What is a good Hire vs Outsource Cost Analysis?

For Non-Core Functions, a good Hire vs Outsource Cost Analysis is Outsource (save 30%+). Typical performance falls in the Hybrid model range, and Full internal (costly) is considered poor according to Deloitte Global Outsourcing Survey 2025.

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Decision Engine

Hire vs Outsource

The wrong hiring decision costs a business 30% of the employee first year earnings according to the Department of Labor. Answer 5 questions about your role requirements, budget, timeline, and skills needed to get a data driven recommendation on hiring versus outsourcing.

Last updated: May 2026Maintained by CalcStack

A hire vs outsource analysis compares the total cost and control trade-offs of building an internal team versus using external providers. Internal Cost = (Salaries + Benefits + Management + Tools) ÷ Output. Non-Core Functions typically target Outsource (save 30%+). The wrong hiring decision costs a business 30% of the employee first year earnings according to the Department of Labor.

Used in

Industries:For HR & Operations

📊 Your visitors see this on your website. HR teams embed this tool on their careers page, candidates assess fit and you capture their profile data automatically. See plans →

✓ Built on patterns from Stripe, Typeform, and HubSpot✓ Interactive tools convert 30-50% vs 2-3% for static forms✓ 60-second embed, works on any site

↑ This is exactly what your website visitors see when you embed this tool. The only difference: their results are gated behind an email capture form, and every input is sent to your CRM.

What is Hire vs Outsource Cost Analysis?

A hire vs outsource analysis compares the total cost and control trade-offs of building an internal team versus using external providers.

The Formula

Internal Cost = (Salaries + Benefits + Management + Tools) ÷ Output
Outsource Cost = Agency/Freelancer Fees ÷ Output

Worked Example

A marketing function: hire 2 staff ($45K each) or outsource to agency ($5K/month).

Internal: ($90K salaries + $25K benefits/tools + $15K management) = $130K/year
Outsource: $5K × 12 = $60K/year
Internal output: consistent, culture-aligned
Outsource output: specialist expertise, scalable

📌 Outsourcing saves $70K annually but internal team offers more control and culture alignment.

Why This Matters

Cost efficiency

Outsourcing can save 20-40% on operational costs while providing access to specialist expertise.

Focus on core business

Outsourcing non-core functions frees management attention for activities that directly drive revenue.

Scalability

External providers scale up or down quickly. Internal teams require months to hire or restructure.

Common Mistakes

❌ Outsourcing core competencies

Never outsource what differentiates you. Outsource commodity work and keep strategic capabilities in-house.

❌ Choosing on price alone

The cheapest provider often delivers the poorest quality. Evaluate expertise, reliability, and cultural fit alongside cost.

❌ No SLAs or accountability

Without clear deliverables and metrics, outsourced work lacks accountability. Define expectations contractually.

Industry Benchmarks

Category	Good	Average	Poor
Non-Core Functions	Outsource (save 30%+)	Hybrid model	Full internal (costly)
Core Functions	Internal (control)	Selective outsourcing	Fully outsourced
Cost Saving	30-40% saving	10-30% saving	No saving or higher cost

Source: Deloitte Global Outsourcing Survey 2025

Benchmark data sourced from Deloitte Global Outsourcing Survey 2025.

SHRM's 2025 Talent Acquisition Benchmarks report found that companies embedding interactive assessment tools in their hiring flow reduced time-to-fill by 19%, because candidates who self-evaluate their fit generate richer profile data for recruiters to prioritize.

See All Decision Engine Tools →

One of the most common mistakes we see when working with clients: outsourcing core competencies. Never outsource what differentiates you. Outsource commodity work and keep strategic capabilities in-house.

Embed This Decision Engine on Your Website

Every visitor who uses your embedded decision engine becomes a qualified lead. Their inputs, results, and business data are captured and sent to your CRM, before you ever pick up the phone.

Lead CaptureCRM IntegrationBranded PDF ReportsIndustry Benchmarks

See Plans & Pricing →Compare Tools

Related Tools

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Full-Time vs Contractor

Full time employees cost 30 to 40% more than contractors when benefits are included according to BLS data. Answer 5 questions about duration, budget, IP ownership, and skill requirements to get a data driven recommendation on full time hire versus contractor engagement.

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Apprentice vs Experienced Hire

Apprentices cost 50% less in year one but take 18 to 24 months to reach full productivity according to DOL apprenticeship data. Answer 5 questions about your urgency, training capacity, budget, and role complexity to get a recommendation on apprentice versus experienced hire.

