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How Outsourcing Costs Compare to Staffing

As company leaders look to hire back furloughed workers, they are contemplating whether to outsource or to hire. Sometimes it makes more sense to outsource certain roles, and it can definitely come down to cost. Outsourcing a key position can save as much as 30% compared to the salary that would otherwise be paid to an internal hire.

Why even think about outsourcing though? If the last year has taught us anything, it’s the need to stay nimble, adapt and pivot considering how quickly the world – and government laws – change. High-growth companies may also find it difficult to scale their internal teams’ capabilities compared to what they can bring to the company through an outsourced role.

At the end of the day, sometimes it is all about the numbers.

The Costs of Internal Hires

Recruiting, onboarding and training a new employee takes time – and money. Some of the hidden costs associated with hiring a new, full-time employee can include:

  • Advertising the position

  • Registering on job boards and job sites

  • Employee background checks

  • Paperwork administration costs

  • General onboarding expenses

Plus, external recruiter fees can triple or quadruple hiring costs. Then there’s turnover. Replacing a full-time employee can cost as much as 30% of that person’s salary.

Not all costs are related to money. Onboarding usually involves a temporary dip in productivity and administrative time, too.

Of course, retaining an internal hire means paying a competitive salary, offering a benefits package, maybe paying for professional development and continuing education courses and more. There’s a lot more to an internal employee than costs … the right people will chart the course for the future as part of the organization’s core team.

While there are certain positions that should be kept internal, some roles, like accounting, marketing, HR or IT, can function just as well, if not better, with an outsourced consultant.

How Hiring Compares to Outsourced Consultants

One of the benefits of working with an outsourced consultant is knowing the costs upfront. They’re predictable, in writing and easy to manage. Hidden costs aren't part of the deal. Deliverables are agreed upon and a budget is created according to the organization’s needs. Often, the only costs associated with an outsourced consultant are the hourly or fixed fees for a project or a monthly retainer that’s agreed upon in advance.

Consultants are experts in their fields and don’t require training or the extensive amount of onboarding of in-house talent. Companies don’t even have to provide consultants with technology, continuing education or benefits.

Combined with permanent employees, using outsourced consultants can help a company lower and better manage their staffing budget.

Looking at the Numbers: Internal Versus Outsourced Accountants

Accounting is one of the roles that many companies, especially start-ups and those in growth mode, should really consider outsourcing. It’s an area of expertise that many business owners lack, for one thing. At the same time, a well-run accounting function saves money for the organization and helps to pinpoint opportunities and risks. Accounting is essential, but it isn’t necessarily a core business function.

Here’s how the numbers generally compare between an in-house versus outsourced accountant. For comparison’s sake, these numbers look at a full-time employee.


  • In-house: $4,000 - $7,000

  • Outsourced: N/A


  • In-house: $72,000 on average for a mid-level hire, not including benefits. This amount can vary greatly based on location.

  • Outsourced: It ranges based on your needs, but it could be something like $60,000 per year as you probably don’t need someone a full 40 hours a week. For this price you likely get access to a team of professionals with various experience levels including at the CFO-level.

Productivity Hours

  • In-house: 1,400 productivity hours per year, per employee, on average. This is based on a 40-hour workweek and accounting for three weeks of paid time off, holidays, trainings, water-cooler chat, etc. That can add up to around 600 hours or so that are paid for but underutilized.

  • Outsourced: Pay only for what’s needed.

There are other benchmarks that are harder to compare from a pure numbers standpoint but still matter to the overall business. When it comes to accounting, outsourcing – to the cloud, especially – will also help:

  • Lower the risk of financial theft and fraud

  • Speed up accounting and financial reporting

  • Make fewer accounting and bookkeeping mistakes

  • Lower the company’s carbon footprint

  • Increase data security

You get all this while utilizing cutting-edge accounting technology solutions you don’t have to purchase on your own.

Get Only the Services You Need

COVID-19 created a new awareness among organizations to step up their knowledge of accounting and reporting requirements, security concerns and integrated technology. By now, most organizations have revamped their accounting processes to better suit a paperless environment, but growth can be harder to achieve if internal accounting teams are always struggling to keep up with daily tasks. Outsourced accounting, especially to the cloud, offers several benefits and cost-savings opportunities for high-

growth companies.

As you contemplate hiring or outsourcing, be sure to look at the whole picture. Cost is a factor, but so is the skillset the person brings to the table for your benefit. Think about what you are in business to do and then determine if things like producing financials, writing blog posts or filling out employment documents are what you’re best equipped to do and if it’s what you want your business to be doing. If not, explore the outsourcing options available to you and focus on what you do best.

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