When to Outsource and When to do it In-House

Most businesses face the dilemma of whether to outsource or handle tasks in-house. It’s a difficult choice between short-term costs and long-term gains, as each option has its own set of advantages and disadvantages.

This article will discuss some considerations to keep in mind when deciding whether to do something in-house or outsource it.

Financial factors

Financial factors are obviously extremely important when making a decision. Sometimes you simply don’t have the money to hire an outside service provider and have to take on the responsibility on your own.

There are several important financial factors that often determine whether you should outsource or handle something in-house.

How much budget space do you have for the project or service?

This is probably the biggest financial concern for most businesses when considering whether to outsource something. Do you have the money to engage an outside service, and if so, how much can you realistically afford?

You need to have a good idea of the life of the project or service before answering this question, and timelines change, but you need a general idea.

Does it make more financial sense to do something in-house or outsource it?

To answer this question, you need to know what kinds of costs you would be imposing on yourself if you handled the service in-house, like hiring or training employees, or buying equipment and supplies. Consider all costs associated with taking on a project yourself so that you can accurately compare it to the cost of outsourcing it.

Would outsourcing save money?

This is probably the most important question when considering financial factors. Could you save money by outsourcing? Would you be cutting costs by hiring a service provider rather than taking on the project or service yourself?

You need to consider all of these questions in order to make an informed decision about whether or not it would make more financial sense for you to do something in-house or outsource it. Doing your research and crunching the numbers is the best way to make sure you’re making the right decision.

Expertise and human capital factors

In addition to the financial aspect of outsourcing, you also need to consider whether you are capable of handling something on your own. You might think you have the budget to tackle something in-house, but do you have the skills required to actually deploy the capital effectively?

This is why expertise and human capital are also important considerations when deciding whether or not to outsource. Do you have the right people in-house who can handle a project or service?  Or would it be more cost-effective and efficient to hire outside help, such as an MSP staffing company, which can provide the specialized skills and resources needed?

You also need to consider the potential of doing something in-house, doing it wrong, and the consequences. Could the consequences of a mistake be more costly in the long run than outsourcing it?

Could stepping outside your area of expertise end up hurting your reputation or losing your customers? Alternatively, what are the risks involved with outsourcing something and essentially putting your business and reputation in the hands of outsiders?

These are important considerations in addition to the financial ones discussed above.

Time commitment factors

Outsourcing or handling something in-house is often a question of how many things you can do at once. When you outsource, the service provider can usually take on the project and free up your time so that you can focus on other things.

On the other hand, if you decide to handle a project in-house, it will often require more of your time and attention. You need to consider whether or not you have enough extra time to commit to a project and if so, how much time you can realistically commit.

Time factor 1: How long will it take you to complete the project?

There is no one-size-fits-all answer to this question, as it depends on the complexity of the project and the skillset of your team. You need to create a hierarchy of projects in order to understand which ones will take longer to complete and which ones you can handle in-house.

Time factor 2: Does outsourcing make sense for short-term projects?

Outsourcing is often the more cost-effective option when it comes to short-term projects that don’t require ongoing maintenance. By hiring an outside service provider, you can save on costs associated with hiring and training employees or buying equipment.


These are all important factors to consider when deciding whether or not to outsource a service or handle it in-house. Make sure you take the time to do your research and crunch the numbers before making any final decisions. This will ensure that you make the right decision for your business.

It’s also important to consider whether you have the time and the expertise to be able to do something well. There are costs associated with failing to consider both of these variables that might not be immediately evident but which could lead to costly mistakes in the long run.

By taking into account financial, expertise and human capital, and time commitment factors, you can make an informed decision when it comes to deciding whether or not to outsource a project or service.


Dan Smiljanić

Dan is a practitioner of project management and our resident geek. With a background in computer science, Dan is the lead product tester at Binfire. When Dan not writing code, you will probably find him cycling and hiking with friends.

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