Ask the Expert: How Do I Know When to Outsource Work?

Dear Evan,

“I have been getting solicitations from vendors who can take over all kinds of activities that my staff and I are already handling - everything from handling direct mail campaigns to keeping our books. How do I know when it makes sense to use some of their services instead of doing everything myself?” - Henry, New Mexico

Dear Henry,

There are definitely times when outsourcing is preferable to trying to do work in-house. If an outside company has more size and scale than you do internally and can do a much better job, then it is usually a good idea. If you look at costs like payroll hours and supplies, you might determine that outside vendors can deliver services for less money than it costs you to handle them yourself.

Direct mail, which you mention, is a good example. Chances are that you lack the ability to do it as well in-house as an outside vendor can. That vendor offers design services, printing, Zip Code sorting, mailing, and many other strengths that you lack, because you are not in the direct marketing business.

Social media is another good example. Hiring a social media expert to join your staff would cost a lot of money. In most cases, it is more effective, and more cost-effective, to use an outside social media marketing company. Plus, there is the fact that social media is best handled by a team, not just one person. Replicating their skill set in-house would be far too costly.

The other benefit of outsourcing is that you have a lot of companies to choose from. You can do the research to find the right company and they can hit the ground running and do a great job for you much more quickly than would happen if you recruited and hired in-house staff. You can also review the work that those vendors have done for their other clients and have a good idea of what they can do for you.

However, a time may come when it will make sense for you to do more of that work in-house. You get big enough, you have enough scale, and you arrive at the point where you can do the work for less money internally than if you were paying outside companies. HR is an example at some companies. For a time, it makes sense to for them to hire an outside firm to manage various HR functions like payroll. But the company grows, and the day comes when it is less costly to hire a company HR person.

I hope that you find these suggestions helpful.

Have a question about your franchise? Email your franchising question to ehackel@ingage.net. I look forward to hearing from you! Please note that your questions may be edited for length prior to publication.

Evan Hackel is CEO of Tortal Training, a leading training development company in Charlotte, North Carolina, and Principal and Founder of Ingage Consulting, a consulting firm in Woburn, Massachusetts. To learn more about Ingage Consulting and Evan’s book Ingaging Leadership, visit Ingage.net. Follow @ehackel.