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Recruitment Cost Calculator

The average cost per hire in the US is $4,700 according to SHRM data. Enter your job ad spend, recruiter fees, interview hours, and onboarding costs to calculate the true cost of each hire. Compare your cost per hire against industry benchmarks by role and seniority.

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Training ROI Calculator

Companies that invest $1,500 or more per employee on training see 24% higher profit margins according to ATD research. Enter your training costs, participant count, and expected productivity improvement to calculate the return on investment. See payback period and annual returns.

⏰

No-show Meeting Cost Calculator

No show meetings waste an average of 15 hours per employee per month in preparation and idle time according to Doodle research. Enter your team size, average salary, and no show frequency to calculate the hidden cost across wasted salaries, preparation time, and lost momentum.

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Return to Office Poll

Owl Labs 2025 State of Hybrid Work found that 64% of employees say they would actively look for a new job if forced fully back to office. Vote in this two question peer poll on your current arrangement and your ideal one to see where the peer median sits across remote, hybrid, and in office.

Frequently Asked Questions

When should I hire instead of outsource?

Hire for ongoing roles that involve core IP, require deep institutional knowledge, or where direct management is essential. Outsource for specialist or short-term work.

How does the recommendation engine work?

It weighs your specific inputs, role duration, budget, complexity, management capacity, and IP sensitivity, to produce a personalized recommendation with confidence level.

When should I outsource instead of hiring?

Outsource when the role is project-based (under 12 months), requires specialist skills your team lacks, or when your management capacity is stretched. Companies that outsource non-core functions save 20-30% on average compared to full-time hires for the same output.

How much does outsourcing cost compared to hiring?

A full-time US employee costs 1.25-1.4x their salary when you include payroll taxes, benefits, equipment, and office space. Outsourcing typically costs the hourly rate only with no overhead. For a $40K role, the true cost is $50-56K employed vs $35-50K outsourced for equivalent hours.

What are the risks of outsourcing?

The main risks are quality inconsistency, communication delays across time zones, IP security concerns, and lack of cultural alignment. Mitigate by starting with a paid trial project, using clear SOWs, and keeping core strategic functions in-house.

What factors matter most in the hire vs outsource decision?

The four biggest factors are: duration (short-term favors outsourcing), IP sensitivity (core product favors hiring), management capacity (limited capacity favors outsourcing), and budget (outsourcing has lower upfront cost but hiring builds long-term capability).

When should a company outsource instead of hiring?

Outsource when the role is project-based under 12 months, requires specialist skills your team lacks, or when management bandwidth is stretched. Deloitte Global Outsourcing Survey data shows companies that outsource non-core functions save 20-30% versus full-time hires while maintaining or improving quality.

What are the main differences?

Full-time employees offer loyalty, cultural fit, and IP control.

See the full answer on Full-Time vs Contractor

What are the benefits of hiring an apprentice?

Lower salary costs, government funding incentives, loyalty, and the ability to train someone in your exact processes.

See the full answer on Apprentice vs Experienced Hire

What costs are included in the recruitment cost calculator?

Job board advertising, agency fees, recruiter time, interview time (hiring manager plus panel), assessments, onboarding, and productivity ramp-up to produce a full cost-per-hire figure.

See the full answer on Recruitment Cost Calculator

How to calculate training ROI?

Compare performance improvements to training costs...

See the full answer on Training ROI Calculator

What is a no-show meeting?

When attendees fail to show up...

See the full answer on No-show Meeting Cost Calculator

🤝

Decision Engine

Hire vs Outsource

Last updated: May 2026Maintained by CalcStack

Used in

Industries:For HR & Operations

📊 Your visitors see this on your website. HR teams embed this tool on their careers page, candidates assess fit and you capture their profile data automatically. See plans →

✓ Built on patterns from Stripe, Typeform, and HubSpot✓ Interactive tools convert 30-50% vs 2-3% for static forms✓ 60-second embed, works on any site

↑ This is exactly what your website visitors see when you embed this tool. The only difference: their results are gated behind an email capture form, and every input is sent to your CRM.

What is Hire vs Outsource Cost Analysis?

A hire vs outsource analysis compares the total cost and control trade-offs of building an internal team versus using external providers.

The Formula

Internal Cost = (Salaries + Benefits + Management + Tools) ÷ Output
Outsource Cost = Agency/Freelancer Fees ÷ Output

Worked Example

A marketing function: hire 2 staff ($45K each) or outsource to agency ($5K/month).

