Work Smarter, Not Harder: Knowing When to Outsource
Scaling a business means that you have to use your two most valuable resources, time and capital, efficiently and effectively. Outsourcing projects and automating processes can save a business time and capital, while affording team members to spend more time on higher-value tasks. That's why we partnered with Veratad on this Series, "Work Smarter, Not Harder". You can view their expertise on leveraging technology to automate customer on-boarding.
Studies are coming out demonstrating that generalists -- a “Jack (or Jill) of All Trades” -- can excel, provide unique value, and at times outperform their specialist counterparts. This is especially true at smaller companies, where employees must wear multiple hats to fulfill responsibilities. That being said, no matter how powerful the generalist or how broad their diversity of talent is, no one can excel at all things or single-handedly propel a business to success.
That’s why businesses need to operate like a team. The combined forces of several, tens, hundreds, thousands, or millions of people outweighs the force of one. Basketball superstar Russell Westbrook fills up the stat sheet in almost every column -- a true generalist -- and while he won an MVP award, he’s yet to win a championship. Steve Jobs had Steve Wozniak. Thomas Edison had J.P. Morgan. And now their companies have massive global teams that continue their dream years and decades after they passed.
When building a team, you can hire internally or outsource. Hiring internally has its own benefits: they’re dedicated to one company, one brand, and one vision for the long-term; they can take ownership and grow their role; they can grow their expertise and become subject matter experts. Outsourcing provides more expertise for a lower price, diverse teams with an array of specialists, and more flexibility with time. Here are particular cases when businesses should outsource:
When You Need to Save Money
Your company is launching a full-fledged digital marketing campaign. To pull it off, you’ll need a marketing manager, web developer, graphic designer, copywriter, social media coordinator, and digital marketing coordinator. According to data from Glassdoor, those 4 salaries combined would cost your company more than $370,000 on average. If we assumed that each works 40 hours per week for 50 weeks (you give at least 2 week’s vacation, right?), you’re paying your team $185 per hour. According to Credo’s Digital Marketing Industry Pricing Survey, worldwide average agency rates are $148. By outsourcing to an agency, your company saves an average of nearly $40 per hour. Plus, the team you get in return is likely larger and equipped with more experience and expertise.
When You Need Specific Expertise
Perhaps you’re a Registered Investment Advisor (RIA), but you want to transition your firm into a broker-dealer. Anybody in the finance industry knows that it’s inundated with regulations, compliance standards, and licenses, disclosures, and other legal requirements. To make such a transition, your firm will need a team that understands all specific details of regulatory and legal requirements. The Dodd-Frank Act alone, a piece of legislation put in place after the Great Recession, contains more than 2,300 pages with hundreds of rules. To ensure it goes smoothly, you’ll want a legal and compliance team that’s already done it before, with success.
When You Need Fresh Ideas
Studies continue to come out about the benefits of diversity in the workplace. Diversity in race, ethnicity, culture, upbringing, education, and a load of other factors contribute to innovation, creativity, problem-solving, and agility. Diversity also means having breadth in experience and ideas. Maybe your company doesn’t know how to capture the upcoming Generation Z, or is struggling to rebound from a scandal. Sometimes when we’re on the inside, we’re blinded by a veil of emotions, personal interest, and exhaustion from consistency. Hiring an outside firm, with an untainted and fresh perspective, can bring in ideas that make your company withstand, permeate, and hurdle over struggles.
When You Have Short-term / One-time Projects
Your company decides to build a mobile application for its customers. You plan to do a one-time build, then have your IT manager maintain it going forward. You don’t plan on building a second or third mobile application, so it doesn’t make sense to hire an employee or set of employees to work on a 3-6 month project.
When You Have Time-sensitive Projects
Hiring team members -- and the right ones at that -- can be time-consuming and lengthy. It can take up to 49 days on average to fill an open position depending on your industry. This doesn’t account for the employee training and on-boarding, and time it takes to get someone up to speed after filling the role. We can’t control time. When it’s running out and a deadline approaches, we can control how many teammates work on a project through outsourcing. This happens commonly in the software development space with staff augmentation, or “staff aug”, for short. This happens when a tech company or internal development team needs a few hands on keyboards to push a single project over the finish line.
When deciding to grow your team or outsource a project, measure the time, money, resources needed to fuel it, and the expertise needed to accomplish it proficiently.