What are the Differences Between Outsourcing and In-House?

IT Outsourcing

Outsourcing vs. In-house: What are the Differences?
Mobytelab Team

Mobytelab Team

Posts 25 days ago


Nowadays, there are many forms of cooperation allowing each business to choose and use to suit their goals. We can mention such as outsourcing with third parties, cooperating with agencies, freelancers, part-time, or hiring full-time workers (in-house).

Each form will have different characteristics, we should specifically consider each form to make a decision. So what are the differences between outsourcing, agency, freelancer, part-time, and in-house?

The Definitions

What is Outsourcing?

Outsourcing is a solution that hires outside resources to assist the company.

The company chooses a provider to outsource a part or all tasks or works to complete quickly and efficiently. Providers might be an individual or organization, such as a freelancer, a part-time worker, or an agency.

Some popular outsourcing activities include human resource management, accounting, marketing, customer service, software development, designing…

Advantages of Outsourcing

  • Focus on core business.
  • Access to a larger talent pool.
  • Cost-effectiveness.
  • Resource maximization.
  • Less risk.

Disadvantages of Outsourcing

  • Lacks of control.
  • Management difficulties.
  • Communication issues.
  • Problem with quality.
  • Passive in some cases.

Outsourcing has been divided into many dỉfferent models.

  1. Based on the Relationship: Outsourcing has 3 models:
  • Staff Augmentation Model
  • Dedicated Development Team Model
  • Project-based Model
  1. Based on the location: There are 3 types of outsourcing including:
  • Offshore
  • Nearshore
  • Onshore

Depending on the needs of the company, one of the outsourcing models can be chosen.

What is Agency?

An agency is a business or organization that provides specific services, cooperates with other individuals or organizations, and implements contracts.

For example law agencies, recruitment agencies, sales agencies, advertising agencies, insurance agencies…

An agency might be a part of outsourcing because the company can outsource work to any agency that provides a suitable solution.

Advantages of Agency

  • Cost-effectiveness.
  • Professional experience.
  • Easy to find.
  • Flexibility.

Disadvantages of Agency

  • Difficult to control.
  • Missed information.
  • Not on-site.
  • Secure risk.

What is Freelancing? and Who is Freelancer?

Freelancing is a type of work, a legitimate work from home job, that has become more and more popular in the world.

Freelancers are self-employed persons, independent contractors who are not necessarily committed to a particular organization long-term, get paid to offer freelance services, and make money. Freelancers are both business owners and their bosses, set their schedules by themselves to have a work-life balance. Freelancer jobs allow people to work at home or work from anywhere they want in their free time.

Freelance marketplace provides a lot of freelance opportunities that are common include graphic design, editor, writer, media & PR, financial support (bookkeeping), editing & proofreading, photography, videography, tutoring, data entry, programmer.

Job seekers can find freelance work by accessing freelance websites such as

Depending on the work hours a freelancer dedicates per day, freelancers are divided into full-time or part-time freelancers. A full-time freelancer will work 40 hours a week and perform the duties as a full-time employee. A part-time freelancer will work 20 hours per week or less because they may have a day job during office hours or go to school.

Advantages of hiring a freelancer

  • Cost savings
  • Flexibility and special expertise
  • High quality of work
  • Fewer responsibilities and less supervision
  • Worldwide reach
  • Reduced risk

Disadvantages of hiring a freelancer

  • Lack of supervision
  • Lack of commitment
  • Lack of team spirit, interpersonal interactions
  • Unpredictable quality of work
  • No long-term relationship
  • Security and law enforcement

What is In-House?

In-house is the opposite of outsourcing. In-house is a form of using the organization's available resources to implement plans and achieve goals. Resources contain all full-time workers and the time of an organization.

Hiring in-house is similar to full-time employment. The hiring process will take a lot of time. After that, a long-term contract that recorded all agreements of both parties will be signed. The company will pay both the salary and the benefits such as insurance, bonuses, travel cost...

Full-time employees make sure to dedicate all of their time to perform and complete the task at the office. The working schedule of a full-time worker is on workdays, usually from Monday to Friday.

Advantages of hiring in-house

  • Long-term contract
  • Better understanding
  • Greater responsibility
  • Easy to meet, discuss, share, train...
  • Building a team, investing in the company

Disadvantages of hiring in-house

  • Expensive
  • Long process
  • Difficult to hire experts
  • Lack of necessary skills
  • Financial risk

What is Part-time?

Part-time is a word used for a period that is less than the usual or full time. If you are a part-time worker, you work for only part of each day or week.

A part-time job is a form of employment that carries fewer hours per week than a full-time job. They work in shifts. The shifts are often rotational. Workers are considered to be part-time if they commonly work fewer than 30 hours per week. Part-time job opportunities are popular and available in different industry and career fields, but retail and hospitality are the most common. - According to Wikipedia

Any person of any age, any gender, including students, parents, military spouse, retirees, and other workers who want to have extra income but don't want or need the time commitment of a full-time position, can part-time or home job search with a flexible schedule. A part-time worker is also a member of an organization.

