Hiring Vs. Outsourcing: Which Direction Should Your Agency Take?
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Building an agency is like starting a family. And the best part? You choose its members yourself.
But as you’ll be depending on your new brothers and sisters to represent your business, you need to make sure that you choose the right ones. When deciding on whether to hire or outsource your co-workers, one question will keep popping up: Do I really have to invite my weird uncle to parties?
Well, if you’ve gone down the outsourcing route, absolutely not! Should a freelance team member start causing you hassle, drop Uncle Weirdo like he’s hot and move on to the next contractor without a second thought. But wait. If your family only consists of freelancers who are also working for several other clients, where’s the dependable sister who’ll work a Red Bull-fueled all-nighter to hit a 2:00 am deadline because, “Blood’s thicker than water, right?”
Hmm, let’s rewind a little and take a deeper dive into the question of whether an agency should hire freelancers or full-time employees (FTEs).
A definitive answer will really depend on the type of agency you want to build and its current financial situation; however, we’ll assume your business provides a service of some kind (graphic design, content creation, social management, etc.) and that you have at least one eye on scaling up in the future.
Outsourcing To Freelancers
“Freeeeedooooom!” It’s as important to people nowadays as it was to Braveheart back in the 1990s. There’s a growing number of workers who want to choose their own hours, pick who they work with from project to project and if they want to turn up to work with blue face-paint and a kilt, there’s no HR manager to tell them otherwise.
In an online world of Upwork, LinkedIn and Fiverr, it’s not hard to find someone who will take on regular freelance work; but is it right for your agency?
Pros
Flexibility. You can hire and fire freelancers from job to job, meaning you can spend money when you actually get paid
As hired guns, freelancers are really only as good as their last battle – if the quality of their work dips, you can simply hire another sharpshooter for your next job.
A lot of tasks can be done remotely and while FTEs might expect a regular office space, you can outsource tasks to freelancers in any country
You can potentially save cash by outsourcing to freelances living in a country where rates are a bit lower, even though the quality of work is excellent (although this can become a false economy if you end up having to redo work, e.g. if English is not their first language).
With so many freelancers vying for the same position, it really is a seller’s market – however, this can also mean that it’s a struggle to separate the wheat from the chaff.
Cons
Just as you can cancel their contract, they can turn you down at any point, even mid-project. Yikes.
If your freelancers are working remotely, they’re less accountable and you are basically at the mercy of whether they reply to their emails or not.
Freelancers tend to cost more, especially for short-term gigs that an FTE would simply assimilate into their role (i.e. editing a small piece of website copy, creating a banner ad, etc.).
Team fist bumps work so much better when you actually have a team around you.
Hiring Full-Time Employees
The days of a “job for life” are pretty much in our rearview now, yet most people still crave security and would prefer a full-time position with all the benefits it brings. There are advantages here too, and drawbacks to consider.
Pros
Security. The family that gets paid together stays together (or so the theory goes), so you can rely on your FTEs showing up Monday through Friday.
As they have a fixed salary, you can talk to FTE’s about moving workload around – this is not the case with freelancers who will invoice on an ad hoc basis. So as long as your company prospers and you make sure you are maximising their utilization, FTEs should be both a safer and more financially sound decision.
Because you’ve given them this security and you’re constantly bonding, FTE’s are more likely to be invested in your company and want to see it succeed.
If they do fly the coop, employees are contractually bound to give you notice – with a long enough period, they should help you onboard their replacement.
More visibility. You can decide what hours your employees work and be with them in-house without having to worry that they’ve got Breaking Bad playing in the background of a workday (as most freelancers do).
Cons
Cash flow issues. Unless you keep on top of your cash flow, the fixed cost of employees’ salaries can sink a business.
Office politics. The reality is, as this family of yours grows then there is a greater chance of two or more people simply not getting along. No one wants to be sat next to Uncle Weirdo for five days a week.
So, which one to choose?
Most of your decision will come down to money, honey.
If you have decent chunk of startup capital or have signed contracts with several accounts that guarantee income for the next year or so, it makes sense to hire a team of energised employees who are incentivised to help you realise your agency’s potential.
Let’s say you’re a smaller startup that hasn’t signed many clients yet; hiring a team is probably too risky and you’re better off starting from the ground up with freelancers. This way you can cycle through a few bad ones, learn from mistakes and have the option of offering your favourite freelancers a full-time position when you can afford to do so.
Scaling your agency will require careful use of finances, so don’t commit to something you can’t sustain long term.
A Happy Compromise?
One of the many catch-22s in business is that you need a base stability to promote growth and you need growth to ensure stability. You like the idea of having a reliable team but don’t want the pressure of employing everyone full-time? Welcome to the club. Have you considered hiring short-term full-time contractors? You can sign them on a rolling monthly basis with a non-compete clause that can be increased as your business grows.
This approach allows you to gradually recruit the most talented full-time employees for the essential stuff (e.g. account management) and continue to outsource the fluctuating manual work to freelancers (e.g. graphic design, copywriting).
Nurture The Family
It goes without saying that if you have a team of FTEs, you’ll want to make them as happy and incentivised as possible; however, it’s also beneficial to treat freelancers as if they are part of your agency’s team.
If you guarantee them work each month, are transparent about rates and workload, pay them on time, etc. then you’ll build the type of loyalty one would expect from FTEs, resulting in the best of both worlds.
Going Long
Cliched as it may sound, you should always think to yourself, “Where do I want my agency to be in one, two, five years?” The answer will probably be along the lines of “Bigger, better, more secure” which is why you need to get the basic foundations of running your business correct from the beginning.
Project management, time-tracking, assessing profitability, chasing sales and organising your resources is crucial whether you use freelancers or full-time employees; tools like Productive allow agencies to manage all of these elements with one streamlined and intuitive program that can grow with your business.
Oh, and you can also use its scheduling tool to plan your next work party – whether you invite Uncle Weirdo or not is up to you.
