4 Factors to Consider When Deciding Between Outsourcing IT and Hiring In-House
When a company with obvious tech needs grows beyond a certain size, the question of whether you should hire an in-house IT team or go the outsourcing route often becomes prominent. In this post, we will explore the 4 factors you should consider when making the decision.
So, what option is right for you?
When you are in the process of deciding whether to hire IT in-house or out, there are 4 main aspects to consider. Please note that these aspects are to be looked at both separately and together and you should certainly consider the general business context, in which you are operating before you reach a decision.
1. What is the complexity of your IT needs and how much do you expect them to change in the foreseeable future?
Generally speaking, the higher the complexity of your IT needs and the more changes occur, the higher the chance that you will need to hire out. Complex IT needs and constant changes usually mean that the team needs to be adjusted on the fly. While it is certainly doable in house, recruiting and firing of staff is time-consuming and costly and in many cases is simply unfeasible. Outsourcing IT companies normally have a big staff of IT pros that can be engaged as needed or shifted based on your particular needs, and your normal fee will cover all the expenses.
2. What is your IT project time horizon?
The overall guideline is this: the longer the time horizon, the more likely you are to benefit from in-house IT team. If you have an IT project that has a delivery date 6 months from now, hiring in may simply be uneconomical and unnecessary. If however your IT needs will last as long as your business, then over time you should strongly consider hiring in (given that other factors on the list allow for that). Developing an internal IT team over a period of time is just like having an internal sales force – they understand your business better, know what’s going on, they care about the future of the company, they share in its culture, and much more.
3. Are you comfortable with lack of control?
Some business owners are all about total control, while others are comfortable relinquishing some authority to get things accomplished. When considering the IT dilemma, consider this: when you hire in, you can exert complete control over how and when things are done. On the other hand, with an outsourced team, while you can control some aspects of the work, like deliverable dates, the process itself is out of your hands. This consideration, while seemingly insignificant may be the most important one, since if you are a control freak, you may simply not be able to sustain an outsourcing relationship and the output quality (and thus your business) may suffer. Consider this one carefully.
4. What can your budget accommodate?
That is the most obvious of all factors and plays a critical role in the whole ‘hire in vs. outsource’ dilemma. The general rule is: the smaller your budget, the more you should lean towards outsourcing. Outsourcing companies take advantage of economies of scale, lower cost labor and high-level expertise to cut their own costs, and they pass these costs savings on to the client. That’s the very point of outsourcing. On the other hand, if you have the budget to develop an internal IT department and have the recruiting resources to assemble an expert group of people AND the other business factors like financial outlook, project complexity, etc. align, then go for it. You can control the process and build a star internal IT organization that cares deeply about the employer.
Many businesses are maintaining a portion of their legacy IT systems in-house and hiring IT personnel to work on the premises. Any needs which are outside the scope of the hired in-house IT personnel are hired out to an outsourcing provider. Thanks to new technologies this is becoming more feasible to do without disrupting day-to-day business operations.