Organizations have to decide whether to create internal teams or outsource certain functions to external teams when it comes to developing a team. Both approaches have their own unique advantages and disadvantages based on the needs of the organization. This report will assess the pros and cons of utilizing either an external team or an internal team so that organizations can develop a plan and make a decision that aligns with their organizational goals.
Advantages of Utilizing External Teams
When an organization utilizes an external team (an external team is generally defined as one where the team members are contracted or hired on a project-by-project basis), they can utilize skills and abilities that may not be available within the organization.
Key advantages include:
- A cost-effective method: The use of an external team provides companies with a more affordable alternative because companies are not required to commit to paying the salary, providing benefits, and providing training for the duration of employment.
- A source of expertise: An organization can access skills and experience from outside of the organization.
- Flexible to changing needs: An organization can easily grow its operation by adding an external team to meet growing demands without having to go through the lengthy process of hiring employees or increasing overhead costs.
Utilizing an external team gives an organization the flexibility to hire highly qualified professionals on a temporary or project-by-project basis while avoiding many of the costs associated with long-term employee commitments.
Advantages of Utilizing an Internal Team
An internal team refers to the employees that work full-time within the organization and are therefore likely to be more connected to the organization’s culture and longer term plans.
Key advantages include:
- A better connection to the culture: Employees on an internal team are more familiar with the company’s culture, values and long term goals resulting in more effective communication and a better connection to the organization’s mission.
- Continuously involved: As employees on an internal team are continuously involved in the organization’s daily operations, they have a better understanding of the organization’s challenges.
- More control and oversight: An organization has more control over how an internal team operates and the quality of the products and services produced by the team, as the team members are employed by the organization and have a vested interest in the organization’s success.
An internal team is a stable entity, and the organization has complete control over the product or service being developed, and the organization is able to have direct oversight and input in all aspects of the project development.
Disadvantages of Utilizing External Teams
While external teams can provide an organization with specialized knowledge, there are several other factors that the organization should consider when deciding to utilize an external team.
Key disadvantages include:
- Communication challenges: An external team may have difficulty understanding the nuances of the business or communicating effectively as they are remote workers or their priorities are not aligned with those of the organization.
- Lack of loyalty and retention: Since an external team is comprised of non-employees, there is little opportunity for the team to develop a sense of belonging to the organization and a vested interest in the organization’s long term vision.
- Availability limitations: An external team is usually managing multiple client relationships at once, and this can result in limited availability or conflicting priorities.
Although an external team can provide an organization with flexibility and specialized skills, the organization must take responsibility for overcoming the communications, loyalty and availability challenges of an external team.
Disadvantages of Utilizing an Internal Team
An internal team, although allowing an organization to maintain greater control, also presents certain challenges that must be managed.
Key disadvantages include:
- Increased costs: Supporting full-time internal teams can be costly to the organization, as the organization is responsible for the salaries, benefits and training of these employees.
- Limitations in expertise: An internal team may not possess some specialized skills that would benefit a particular project.
- Inability to scale quickly: It can take an organization time to recruit and train new employees; thus, the organization is not able to quickly respond to changes in the market or increase the size of the organization.
An internal team requires significant investments and time in recruiting employees, however, the organization will have long term stability and control over its business operations.
Conclusion
The type of team that an organization decides to employ ultimately depends upon the organization’s current needs, financial resources and long-term goals.
- An organization that uses an external team can gain flexibility and specialized skills at a reduced cost, however, the organization must take responsibility for minimizing communication and loyalty challenges.
- An organization that employs an internal team will gain stability, a deeper connection to the company culture, and greater control, however, at a significantly increased cost.
Ultimately, by evaluating the pros and cons of each option, organizations will be able to make educated decisions regarding what will allow them to operate efficiently and reach their long-term strategic goals.
