In business, there are lots of things you have to do. Some are exciting – like making sales, looking after clients, finding new suppliers – and others are not so exciting – bookkeeping, IT maintenance, making sure there’s enough paper clips.
You can give the responsibility to carry out an awful lot of the not-so-exciting things to freelancers and specialist outsourcing companies. Sometimes it makes more sense. Why spend £20,000 a year on a full-time receptionist when you can spend £100 a month with a telephone answering service who will take your calls and control your diary?
When does it make sense to outsource your business processes? The Smart Team investigates.
The pros of outsourcing
Whatever task you need performing, there is a professional out there who would love to do it for you. These freelancers all have their own areas of speciality which makes them a potentially very valuable resource if they can do what you need doing.
Whichever service you need, there will be a freelancer who is willing to do it for an hourly rate. Place an order, tell them what result you want, they then do it, and you pay them. Instant expertise you can pick up and put down for £20 an hour tops, most of the time.
The cons of outsourcing
Some freelancers are unreliable. Some profiles exaggerate a freelancer’s actual level of skills. Many freelancers just make up their prices as they go along. To avoid this, only use freelancers with believable testimonials and an accessible portfolio. Most freelancing platforms also provide a satisfaction score for longer-serving freelancers based upon historical feedback on their work.
Freelancers will generally charge you far more per hour than someone you employ doing the same task. If you need something done every now and again rather than every day, a freelancer is cheaper overall and easier to manage than a staff member.
This starts to become a disadvantage if you’re using the same freelancer or set of freelancers to perform the same tasks so much that the monetary cost per month creeps up close to or reaches what you’d pay an actual member of staff.
The pros of hiring somebody
The alternative to outsourcing is to hire somebody to work in-house. These employees will come at a much lower hourly rate than their contractor counterparts. If there is consistent work that needs to be done, then hiring somebody dedicated to a specific role is usually the most cost-effective way of getting things done.
Additionally, you will be able to communicate with an employee much more than you would a freelancer. If you need to discuss an issue, having someone who is a few steps away is far more convenient than having to arrange a phone call.
Employees will be more committed to your business than a freelancer is. When their salary and future prospects are on the line, they are often more productive and reliable. A freelancer can only be incentivised to deliver a high-quality service by increasing the amount you pay them whereas an employee can be given extra holidays, a bonus, or other company benefits.
The cons of hiring somebody
Freelancers tend to be professionals in a field before they decide to branch off and become self-employed. This means that you can expect a professional who knows the job inside-out. The same cannot be said for an employee.
There is an expectation that an employee learns and grows during their time with your business. This can result in a lot of poorer-quality work during the early stages of their employment.
Which is right for your business?
Naturally, there is no one-size-fits-all answer. If you feel that there are enough hours of work that are constantly being done to meet a specific need, then hiring an employee is probably the way to go.
If you don’t have the money for new members of staff and the tasks that need completing are few and far between, then a freelancer may be your better option.
We can help
Freelancer versus member of staff? Tough choice but if you’d like your accountant’s view on the risks and rewards, call us today on 01202 577 500 or email email@example.com.