Choice paralysis: Building out your HR in-house vs choosing an external partner

As a People or business leader, you often face the question: Should I have HR capability in-house or outsource? We see this come up often and there’s no single right answer. It ultimately comes down to where your company is in its journey, the challenges you’re navigating and the vision you’re building toward.

In this conversation, our Head of People Advisory Kacey D’Odorico unpacks the pros and cons of each option and provides a framework for overcoming decision paralysis to make the choice that best aligns with your budget, strategic vision and culture.

Question 1: Set the scene for us. When do People and business leaders face the in-house versus partner choice for HR support?

In the current landscape, businesses are under a lot of pressure to stay lean, move fast and still deliver not just for the business, but for their people. So they're grappling with questions around growing and scaling, and considering whether to bring someone in-house or work with an external partner.

A scenario where leaders often face the in-house versus partner decision for HR support is when they hit a critical point in their growth, usually when people challenges start to surface or when there’s a strategic objective they need help achieving. It might be about improving engagement, scaling culture, refining performance systems or supporting a new phase of growth. 

Another common scenario is when a business has had someone “maintaining” HR, managing the basics and keeping things running but now needs to step up to a more sophisticated, strategic approach. This is often the moment leaders pause to ask: Do we build this capability internally, or is it time to bring in a partner who can accelerate our people strategy?

Question 2: What are the pros and cons of an in-house approach?

The main benefit of in-house is usually the full-time dedicated focus which can bring consistency and continuity. They're on the ground, in the water cooler conversations, and can build a deeper understanding of the business.

If a business is growing the headcount above say 80 people, there are definitely benefits of having someone dedicated internally, especially if there are multiple locations, so they can build internal relationships and the long-term IP of a People function.  

Meanwhile, the most obvious con of in-house hiring is cost. Can you afford the fixed cost and overheads of a full-time or permanent headcount? The other main downside is that committing to one or two in-house people can limit the team’s capability, because they’ll typically be generalists handling everything across the employee life cycle. If you then need to scale and grow quickly, those resources can become stretched and bottlenecks often develop, plus the business is lacking specialist HR skills it might need for periods of time.

Then there’s the flip side of what we were just talking about around those water cooler conversations. Sometimes, being in-house and knowing everyone inside and out can limit perspective or create internal bias in decision-making. 

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“Can you afford the fixed cost and overheads of a full-time or permanent headcount and will they be able to deliver at the scale your business requires?”

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Question 3: What are the pros and cons of a strategic partner?

Working with an outsourced HR partner offers flexibility and scalability that a permanent hire often can’t match. You gain access to experienced People and Culture professionals without the fixed costs of a full-time headcount, allowing you to tap into the right expertise exactly when you need it.

A strategic partner is especially valuable when there’s a skills gap internally or hiring isn’t feasible. They bring depth and breadth of capability, covering everything from day-to-day HR operations across the employee life cycle, people advisory support, and even executive-level strategic guidance. You also benefit from fresh perspectives and industry best practices, drawn from experience across multiple organisations facing similar challenges.

Partners can scale their support up or down depending on your needs. Many businesses already have someone leading HR in-house, doing a strong job, but require extra support for a specific project, capability gap or to upskill their internal team — this is exactly where a strategic partner can add real value.

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Question 4: That takes us onto the hybrid, ‘best-of-both-worlds’ approach. What does that look like?

The hybrid model offers the flexibility to combine internal HR capability with additional external expertise, giving you the best of both worlds. You can bring together your expertise and business context from your in-house team and bring in a strategic partner to either add capacity or capability whenever a specific need arises.

For example, if your business has an ambitious growth target over the next 12 months and your internal team is already stretched managing day-to-day HR, a partner can step in to provide extra capacity and specialist expertise. On the flip side, if you already have strong strategic HR capability but lack the team to implement what “good” looks like quickly, an external partner can help execute efficiently, turning strategy into action.

It’s not about replacing your team, it’s about doing the heavy lifting while keeping your team fully involved and informed. We see ourselves as an extension of your team, embedded in your business and operating as part of your ecosystem. Practically, this means using the same tools - email, Slack, Teams, being on-site when needed, learning your tone and voice and delivering work that feels seamless. Whatever we deliver, we deliver as if we are part of your team.

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“You can tap into a team of HR experts and adjust the level of support to match whatever challenge you’re facing.”

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Question 5:  How would you approach guiding the choice between these options?

It starts with understanding your business strategy and objectives and the role your People function plays in achieving them. If your goals rely heavily on HR capabilities, the question becomes: do you have that expertise in-house, or do you need to bring in additional support?

Some of the key questions we ask leaders include:

• Are your systems and processes already in place or are you building from scratch?
• What specific people-related challenges are you trying to solve?
• What growth ambitions are you planning for and how will they impact your people needs?
• How quickly do you need these initiatives implemented?
  
  

These questions naturally lead to a discussion about capacity and capability. Do you simply need extra hands to manage workload with added capability as a bonus? Or do you need new strategic skills to achieve your objectives, alongside the capacity to implement them?

Working through these questions usually clarifies the best path forward, aligning your People strategy with your business’s stage, needs and ambitions.

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We hope you enjoyed this conversation. Want to hear more from the WRC team? Head to our Articles page where the crew covers more of the most common and difficult People & HR challenges we see every month.

‍ Need a people and culture partner who gets it? Reach out to start a conversation of your own around how WRC can support your team with an upcoming project or ongoing support.

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