In-House vs. Outsourcing Hiring

Any business using freelancers to supplement its staffing requirements will come to a point where it needs to decide whether to run its HR operations in-house or outsource some (or all) of it.

Of course, there are pluses and minuses to either arrangement, so below, we'll consider both choices and a possible solution.

But first, let’s clarify a few things:

What Do We Mean by In-House Recruitment?

In a nutshell, ‘in-house recruitment’ refers to a company hiring a full or part-time employee (or team) to source, recruit, and onboard its employees. Usually, the same person/people manage payroll, worker-related tax, legal compliance, background checks, references, signing company policies, and onboarding. 

An in-house recruitment team is firmly embedded in your business and should form part of your company culture and ethos. 

What Do We Mean by Outsourcing Hiring and Talent Management?

In contrast, outsourcing HR-related tasks is when a business transfers all or part of its recruitment and talent management to an external partner. This could include attracting, onboarding, developing, utilizing, paying, and employing methods to retain the company’s workers. 

Sometimes, in-house hiring managers might use a recruitment agency to help them manage some of the more demanding administrative aspects of hiring permanent and contract employees. For example, assistance hiring in bulk during busy times, such as the holiday season. A recruitment agency can also act as the middle person between the business and the candidate regarding salary and benefits.

Where recruitment is concerned, this typically involves pursuing talent outside of the company’s pool of internal candidates. Of course, there are many definitions of ‘talent.’ But, for the purposes of this blog post, talent refers to someone with the relevant skills to contribute to an organization. 

The Pros and Cons of In-House Recruitment

Now you have a clearer idea of what in-house and outsourcing HR looks like, let’s examine the pros and cons of both.

Pros:

• You have the opportunity to nurture a team of loyal employees who are invested in your company culture, its aims, and objectives. As such, you’re more likely to trust your in-house team to find talent that fits your organization.

• With a better understanding of the intricacies of your business, your in-house HR team might be better positioned to fruitfully collaborate with other departments to source internal candidates rather than having to seek external applicants.

Cons

• Funding a permanent, in-house recruitment team can be costly. 

• Sometimes, employing an in-house HR team that’s too invested in your company culture can prevent your business from benefiting from unique ideas and fresh perspectives.

• Once you’ve hired an in-house recruiter, there’s a risk they may not always be fully occupied, particularly during fallow periods. 

• On the flip side, if recruiters are dealing with high-volume hires during busier periods, they might not have the time or the resources to fully vet every candidate thoroughly. 

The Pros and Cons of Outsourcing Recruitment

Now, let’s look at the pros and cons of outsourcing recruitment-related jobs:

Pros:

• Outsourcing to a freelance HR professional opens up your talent pool. So, instead of settling for HR talent in your area, you bypass geographic restrictions and instead can focus on hiring the cream of the crop.  

• You might potentially save costs when you outsource to a freelance HR professional - for instance, pensions, social security, benefits, etc., 

• Most businesses experience high and low-volume recruitment periods. For instance, retailers typically hire more during holidays or when a company expands to a new location. When you outsource your hiring, you can scale your HR needs accordingly. 

Cons:

• You have less control over the entire process.

• As you’re one step removed from your candidates, you may find yourself in a situation where you’re wasting time interviewing unsuitable people.

In-House vs. Outsourcing: The Middle Ground

Unless you’ve been living under a rock, there’s a good chance that there are more freelancers and remote workers than ever. For example, there could be as many as 36.2 million remote workers in the US by 2025, an 87% increase from pre-pandemic levels. In the pre-pandemic EU, 5.5% of people worked remotely. Now, it’s 13.5%. 

This is where a freelance management system is a catch-all and cost-effective solution. It’s the ideal answer for in-house HR teams looking to streamline their recruitment and freelance management processes without relinquishing control to a third party. 

For the uninitiated, a freelance management system (FMS) is a software solution that provides the tools HR teams need to manage their freelance cohort and remote workforce. It differs from a freelance marketplace, where the focus is simply finding talent. In contrast, an FMS helps you streamline the creation and management of your talent pool with features like automated payments, collaboration features, insights into freelancer availability, etc. 

Freelance management software, such as Bubty, can help internal hiring managers and HR departments save time when sourcing, hiring, onboarding, and managing their talent pool.

Let’s not forget other in-house teams too. For example, finance and IT teams can benefit from such a system by having complete visibility over all the freelancers and workers the business has working for it. With this information, they’re better positioned to prepare and ensure your staff is set up and ready to hit the ground running. For instance, having logins ready, budgeting salaries, etc. 

In other words, in-house recruitment teams and outsourcing don’t necessarily have to be mutually exclusive. Instead, you could combine the two. 

Here’s a bit more information on what a best-in-class FMS could do for your business:

• Sourcing and onboarding talent: This includes automating tasks for HR teams such as:

  • Creating contracts and invoices

  • Making payments

  • Informing key IT personnel to create logins and permit access to other technology

• Managing your freelance pool: having an overview of people’s availability, location, skills, rates, and so on.

• Collaboration and organizational features: to make it easier for freelance and in-house teams to communicate and collaborate through live commenting, time tracking, etc.

• Automated payments: A transparent payment system that can handle invoicing, payment approvals, payment scheduling, and payment status updates. I.e., a decent FMS should come with a one-click “pay” centralized solution. 

The Pros and Cons of Using An FMS

Before wrapping up this blog post, let’s consider the most notable pros and cons of using an FMS:

Pros:

• A high-quality FMS should have automation features that save you time and money. For instance, automating payments, onboarding, legal compliance, etc. 

• An FMS with robust communication features should help you foster stronger relationships with your freelancers. 

• Building on the first pro in this list, an FMS with an automated payment system ensures your invoices are paid on time, every time. Needless to say, this works wonders for maintaining good relationships with your freelancers.

• A decent FMS should massively simplify the following tasks: 

  • Inviting freelancers to your talent pool

  • Finding the skills needed to execute specific projects from your talent pool.

  • Storing signed documents under one roof.

     

• An FMS can help you standardize and speed up your entire onboarding process. This could include background checks, sorting indemnity insurance, signing contracts and non-disclosure agreements, clarifying tax obligations and bank details, and other aspects of onboarding. 

• The right FMS will seamlessly integrate with the tools you already use. At a minimum, you should expect it to integrate with Google Sheets, Excel, your accounting system (e.g., Quickbooks or Xero), Google Calendar, and internal communications platforms such as Slack.

• You can budget better. Your FMS is a one-stop shop for tracking your total freelance spending, costs per hire, budget, and spending reports. In other words, you’ll get a complete picture of your current freelancer spending. With this info to hand, you can better forecast future spending. 

• You always know when someone is available, their skills, pay rate, and location. You don’t have to rely on an agency to tell you if someone is free.

Cons:

• One hindrance could be if your chosen FMS has system outages.

• A freelance management system will hold sensitive data about your workers. That’s why it’s important that if you choose to work with an FMS, that it has the needed ISO and security certificates.

However, at this point, it’s worth noting that these two potential drawbacks can easily be overcome by working with a reputable FMS. Ensure the software you're considering is transparent about its security measures and boasts a reliable uptime.

In-House vs. Outsourcing Hiring and Talent Management: Our Final Thoughts

The beauty of using a freelance management system is that it allows you to quickly source freelancers from a pre-existing talent pool. That same freelance management system can work with you throughout the entire freelance management process. From sourcing to hiring to onboarding and managing your recruits, you’ll never lose track of who you have working for you again. 

Bubty is one such system. So if you’re interested in finding out how we could help you to improve your recruitment workflows, why not book a demo today?