Accelerating Your Success: When Does Outsourcing Beat In-house Hiring?

Accelerating Your Success: When Does Outsourcing Beat In-house Hiring?

As a startup founder with a fresh idea that’s starting to come to life and a software product to build in order to launch, your instinct may be to hire an in-house team right away. But when you take a closer look, things aren’t as easy, or as cost-efficient, as they seem.

To put it shortly, work doesn’t get done because you lack the right people. You’re losing money by spending time on hiring rather than the business, and by losing traction as you struggle to initiate or accelerate growth.

If this sounds familiar, know that there’s an alternative that can actually help you, even in the short term. Here’s why you may actually benefit from outsourcing in the early stages of your business.

1. Costs

The invisible cost of in-house hiring vs. the real value of outsourcing

Building an in-house team seems like the safe and logical option. However, the costs that come with hiring in-house – like recruitment, onboarding, salaries, benefits, and equipment – quickly add up. The time and energy you spend finding the right people are hidden costs that can catch you off guard. There’s also the risk of committing to someone who might not be the best fit, which can harm your company over time.

When you consider all the unseen costs and how much your time is worth, outsourcing can come out as the same or even less expensive. The real difference shows in the flexibility of an outsourced team and how quickly they can get to work, which can save you important months of runway down the line.

Let’s take a look at some actual numbers below:

2 software engineers earning €90k/year cost ~€120.000 for 6 months in salary alone with employer costs, and with benefits and the costs of recruitment, office & equipment, the total cost becomes way higher.

Hiring a small outsourced team for 6 months (involving the right people at the right time) at an average daily rate of €600-€750 would cost you between €76k-€95k.

Outsourcing comes out as less expensive even before considering the huge added value of flexibility, scalability, expertise and speed of execution.

Image of scales depicting the costs of hiring vs. outsourcing

2. Time

Faster results and short-term help for long-term gain

Outsourcing gives you quick access to the right skills and the option to adjust your team size as needed. It’s not just about direct cost savings; it’s about being able to move quickly and iterate in the right direction, which are crucial for a startup to succeed.

What you get with outsourcing is immediate support that lets you focus on the business and makes sense in the long run. It’s about setting up a strong base for your company, keeping your ability to change quickly, which is invaluable. You will hire your own team eventually, but so much will have been done in the meantime to propel your business forward.

3. Expertise

On-demand expert skills for tech and business alignment

You can find software engineers with great tech skills, but not all are equipped to handle specific stages of business or understand different industries. Outsourcing companies excel at this and broad experience is their strength. Faster shipping is one thing, but ensuring market fit and aligning technology with your business are key.

And if you’re looking for investors and afraid they only want in-house teams, worry not. Lack of an in-house team doesn’t actually stop them from getting involved. Investors look for smart leaders who can manage a strong team, be it in-house or outsourced. They care about skills and saving money - and outsourced teams, with all their experience, can quickly anticipate recurrent issues and mitigate them.

Making the Smart Choice for Your Business

Outsourcing helps you in the short term and ties beautifully with your long-term strategy. It’s about building a solid foundation for your startup, one that allows you to secure better talent when you’re in a stronger position. It’s about maintaining your agility and ability to adapt, which are of essence if you are to succeed.

In the end, it’s about realising how much time is actually worth for your business, and knowing the benefits of outsourcing. This may be the time to ask yourself: are you ready to embrace a more efficient approach and skyrocket your business towards success? If the answer is yes, let’s have a virtual coffee together and find your perfect interim team.

#startups #people-culture

Tiago Olo

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