Outsourcing vs Hiring: Which Saves More Money?

Outsourcing costs less when compared with hiring; it offers flexible capacity that is available without the full cost of employing a new accountant. However, hiring makes sense when the workload becomes consistent and permanent. The right choice will depend on the workload, employment costs, utilisation, management time, and requirement for additional capacity.

To understand it better, we will put you in a situation. As an accounting practice, you are facing the same problem every month. Your accounting staff is handling more bookkeeping, accounts preparation, and VAT work than it can comfortably handle. With the client base expanding, recruiting multiple full-time accountants becomes expensive.

You will be left with two obvious choices: hire or outsource.

At first glance, hiring can look cheaper. You pay one salary and have someone sitting inside the practice every day.

But the salary is just the start. When National Insurance, pension contributions, annual leave, recruitment, equipment, training and management time are included, the real cost of an employee can look very different.

So, outsourcing vs hiring: which saves more money?

The answer depends on the type of work your practice needs and how consistently you need the capacity.

What Does Hiring Really Cost an Accounting Practice?

Hiring costs for an accounting practice include more than just salaries. For 2026/27, employers generally pay Class 1 National Insurance at 15% above the £5,000 secondary threshold, subject to the relevant rules and allowances. Eligible employers can claim up to £10,500 through the Employment Allowance.

Employers are also required to meet their pension obligations for eligible employees. The minimum employer pension contribution is 3%.

Then there is paid annual leave. Your staff who work a 5-day week must receive at least 28 days of paid annual leave a year. This is the equivalent of 5.6 weeks of holiday.

And the cost does not stop there.

Recruitment advertising, interviews, onboarding, training, software licences, equipment, management time and the time it takes a new employee to become fully productive can all affect the real cost.

Why Is Hiring Becoming a Bigger Decision for Accounting Practices?

Recruiting accountants is not a cakewalk. ICAEW research found that 56% of firms identified attracting and recruiting qualified staff as a top talent challenge. That does not mean finding an accountant is impossible.

It does mean recruitment must be taken after careful consideration rather than simply responding to a busy month.

If workload is permanent, then hiring makes sense. However, if demand keeps changing throughout the year, then outsourcing will be a better choice.

When Does Hiring Make More Financial Sense?

The decision to hire will be financially sound only when you have a consistent workload for your employees throughout the year. For example, suppose your practice has enough recurring bookkeeping, accounts preparation, and client work to keep an accountant busy for most of the year.

Having an in-house accountant permanently has its share of benefits. It will help in developing deep knowledge of your clients, becoming part of your culture, and developing into a more senior role over time.

Hiring also makes sense when you have frequent client interaction, management responsibilities or responsibilities that are difficult to separate into defined production tasks.

The question is not simply, “Can we afford the salary?”

It is:

“Can we consistently generate enough productive work to justify the full employment cost?”

When Can Outsourcing Save More?

Outsourcing becomes financially viable when your practice needs additional capacity, but the workload is not consistent enough for hiring a full-time employee. Hiring means carrying the employee cost during quieter months.

On the other hand, outsourcing allows you to increase capacity when required and reduce it when demand falls, depending on the engagement model.

This is particularly useful for:

• Bookkeeping backlogs
• Year-end accounts
• VAT work
• Payroll processing
• Management accounts
• Catch-up accounting
• Seasonal workload
• New client onboarding

The cost comparison should therefore be based on productive capacity, not simply an hourly salary calculation.

Outsourcing vs Hiring: What Should You Compare?

Here is a useful comparison between outsourcing vs hiring that looks beyond salary and outsourcing fees.

