Financial Leadership: Outsourcing vs Inhouse
As we reflect on the past two years, certain trends seem to have become accelerated in the Covid-19 era. A combination of cost control, flexible working conditions and demand for expertise has seen our requests for short-term or project-based contracts surge. Here we discuss the conditions that have driven this trend, compare the benefits to inhouse or outsourced/contract resources and look ahead to ask if this will be a short-lived or a more permanent trend.
Outsourcing vs Inhouse
For the purposes of this article, we are defining outsourcing as engaging the help of a 3rd party organisation or an individual to complete specific tasks or project, usually for a set period of time. We will use the term Inhouse to mean full time employee of the business.
The pandemic has opened up an array of opportunities for businesses to find the perfect candidates for positions in the current climate. From the moment employees were advised to work from home where possible, the world changed.
Whilst many have returned to work, either on a full time or on a hybrid basis, businesses have recognised the benefits of employees working from home. Technologies such as fast and cheap domestic broadband, digital conferencing apps and relatively cheap hardware have shown that many employees can work very efficiently from home, reducing costs and increasing employee satisfaction. Many businesses have suffered financially over the past couple of years and cost control has become more important than ever to best manage the business.
Finally, industries such as hospitality really struggled to retain their staff over the past two years. These conditions have prompted many of the best employees to reconsider their careers and take sideways steps into other industries. This migration of expertise has left some gaps in the current inhouse workforce which could also affect the development of up-and-coming talent who would usually rely on the mentorship of those leaders.
The process of hiring the perfect candidate for any role is never simple. Costs are often the first thing that prompts a business to consider searching for an experienced candidate on an interim consultative basis. The time involved in notice periods and the onboarding process for candidates can add costs, whereas a consultant, who can start quickly and hit the ground running, with a short-term flexible contract represents a fixed and predictable cost that the business can control easier than a full-time employee.
Consultants, especially individuals, seem to be increasingly adopting the Netflix style subscription agreements over the 12 month retainer contracts that are offered by bigger 3rd party outsourced businesses. This strategy is based on the premise that businesses who are facing uncertain revenue streams will be looking to reduce risk, but if your services represent ongoing value, the agreement won’t be cancelled early.
We have also found that more and more of the very best candidates are looking for hybrid working conditions as part of their contract negotiations. Of course, there are many businesses where this is simply not an option in the long term. The opportunity lies in the fact that if you can offer flexible working to employees, then the barrier to recruiting an outsourced off-site consultant is removed.
We have seen a huge number of highly experienced candidates offering their services for short, interim period contracts. Many of these are high level directors who have retired from their full time, 9-5 roles but are keen to re-enter the market while taking control of their work life balance. Some of these are candidates, who have now experienced working from home and would like to continue to do so.
With the right mix of outsourced experts and an eager, enthusiastic inhouse teams, businesses can use the opportunity to not only deliver a project, but for inhouse teams to work with and learn from experienced professionals and develop their own skills to eventually lead these kinds of projects inhouse.
Trend or Here to Stay
So, is this current trend for outsourcing particular to this moment of recovery after the pandemic, or will it shape the future of people resourcing?
Most businesses have now experimented with working from home over the past two years. This is something that may never have happened without the pandemic. Many of these companies will now know how feasible it is to have a hybrid workforce and will have a strong plan in place to manage it.
As mentioned earlier in this article, companies whose work culture revolves around brainstorming ideas as a group, feeding off each other’s energy and sharing thoughts and ideas without the formality of a zoom invite may have found themselves really struggling with offices empty.
The trend for employees to change jobs through their lives is likely to continue. We are increasingly less likely to work for one company for our entire work lives with a healthy full-salary pension. It seems far more likely that, if the opportunities are there, experienced industry professionals will take on interim consultancy-based projects later in their career, and businesses will have access to cost-friendly, flexible solutions that add a precious resource of expertise.
For support with interim projects, your next career move or to improve your recruitment strategy, please contact using any of the below details:
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