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Outsourced vs In-house
Should a staffing agency run its back office in-house or outsource it?
The verdict
Outsource until the fee exceeds the loaded cost of the team it replaces — usually somewhere past 75 to 100 contractors. Before that, an outsourced back office buys compliance cover and founder time, and founder time spent selling is worth more than the fee saved.
Reviewed by James Doyle · Updated 2026-09-16
Side by side
| Factor | Outsourced | In-house |
|---|---|---|
| Cost shape | Variable, per contractor or percentage | Fixed salaries plus software |
| Compliance risk | Shared with a specialist provider | Entirely yours |
| Setup time | Live in weeks | Months to hire and implement |
| Control | Provider processes and timelines | Full control of billing and collections |
| Break-even | Better below roughly 75 heads | Better above roughly 100 heads |
Choose Outsourced if
- You are pre-launch or under 75 contractors
- You do not yet have payroll or compliance expertise internally
- Founder time is better spent on clients than on process
Choose In-house if
- Volume makes per-head fees the largest line after payroll
- You need bespoke billing that a provider cannot support
- You have a finance lead who can own compliance
Cost the risk, not just the salaries
The in-house comparison is not one administrator's salary. It is payroll software, insurance, cover for absence, audit readiness and the cost of getting a classification or tax filing wrong once.
Most funded launches keep the back office bundled with their funding facility in year one precisely because the two functions share the same data.
Common questions
What does an outsourced staffing back office include?
Typically timesheet capture, contractor payroll, client invoicing, credit control and statutory filings, often bundled with a payroll funding facility so the cash and the paperwork move together.
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