforce, causing you to work with a smaller team and skills than you would if you had settled for contractors or an outsourcing agency.   

Another issue with internal recruitment is that it can be hard to scale down if you have to pause the project build or are in between funding rounds.

Outsourcing to independent contractors

Alternatively, you can also decide to outsource your project build to contractors. Working with independent contractors is usually cheaper and more flexible than hiring internally. Plus, it makes it easier to ramp up or scale back your team as the project advances. Another advantage of working with independent contractors is that it allows you to source from a global recruitment pool, which is bigger and more flexible than any local, permanent team.

However, it’s important to note that many contractors are not used to working as a team, which can make promoting team collaboration and dynamics difficult. Besides, unlike permanent hires,  contractors are usually stable and cannot be totally relied on. They also tend to switch to the next project sooner than employees on a permanent contract do. Moreover, if a contractor is unreliable, unreachable, or not delivering what you expect for the project, all you can do is look for a new one or continue to work with them and hope for the best. In short, you might end up with a less collaborative team and a less dependable workforce.  

Outsourcing with a specialist agency

Another common option is to entrust your project to an agency. Outsourcing agencies are often based overseas and work with people from all around the world. So, they usually have a large pool of talented professionals offering different skills. As with contractors, working with an outsourcing agency also allows you to grow or scale down your employees easily. And if a team member doesn’t perform or meet your expectations, there is a way you can have the issue resolved. Agency teams can also collaborate with your in-house team, forming a bigger, cohesive workforce with a wide range of skills. 

However, when using an outsourcing agency, it is important to have a technical lead on board. The technical lead will act as a link between the agency and your in-house team, ensuring that the project is built according to your needs and expectations. If there’s no one in your internal team that can handle this role, the outsourcing agency may recommend a locally based person that fits the bill.

It’s also important to consider how much intellectual property your project will have. If the project holds high levels of intellectual property, team extension will ensure that your company retains the knowledge since information and expertise are shared. However, if you wish to work with an agency, you need to research the agency’s security and privacy policies to be sure your data would be safe

Since outsourcing agencies are often based abroad, you may be worried about the team’s language ability. But this is nothing to bother about as long as the Project Manager can communicate in your language and the project’s requirements are clear and documented right from the start. However, you will have to consider which members of the agency you are going to be in regular contact with. 

Try to ask the outsourcing agency about their recruitment and training strategy to find out if they provide language courses to their team members, as this will help them improve their skills. Find out whether the agency includes language courses in its recruitment and training strategy. This will help the team improve their communication skills.

You may also ask for the chance to speak with each direct-contact employee personally before they become a part of your team. This will allow you to evaluate their language abilities and how well they would blend in with your organization’s dynamics. 

Note that it takes little practice to work effectively with an outsourcing agency. So you might want to make clear how you want the team to work together and what you aim to achieve with the partnership.

Finally, no matter which of these options you choose, the key to ensuring your project’s success is having an engaged, motivated, and interested workforce. Whether you decide to hire internally or outsource your project build, you need to spend time ensuring that all the team members understand the project’s objectives and goals and are enthusiastic about its success.