Choosing between internal & external resources

Firms regularly must choose between internal and external resources to obtain new capabilities, or increase punctually capacity or expertise. It is often subject of discussion, gains and budget calculation.

How do you decide between traditional employees and consultants or contractors? You will find below a list of advantages and constraints that can help you to move forward. Take a look also at The 4 different human resources solutions to address internal needs.

 

 

• Salary costs: Consultants usually cost more than employees, but there are several benefits to explain this difference, such as no exit fees, no HR costs, and no infrastructure or ramp-up costs. When deciding between outside help and internal staff increases, always keep in mind the hidden costs associated with the hiring of employees. These costs may be difficult to calculate precisely, but an estimate can give you the information needed to make a decision.

 

• Skill: Consultants can usually offer a higher level of expertise in a specific area. Because they are choosing this way of working, consultants are continuously building new skill sets, vs. employees who may be less motivated to personally investigate industry evolution. But at the same time, employees may offer a huge experience in their own areas and know the company better.

 

• Training: Developing employees should be part of your company culture. With the proper training programs in place, you should be able to better assess what skills individuals are missing in order to give them a promotion and what their rate of progress is. If you know they won’t be ready or if you don’t have the time because of urgencies, you can hire external resources.

 

• Flexibility: Outside the first three considerations, contractors provide a great deal of flexibility to the organization and can be used at the convenience of the company. This is especially helpful in situations where the project is altered in some way or where load cannot be forecasted or ensured. If, for example, the company changes direction and the project gets killed, or assigned a lower priority, there is no employee to fire with the administration going with it.

 

The Benefits of Using Independent Contractors – The main reasons to hire contractors instead of employees are:

 

1. Your business has short-term or middle-term staffing needs.
2. There is urgency.
3. Your business requires specialized skills for a limited time period.
4. To save the expense of recruiting, hiring and training new employees and reduce termination costs.
5. To lessen the expense of employee turnover (on average between 10 to 30 percent of the employee’s salary). Independent contractors and temps allow your businesses to try out people before committing to hire them.
6. For expertise and knowledge.
7. Neutrality and independence in particular files or decision.

 

When deciding between internal or external resources, you should consider all parameters. Both solutions are complementary and answer different needs. You can contemplate further this subject with considering in detail the 4 human resources solutions and the  advantages and selection criteria for human resources external solutions.