Advantages of hiring part-time

  • Cost savings
  • Flexibility
  • Improve diversity and enhance the workforce
  • Highly skilled and experienced members
  • Reduce the workloads of other workers,

Disadvantages of hiring part-time

  • No stability
  • Lack of commitment
  • Lack of productivity
  • Difficult to manage and supervise
  • Secure risk management

The Suitability

Choosing between Outsourcing vs. In-House, Agency vs. Freelancer vs. Part-time should be based on different characteristics, advantages, and disadvantages. So each type can be suitable for different projects or companies, depending on the type and the demand.

The project or the company does not require a highly secure, short-term project, startup company, company that has a limited budget and wants to focus on core business can choose outsourcing with an agency, hire a freelancer, or a part-time worker.

For the long-term project, the company prioritizing the security and building of the culture team, or the company has a specific and effective ongoing process, hiring an in-house team is a good solution to use.

The variety of work types is extremely important for each worker. Taking advantage of their ability, workers easily find work as a freelance job, a home job, a part-time job, or a full-time job at the company. Flexible work allows workers to balance work and life. To make money and have a better life, doing one or more jobs with flexible time helps people achieve their goals.

The Differences

Contract

A contract is a legal document, an official agreement between two or more parties for the doing or not doing of something specified, and enforceable by law. A contract will be signed when cooperation is agreed upon. A contact determines the collaboration between individuals, or between individuals and organizations.

Outsourcing Agency / Freelancer / Part-Time: short-term contract, based on the certain project

A contract between a company and outsourcing provider, an agency, a freelancer, or a part-time worker is a short-term contract. Individuals or organizations who are related will be responsible for one or certain projects or tasks at a certain time. After completing the task or the project, parties will terminate or renew the contract if needed.

In-House Long-term contract

The company hired a full-time employee, the signed contract is a long-term contract. It’s called a “Labor contract”. Labor contracts are divided into Indefinite-term labor contracts and Definite-term labor contracts. A definite-term labor contract usually has a term of one year.

Total Time to Commit and Dedicate

Total time to commit and dedicate is the amount of time one person or organization must work to perform the tasks. The time will be noted in the contract.

Outsourcing

Agency: Depend on the time noted on the contract The assignment of part or all of the tasks or projects to a third party or an agency, the most important thing is the total time to finish must not exceed the total time noted on the contract. The total time is different in each project. Outsourcing providers or agencies will spend their hours depending on the company’s demand.

Freelancer: flexibility, less in case of part-time freelancer, more in case of a full-time freelancer A freelancer can dedicate more time and resources to the tasks because he or she can work at home. Freelance workers are divided into part-time freelancers and full-time freelancers, so the total time to commit and dedicate will depend on the type of freelancer.

Part-time: flexibility, 30 hrs/week or less A part-time worker will spend less time than a full-time worker. The total time is unstable and usually is 30 hours per week or less.

In-House

Usually, 40 hrs/week but varies by the type of the work and the company, also by the country they live in. Full-time jobs force full-time employees to commit all of the time at the office to complete the tasks or the projects. The total time is permanent and usually is 40 hours per week.

Cost

Costs are paid for efforts and time that an individual or organization spends to do something. The company will pay to hire outsourcing partners like agencies, freelancers, part-time workers, or own in-house members. The costs will be calculated based on the hourly rate or the project rate depending on the marketplaces, industries, or countries...

Outsourcing

Agency: Effective

Cooperating with outsourcing or an agency, you can save your time, money, and resources. Pricing is based on the type of projects and services. You don’t have to pay for equipment, recruitment, training, and other labor costs. You can focus on the important aspects of the business.

Freelancer: Inexpensive

The cost of paying for a freelancer depends on the devoted time and the hourly rate noted on the freelance contract. The company will not provide any of the benefits and perks. Freelancers usually work at home, with no office expenses to be paid by the company. So it’s inexpensive.

Part-time: Inexpensive

A part-time worker is a part of your team, commits a certain amount of time, and gets the appropriate income. The costs are low and insignificant.

In-House

Highest Hiring a full-time worker is expensive and time-consuming. The costs include salary, health insurance, and other benefits that the company offers. The costs will be paid per month or year. Besides that, the cost of onboarding, training, equipment, and workspace will be calculated. It's significant money.

Size of the Talent Pool

A talent pool is a place or a database of candidates. A talent pool is a list of names of candidates that have applied, potential candidates, referred candidates. A talent pool database contains information about each candidate, including their personal information, characteristics, skills, working experiences, potential roles they could fill…

Outsourcing

Agency / Freelancer / Part-Time*: Wide and Easy to Hire

In-House

Small, difficult, and take time to hire. The size of the Talent Pool is almost based on the location.

The company needs to build its talent pool to help recruit suitable candidates quickly and effectively. The company looks for freelance talents, part-time, or full-time staff via a job listing on job boards, freelance sites, freelance platforms, company websites, social media, referrals… The size of the talent pool can be reached depending on the target and the needs of the company.