Internal: ($90K salaries + $25K benefits/tools + $15K management) = $130K/year
Outsource: $5K × 12 = $60K/year
Internal output: consistent, culture-aligned
Outsource output: specialist expertise, scalable

📌 Outsourcing saves $70K annually but internal team offers more control and culture alignment.

Why This Matters

Cost efficiency

Outsourcing can save 20-40% on operational costs while providing access to specialist expertise.

Focus on core business

Outsourcing non-core functions frees management attention for activities that directly drive revenue.

Scalability

External providers scale up or down quickly. Internal teams require months to hire or restructure.

Common Mistakes

❌ Outsourcing core competencies

Never outsource what differentiates you. Outsource commodity work and keep strategic capabilities in-house.

❌ Choosing on price alone

The cheapest provider often delivers the poorest quality. Evaluate expertise, reliability, and cultural fit alongside cost.

❌ No SLAs or accountability

Without clear deliverables and metrics, outsourced work lacks accountability. Define expectations contractually.

Industry Benchmarks

Category	Good	Average	Poor
Non-Core Functions	Outsource (save 30%+)	Hybrid model	Full internal (costly)
Core Functions	Internal (control)	Selective outsourcing	Fully outsourced
Cost Saving	30-40% saving	10-30% saving	No saving or higher cost

Source: Deloitte Global Outsourcing Survey 2025

Benchmark data sourced from Deloitte Global Outsourcing Survey 2025.

SHRM's 2025 Talent Acquisition Benchmarks report found that companies embedding interactive assessment tools in their hiring flow reduced time-to-fill by 19%, because candidates who self-evaluate their fit generate richer profile data for recruiters to prioritize.

See All Decision Engine Tools →

One of the most common mistakes we see when working with clients: outsourcing core competencies. Never outsource what differentiates you. Outsource commodity work and keep strategic capabilities in-house.

Embed This Decision Engine on Your Website

Every visitor who uses your embedded decision engine becomes a qualified lead. Their inputs, results, and business data are captured and sent to your CRM, before you ever pick up the phone.

Lead CaptureCRM IntegrationBranded PDF ReportsIndustry Benchmarks

See Plans & Pricing →Compare Tools

Related Tools

📋

Return to Office Poll

Frequently Asked Questions

When should I hire instead of outsource?

Hire for ongoing roles that involve core IP, require deep institutional knowledge, or where direct management is essential. Outsource for specialist or short-term work.

How does the recommendation engine work?

It weighs your specific inputs, role duration, budget, complexity, management capacity, and IP sensitivity, to produce a personalized recommendation with confidence level.

When should I outsource instead of hiring?

How much does outsourcing cost compared to hiring?

What are the risks of outsourcing?

What factors matter most in the hire vs outsource decision?

When should a company outsource instead of hiring?

What are the main differences?

Full-time employees offer loyalty, cultural fit, and IP control.

See the full answer on Full-Time vs Contractor

What are the benefits of hiring an apprentice?

Lower salary costs, government funding incentives, loyalty, and the ability to train someone in your exact processes.

See the full answer on Apprentice vs Experienced Hire

What costs are included in the recruitment cost calculator?

Job board advertising, agency fees, recruiter time, interview time (hiring manager plus panel), assessments, onboarding, and productivity ramp-up to produce a full cost-per-hire figure.

See the full answer on Recruitment Cost Calculator

How to calculate training ROI?

Compare performance improvements to training costs...

See the full answer on Training ROI Calculator

What is a no-show meeting?

When attendees fail to show up...

See the full answer on No-show Meeting Cost Calculator

Hire vs Outsource

What is Hire vs Outsource Cost Analysis?

The Formula

Worked Example

Why This Matters

Cost efficiency

Focus on core business

Scalability

Common Mistakes

❌ Outsourcing core competencies

❌ Choosing on price alone

❌ No SLAs or accountability

Industry Benchmarks

Related Tools

Full-Time vs Contractor

Apprentice vs Experienced Hire

Recruitment Cost Calculator

Training ROI Calculator

No-show Meeting Cost Calculator

Return to Office Poll

Frequently Asked Questions

Related Questions

Hire vs Outsource

What is Hire vs Outsource Cost Analysis?

The Formula

Worked Example

Why This Matters

Cost efficiency

Focus on core business

Scalability

Common Mistakes

❌ Outsourcing core competencies

❌ Choosing on price alone

❌ No SLAs or accountability

Industry Benchmarks

Related Tools

Full-Time vs Contractor

Apprentice vs Experienced Hire

Recruitment Cost Calculator

Training ROI Calculator

No-show Meeting Cost Calculator

Return to Office Poll

Frequently Asked Questions

Related Questions