Some things are better left to others. Is it better to grow your own food and absorb the high costs in time and resources, as well as taking on the risks of something going wrong? Or is it a better idea to outsource food production to farmers and grocery stores? If you do it all yourself, you could end up making a $1,500 sandwich in just six months!

And some things we choose to do ourselves... like bathing. It’s faster and easier to jump in the shower, and we don’t want to compromise our privacy.

At the heart of every business decision is exactly this question -- do we do it ourselves, or do we have someone else take care of it for us? Which is better? And the answer is: It depends.

 

The Joy (and Pain) of Insourcing

Insourcing is effectively a Do-It-Yourself approach to the needs of your business. If a critical function in your business needs to be completed -- like payroll, benefits administration, workers’ compensation -- you can choose to handle it on your own without depending on anyone else. But before insourcing, you’ll want to ask yourself three questions:
 

  1. Can I do it as well as another provider? Could I even do it better?

  2. Can I do it myself as cheaply, or will it be more expensive?

  3. Do I actually want to, or will insourcing distract from my business?


You know your own product or service better than anyone; you’ll likely be able to sell with more authority and trust than a commission-based sales mercenary. But can you handle HR functions as effectively? Maybe, maybe not -- and the consequences of being wrong can be severe.

When you choose insourcing, you retain direct control over the situation. You can also be highly-responsive to your employees’ needs because they can come right to you with every problem.

But insourcing has its drawbacks. When you take full control, you also take on full responsibility -- when there’s a problem, it’s on you. It’s up to you to stay current on all rules and regulations, and it’s up to you to deal with the consequences if you don’t. Insourcing can work out well, but it usually requires a tremendous amount of time and resources that may be better spent on the core functions of your business.

 

Outsourcing Can Help

Embracing a ‘leave it to the professionals’ attitude can be tough -- although it’s probably at the core of your business already. You’re the professional providing something to people better and cheaper than they could do it themselves, right? If that wasn’t true, you’d be out of business pretty quickly.

We work with others because they can handle a specialized task better than we can, and it’s worth it to us to pay them to do it. By outsourcing basics like payroll, workers’ compensation, benefits, hiring/firing, and more, we can procure better services (and usually cheaper). We have flexibility to change service providers easily if we want or need to, and we can eliminate the stress and worry that comes with taking on high-stakes tasks.

It does, however, mean that we give up control over important parts of our business. It’s hard to trust these elements to someone else -- it’s natural to want to do everything you can for your employees right under your own roof -- but due diligence can mitigate those concerns.

You can find the right PEO by asking questions about admin fee, cancellation policy, and tax restarts, then judge whether the PEO responds professionally and authoritatively. You can think deeply about whether your business is the right size to work with a PEO (in our experience, most small/medium businesses are a good fit).

 

Outsourcing or Insourcing -- Which One is Right For You?

The answer on whether to outsource of insource payroll, HR, and more depends on what you value most. Is it ensuring that a job is done properly by people who are experts in that sector? Is it more important that you yourself can address an employee’s concern? Do you want to save money while offering the best benefits possible, or do you want a full in-house operation?