If the company uses outsourcing services, a wide range of talent can be approached. Not only using any agency with a specific field but also hiring a freelancer, a part-time worker. Many highly skilled talents are available. The recruitment is easier and does not take time.

Hiring a full-time worker is considered as hiring an in-house member. The company must take a lot of time to process and choose the right person. The member is not only suitable for the skill set but also suitable for the culture company. The number of suitable talent pools is limited. It’s difficult to hire quickly.

Skills

Skills contain hard skills and soft skills.

Hard skills are specific abilities, or capabilities, that an individual can possess and demonstrate in a measured way. For example coding ability, computer skills, foreign language skills, SEO marketing, typing speed, bookkeeping... Soft skills are self-developed attributes that aren’t specific to a particular role. Soft skills are non-technical skills that are related to the way a person works. For example interpersonal skills, team working, communication skills, problem-solving…

Outsourcing

Agency / Freelancer / Part-Time: Diverse The wide talent pool of outsourcing allows the company to reach many high-skilled candidates. The company takes advantage of candidates with high and wide knowledge and skill to develop and achieve the goals.

In-House

Limited To hire an in-house member, the company needs to determine the most necessary skill the candidate must have. The cost to hire an in-house member is the most expensive, so the important thing is to choose the right person with the most suitable skill set and culture at affordable pricing.

Manage tasks or projects

Outsourcing

Agency: Directly or Remotely manage. Through the task management software and track work based on the progress and result

Outsourcing the project to the outside resource, you don't have to manage a particular task directly. Project management allows you to remotely manage, track progress to meet your needs as soon as possible.*

Freelancer: Through the task management software and track work based on the progress and result

Sometimes, you work with a freelancer in another country. It’s difficult to connect, meet and discuss in person. You can use time tracking software and have online conversations. Many tracking tools work as virtual assistants to help take care of administration and management, perform a diverse array of tasks.

Part-time: Through the task management software and track work based on the progress and result You can manage your part-time worker directly or remotely, depending on the agreement of both parties.

In-House

Manage & Assign tasks and Projects to an In-House resource easily as they are always available at working time. You easily arrange an appointment to discuss the issue, set the plan at your office. The offline conversations can help your team find out and solve the problem, improve progress and complete the projects quickly.*

Prompt adaptation

Outsourcing

Agency / Freelancer / Part-time: Promptly

Outsourcing (with an agency, a freelancer, or a part-time worker): Working with another company and another person outside your team can help you get the resources you need quickly and promptly. Potential workers are always available with the quantity and skills to meet your demands in short-term projects.

In-House

You know that hiring an in-house member takes a lot of time. If the project urgently needs a person with a particular skill set, looking for a full-time worker is not good and not suitable to use. After hiring, it takes your time to train. It’s risky and time-consuming.

The Labor Statistics in Vietnam

COVID-19 pandemic significantly impacts labor and employment not only in Vietnam but also in the world.

According to General Statistics Office (www.gso.gov.vn), some statistics about the impact of the COVID-19 pandemic on labor and employment in Vietnam in 2020:

  • 32.1 million people aged 15 and higher nationwide are negatively affected by COVID-19.
  • The number of employed people aged 15 and higher is 53.4 million people, a decrease of 1.3 million people compared to 2019 (corresponding to a decrease of 2.36%)
  • For the whole year 2020, the number of informal workers is 20.3 million, an increase of 119.1 thousand people, while the number of formal workers is 15.8 million, a decrease of 21.1 thousand people compared to 2019.
  • The number of underemployed in working age is nearly 1.2 million people, an increase of 456.7 thousand people compared to 2019
  • The unemployment rate in 2020 will be 2.48 percent, a 0.31 percentage point higher than that in 2019.

In 2020, the average income of workers is 5.5 million dongs, a decrease of 2.3 percent compared to 2019 (an equivalent of VND 128 000).

When the COVID-19 pandemic breakout is widespread across the world, people must stay at home. Telecommuting means someone who will be sitting at home or somewhere can use technology and modern means of communication to stay in touch with your boss or business.

Telecommuting is the best working solution for the company and the employees to keep getting work done at the home office with flexible hours. People can manage their work-life effectively. It's the reason why remote jobs, freelance jobs, or work from home jobs are always prioritized and paid attention to.

Online jobs, freelance jobs, freelance work, freelance positions, remote jobs, remote work, stay at home jobs, work at home jobs, work from home opportunities, work from home positions are keywords that are searched frequently in recent time. With a high-speed internet connection and open worldwide, the ways to make money by working remotely is a necessary and important new trend in the labor market.

Conclusion

Those are some comparisons between Outsourcing vs. In-House, Agency vs. Freelancer vs. Part-time. Each form has different advantages and disadvantages. Depending on the needs at each moment, the company will choose the most suitable form for their team or business. Flexibility allows the company to create, innovate and achieve unexpected results.

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