Should You Hire, Outsource or Manage With Your Existing Team?
According to the latest figures from the Office for National Statistics, the number of job vacancies in the UK has fallen to its lowest level for five years as businesses cut back on recruitment.
It seems many employers are reluctant to add another permanent salary to their costs. From conversations with our clients who run smaller businesses, higher employment costs appear to be the main reason recruitment is becoming less appealing.
Of course, deciding not to recruit does not make the workload disappear. If tasks are starting to slip or your team are taking on too much, you have three options: recruit someone, outsource the work or manage it within your existing team.
Start by defining the problem
When everyone says they are busy, recruitment can seem like the obvious answer.
But before deciding, try this: ask employees to record the time spent on relevant tasks for at least four weeks, where possible, and note any work that is delayed or left unfinished. This should help you establish whether you genuinely need another person or whether existing processes could be improved.
Calculate the full cost of hiring
It is easy to focus on the advertised salary when budgeting for a new employee, but the true cost will be higher.
A proper calculation should include:
- gross salary
- employer’s National Insurance
- workplace pension contributions
- recruitment fees
- training
- employee benefits
Prepare a full annual cost rather than looking only at the monthly salary. Then divide that figure by 12 so you can see the effect on your monthly cash flow.
To put that into context, based on 2026/27 rates, a £30,000 salary costs £2,500 a month before employer contributions. Once you add approximately £312.50 in employer’s National Insurance and a minimum workplace pension contribution of around £59.40 (depending on the pension scheme used), the basic monthly cost rises to about £2,872.
After allowing for equipment, software, recruitment, training and other benefits, a more realistic budget may be around £3,100 to £3,300 a month.
Work out the return you need
Before recruiting, be clear about what you need the role to achieve for the business.
For a sales role, this may be the additional gross profit the employee is expected to generate. For an operational role, it may be the number of extra customers you can serve. For an administrative role, it may be the time it frees up for you or your senior team to focus on higher-value work.
Set out:
- The total annual cost of the role.
- The financial benefit you expect it to produce and when.
- How you will measure whether it is working.
Avoid relying on additional turnover alone. A new employee must ultimately generate or protect enough gross profit to cover their cost. If a recruit is expected to produce £50,000 of additional sales but the gross profit margin on those sales is 30%, you would receive £15,000 of gross profit before other overheads. That may not be enough to fund the role.
When outsourcing may be the better option
Outsourcing can be a useful middle ground when you need additional support but are not in a position to employ someone permanently.
Common examples include bookkeeping, payroll, marketing, graphic design, IT support, and finance director support.
The main advantage is flexibility. You can pay for the support you need without taking on the full cost and legal responsibilities of employing someone.
Outsourcing may be suitable when the workload is irregular, you need expertise that you could not justify employing full time, or you want to test demand before recruiting permanently.
In our experience, outsourcing tends to work best when the responsibilities, costs and expected response times are agreed clearly from the start. So, ask potential providers for a clear scope of work. Check what is included and how additional work is charged.
It is also worth considering how well they understand your business and whether you would feel comfortable working with them regularly. After all, they may become almost as involved in your day-to-day operations as an in-house employee.
When using your existing team may work
Redistributing work within your team can be sensible when the demand is temporary.
A word of warning, though: adding work without removing anything can lead to mistakes, sickness absence and low morale. So be realistic about how much spare capacity your team actually has.
To help free up time, look for practical changes you can make, such as stopping reports or meetings that are no longer useful or automating repetitive administration. The time saved may be enough to help your team focus on more important tasks.
You do not have to recruit full time
The choice does not have to be between a full-time employee and no employee.
Other options include:
- a part-time employee
- a fixed-term contract
- an apprentice
- a freelancer
- reduced or flexible hours
If you’re not sure which option is most suitable, it is worth seeking employment and accounting advice, particularly if you plan to use a freelancer.
Simply describing someone as self-employed does not necessarily make them self-employed for tax or employment law purposes.
And if the arrangement is classified incorrectly, your business could face unpaid tax and National Insurance, interest, penalties and claims relating to employment rights. We can help you review the proposed arrangement before you make a commitment.
Make the decision using your own figures
If you are thinking twice about hiring, compare the full cost, likely return and effect on your cash flow under each option. Then give us a call on 0113 240 4100 and we can help you work through the figures and compare the available options.
