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Market Insights SEEK Employment trends Hiring vs Outsourcing: What Works For Your Business?
Hiring vs Outsourcing: What Works For Your Business?

Hiring vs Outsourcing: What Works For Your Business?

In the face of current business challenges, companies are streamlining their operations by applying changes to their HR policies. They have to make the judgement call to secure what they deem more important for survival and profitability, be it hiring in-house or outsourcing. Learn what works for your business.

The modern-day organisation is constantly experiencing shifts in workforce dynamics and as such impacting its profitability. There is a raging debate as to whether today's companies should hire in-house or outsource in the quest to secure their bottom line.

We delve under and take a look into this heated debate by highlighting the pros and cons of hiring in-house and outsourcing.

Contract of service vs Contract for service

By law, a contract of service is a legally binding document that highlights the relationship between a prospective employer and an employee, outlining the conditions and terms governing the conduct of both parties.

This document only takes effect when the prospective employee turns up for work. An employer, however, cannot claim compensation in the event an employee doesn't turn up, as provided by the act. Similarly, any legal redress on the employee's part can only be achieved through a civil claim.

In contrast, a contract of service defines or governs the relationship between business entities and a third-party service provider or independent contractor to provide a specified service for a stipulated period of time.

A major distinction between a contract of service and a contract for service is that the former provides for an employee an indefinite length of employment and various benefits such as medical and pension schemes, while the latter locks out such benefits and is periodic.

To learn more about the differences in aspirations and considerations between full-time employees and part-time / contract workers, head over to's Laws of Attraction portal anytime. The Laws of Attraction portal is your gateway into insights drawn from a comprehensive study of more than 7,000 Singapore candidates across 20 industries.



In-house Hiring

Business owners or companies experience a sense of relief when hiring from within. This gives them a sense of assurance that they are able to monitor productivity and retain the necessary skill that is required.

Managing such a team becomes easier in terms of organisational meetings and the relationship between parties is less formal. Furthermore, it eradicates the tension associated with a formal atmosphere by enhancing employee engagement, particularly for those in top-level management.

Risk mitigation in organisations can also be addressed by hiring in-house. By targeting high performing employees for promotions, the company reduces the risks of poaching by rival companies which often is a result of unmet career aspirations and goals.

As we can see from the Laws of Attraction tool, Promotion Opportunities is a "Must"-have factor full-time candidates want in a job.


On the downside, the cost associated with in-house hiring is huge. The organisation has to factor in the salary costs of the employees. Paid annual leave days, sick leave, maternal and paternal leave are some of the costs that weigh down on a company's bottom line.

A quick check on LOA data on the income distribution across the two types of workers confirms that the advantages associated with hiring in-house (green bars) do indeed come at higher costs than with outsourcing (blue bars).


Additionally, as the in-house team grows, overheads such as office rental, equipment and utility costs will naturally increase too.


The expression that time is money has never held more weight than in today's corporate world. Why spend more time in activities that can be delegated by outsourcing thereby cutting time and investing in other profitable ventures?

Outsourcing services have become a rampant and common feature in companies partly due to hard-hitting economic times. Services such as recruitment, financial and I.T can be outsourced to different companies and individuals hence cutting on costs that would otherwise have been incurred.

There exist other criteria that need to be put into consideration but ultimately, the cost factor presents itself as a dominating factor. By outsourcing, the organisation places its functions in the hands of experts. As a result, they are better placed to receive the maximum benefits that accrue by employing experts in their various fields.

Outsourcing to different firms will also ensure that professionalism is maintained to the benefit of the organisation in terms of corporate image. In today's world, both individuals and businesses alike prefer dealing with institutions that are portrayed in positive standings hence a proper image is key.


In the face of current business challenges and the uncertainties in the global economic climate, companies are streamlining their operations by applying a raft of changes to their HR policies.

Despite the hyped-up notion that it is beneficial to absorb existing talents rather than outsource, we tend to see that such companies definitely have the shorter end of the stick as they are forced at a point in time to exercise lay-offs.

At the end of the day, companies have to make the judgement call to secure what they deem more important for survival and profitability, be it hiring in-house or outsourcing.

Data used in article are drawn from Data Lab - the interactive exploration tool at's Laws of Attraction portal - based on a comprehensive study of more than 7,000 candidates across 20 industries in Singapore.

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