Factor	Hiring	Outsourcing
Salary or service fee	Fixed employee salary	Agreed outsourcing fee
Employer NI	Usually applies	Not an employee cost for the practice
Pension	Employer contribution may apply	Included within provider pricing
Holiday	Paid employee leave	Capacity remains subject to agreed service
Recruitment	Advertising, interviews and onboarding	Provider manages team recruitment
Equipment	Practice may provide hardware/software	Often managed within provider model
Training	Practice-led	Provider-led, with practice-specific onboarding
Capacity	Fixed employee availability	Can often scale by model
Management	Day-to-day employee management	Service and output management
Best fit	Consistent long-term workload	Flexible or variable workload

Hiring an in-house accountant in the UK would approximately cost between £50,000 and £84,000 per year total per employee, while outsourcing will cost between £12,000 and £30,000 per year (£150 to £2,500+ per month depending on transaction volume and complexity).

However, don’t base your decision just on provider’s pricing and your internal employment costs. That is why a simple salary-versus-outsourcing-fee comparison can give the wrong answer.

What Are the Benefits of Outsourcing Beyond Cost?

Apart from cost, multiple benefits are associated with outsourcing, such as access to experienced staff, additional quick capacity, and saving time for high-value accounting work.

Let’s go through each of them in detail.

Access to Quick Additional Capacity

One of the biggest benefits of outsourcing is the ability to add capacity without making every increase in workload a recruitment decision.

Saves Time

A practice can also use outsourcing to perform recurring time-consuming accounting activities like payroll processing and bookkeeping tasks, thus saving time for high-value work like client conversations, review, and tax planning.

For example, a qualified accountant may spend several hours each week on routine bookkeeping or reconciliations.

Access to Experienced Accounting Professionals

Through professional outsourcing providers, you can also get access to a wider pool of accounting professionals. It is very beneficial when recruiting locally is proving difficult.

For a practice considering this model, Corient can provide outsourced bookkeeping, accounts preparation, payroll and other accounting services through dedicated teams working to the practice’s processes and requirements.

Outsourcing is not here to replace your accountants. It is to give them additional production capacity when they need it.

What Are the Risks of Hiring Too Early?

Hiring becomes risky when done in haste. Some accounting work, like tax work, reaches its peak during tax season and goes down for the rest of the period. But the cost associated with hiring a new recruit to handle this temporary work remains the same throughout the year. To avoid this scenario, you must understand the risks of hiring too early.

Workloads Change

Changes in workload due to the departure of clients, seasonal demands, and increased automation can reduce the requirement for a permanent hire. In that case, if you hire a permanent accountant, you will be bearing the cost for the whole year without much return.

Employee Utilisation

Sometimes hiring in haste leads to overcapacity, meaning you will have less work and more employees, leading to a lack of complete utilisation of resources, making hasty hiring quite risky.

Therefore, it is important to assess the workload over a full 12-month period before committing.

How Can an Accounting Practice Decide Between Hiring and Outsourcing?

Base your decision of choosing hiring or outsourcing on your workload. If the workload is consistent and predictable to keep your employees occupied for the entire year then hiring is appropriate. However, if the workload is seasonal then outsourcing would be the best.

Ideally, you must combine both.

For example, your practice might employ senior accountants and client managers internally while outsourcing routine bookkeeping and accounts preparation.

That creates a different division of labour. Your internal team focuses on judgement, review and client relationships. The outsourced team handles defined production work.

Many growing practices are finding this hybrid model more useful than choosing between hiring and outsourcing as an either/or decision.

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Conclusion: The Cheapest Option Is Not Always the Lowest Fee

Don’t base your judgement on employee salary with an outsourcing quote. It should be based on whether your practice gets the right amount of productive capacity for the money it spends.

Hiring can be the right choice when you have a permanent workload and want to build internal capability. Outsourcing can make more financial sense when demand fluctuates, recruitment is difficult, or you need additional capacity without committing to another permanent employee.

And there is a third option: combine both. With client-facing and higher-value accounting work inside your practice while using an experienced external team for defined production tasks.

If your practice is growing but hiring every time the workload increases is putting pressure on margins, Corient can provide flexible accounting outsourcing built around your workload, processes and client requirements.

Contact us and find out where outsourcing could fit into your practice.