Question

do small businesses often outsource project work? why or why not?

Answer 1

Small businesses will not outsource project work if the project work contains work that can be done by the internal talent available to them. This is because firms which are small tend to grow and acquire capabilities only by doing projects and completing jobs on their own rather than outsourcing them. So any new project, for which there is a matching internal capability, will be done by the firm itself without taking recourse to external help or consultant in order to develop capabilities on managing and delivering the project. This also helps them to showcase their competencies and win clients in the future.

However, there is a caveat that if the project work contains elements which the firm is not equipped to manage or it would need specialised skills and competencies which the firm does not possess, then they may consider outsourcing the project as a small firm would not look to hire new resources for accomplishing a single project and would look for more cost-effective way such as outsourcing to complete the job. However, this will not be the first preference for a small firm.