Business owners will encounter a period when they can no longer handle all their tasks associated with expanding and running their business and thus the need for added human resources. In this case, they explore the various options available in the market such as hiring new employees, outsourcing their businesses or even hiring sub-contractors. Whichever option they choose to add human resources in their businesses, there are both pros and cons.
Hiring New Employees
When people open new businesses or their businesses start to expand, they definitely look for help. Most business owners start by hiring contractors to do the huge work for them but later decide to hire employees.
Pros of hiring employees
The main advantage of hiring employees is that the employers are able to specify the work timetable of the workers they hire, which help to ensure that the employees are available to handle business tasks when employers need them done. Businesses that use independent contractor to handle their jobs have no control over their contractor’s schedule, which means that he or she may not be available to do urgent jobs.
When employers hire their own workers, they are able to train them using their own techniques, rather than depending on the training the employees already have. This allows them to tailor their workers’ training according to their specific practices and needs, which result to enhanced ability when carrying out business tasks.
Cons of hiring employees
Benefits and taxes
The main drawback of hiring employees is that employers have to pay part of their employees’ social security contribution as well as withholding state, federal and local taxes. This adds expenses to businesses and even hours to businesses work week as they compute these benefits and deductions. In addition, business owners may need to offer other benefits such as health insurance, access to retirement plan as well as paid time off so as to attract the best employees.
Outsourcing also known as off shoring has its own pros and cons.
Pros of outsourcing
Expertise and swiftness
People outsource their tasks to qualified and specialized suppliers. In addition, the suppliers have specialized technical expertise and equipment, which are often better than those at the business. This leads to not only faster completion of task, but also output of the highest quality possible.
One of the key factors considered by business people when assessing the option of outsourcing is risk analysis. By outsourcing some tasks of the business can help the firm to offset responsibilities tosomeone else. Due to their experience in these kinds of jobs, the outsourced vendors are able to plan businesses’ risk mitigation factor better.
Reduced recruitment and operation costs
One of the prime benefits of outsourcing business is that it avoids the need of hiring employees thereby minimizing operation and recruitment costs. In addition, businesses are able to save a lot of money as they are not required to invest in the latest software, infrastructure and technology as it’s handled by their outsourcing partners.
Cons of outsourcing
Hidden cost and lack of customer focus
Although outsourcing is quite effective at reducing costs, there can be costs that aren’t obvious when contracts are being signed. This can pose a serious risk to the business. In addition, outsourced vendors may be dealing with multiple firms at once and thus lack total focus on an individual business’s needs.
Organizations may need additional resources to perform specific or specialized tasks. They may want to use the services of sub-contractors or contractors for these tasks and thus the need of weighing up the merits against the demerits of subcontractors.
Pros of sub-contractors
- Businesses can hire them when they need flexibility
- Businesses can use them for tasks that require specialist expertise
- Permanent employees are able to concentrate on their core businesses
- There is no PAYE or social security fund contributions for sub-contractors
- Businesses are able to cover for an employee who may be on leave or sick
Cons of sub-contractors
- They may cost more that daily rate of normal employees
- When business rely on sub-contractors, they are not able to develop or acquire in- house skills
- Employees may hate subcontractors being paid more than them for doing similar tasks
Whichever method businesses may choose for adding human resources, be it hiring employees, outsourcing or even hiring sub-contractors, they should ensure that the advantages outweigh the disadvantages in each case.