Bringing Professional Services In-House: When is it Time and How Do You Do It?
Posted August 4, 2019 in Articles
If your company spends a significant amount of money on professional services (i.e. legal, accounting, recruitment, and information technology (IT)), you may be thinking about creating a new department to bring one or more of these services in-house. By transitioning to the in-house model, you can control your spending more effectively, you can exercise more direction over the services provided, and you can invest in your company’s own talent rather than paying for outside professionals’ career development. However, there are some potential drawbacks as well, and making an informed decision requires a thorough assessment of all of the various financial and practical considerations involved.
Pros and Cons: Transitioning from Third-Party Service Providers to In-House Professional Services
Pros: Cost Control, Exclusivity, Practicality, and Employee Development and Retention
1. Cost Control
While it is certainly possible to control your company’s costs when contracting with outside professionals, transitioning to the in-house model can provide even greater certainty with regard to your company’s annual budgeting for professional services.
Bringing your professional service providers in house means that they will be 100-pecent dedicated to meeting your company’s needs rather than splitting their time between multiple clients.
Bringing professional service providers in-house can provide practicality benefits as well, from having them working on your company’s IT infrastructure to having them available for in-person meetings on a day-to-day basis.
4. Employee Development and Retention
With appropriate focus on employee development and retention, you can offer your professional services employees desirable compensation and benefits packages that will make it attractive to stay with your company long-term.
Cons: Guaranteed Costs, Hiring and Retention, Limited Hours and Limited Options
1. Guaranteed Costs
Unlike working with outside professionals, when you only pay for what you need, when you bring these providers in-house you are guaranteed to have to pay their salary and benefits (and other fixed costs such as office space and software licenses) regardless of the volume of services required during any individual accounting period.
2. Hiring and Retention
In order to find and retain high-quality employees, you need to work for it. While there is certainly a due diligence aspect to choosing outside service providers, there is arguably much more involved in hiring professional employees who will work in-house.
3. Limited Hours
When you hire an outside law, accounting or IT firm, you can reasonably expect it to provide round-the-clock services when necessary. However, this generally is not the case with respect to in-house professional services employees (including those who are exempt from federal overtime rules).
4. Limited Options
Finally, if your professional services budget is devoted to in-house employees, you may find that your options are limited when you need services that fall outside of your employees’ areas of expertise.
Discuss Your Options with a Business Consultant at Mithras Investments
If you are thinking about bringing professional services in-house and would like more information about the benefits and drawbacks involved, we encourage you to get in touch. To speak with one of our consultants about your next deal, please call 305-517-7911 or contact us online today.