The same moment always arrives: the admin workload no longer fits into whatever hours management has left over, and there are two options on the table. Hire someone for admin work, or outsource the function to an outside team.
The conversation almost always starts with cost. And cost is, of all the criteria, the one that decides the least — because the two options cost similar amounts and fail for completely different reasons. This article puts the criteria that actually decide it in order of importance.
What does each option actually cost?
It is worth getting cost out of the way first, precisely so it stops being the centre of the decision. The most common mistake is comparing gross salary with a monthly retainer, when gross salary is less than three-quarters of an employee's real cost.
| Monthly cost | In-house employee | External team |
|---|---|---|
| Base pay, over fourteen months | €2,333 – €2,542 | — |
| Employer social tax (23.75%) | €554 – €604 | — |
| Mandatory training and insurance | €42 – €125 | — |
| Workstation and equipment | €83 – €167 | — |
| Cover for holidays and absences | not covered | included |
| Monthly total | €3,040 – €3,500 | €1,500 – €3,000 |
These are market reference figures for a Portuguese SME of 5 to 30 people, on a twelve-month basis, and do not replace an actual quote. What matters is not the difference — it is that the difference is small enough not to decide anything on its own.
What happens when that person isn't there?
This is the criterion that decides it. An admin function is not a project: it is a routine with fixed dates and no tolerance. Salaries, VAT, social security and invoicing wait for nobody.
What if it coincides with month-end close?
A two-week sick leave in September catches payroll processing, the VAT return and the previous month's close all at once. With a single employee, management absorbs the work or the company falls behind on an obligation. With an external team, cover is part of the contract — that is the difference between a person and a service.
And when the person leaves?
Recruiting, onboarding and training an admin hire takes two to four months to become self-sufficient. During that gap, operations run worse than before the hire. If that person was the only one who knew where things were, part of the knowledge leaves with them.
Does the knowledge live in someone's head, or is it written down?
This is the root of the problem, and it is independent of which option you pick. A healthy admin operation is one where any competent person can pick the work back up from what is documented.
In practice, that means having written down: the fixed calendar of obligations, who approves what and above which amount, where each type of document lives, and what to do for every known exception. It is exactly the same problem described in when the operation lives in one head.
An in-house employee can document all of this — but rarely does, because nobody asks them to and day-to-day work eats the hours. An external team is forced to document, because that is how it replaces people without the client noticing. The difference is not ability: it is incentive.
What obligations come with an employment contract?
Hiring brings a set of duties that do not exist with a services agreement, and that are worth knowing beforehand rather than afterwards:
- Notifying Social Security of the hire, up to twenty-four hours before the person starts.
- Work-accident insurance, mandatory from day one.
- Forty hours of annual continuing training, under the Portuguese Labour Code.
- Holiday bonus and Christmas bonus, which turn the year into fourteen months of pay.
- Severance in case of termination, whose calculation depends on the contract type and start date — the rules have changed several times over the last decade, so the figure should be confirmed case by case.
None of this is an argument against hiring. It is an argument against hiring without having budgeted for these costs and without anyone tracking them.
When hiring is the right call
An in-house hire pays off when the admin work is fused to operations and cannot be separated from it: when whoever enters invoices also handles clients, confirms deliveries or tracks stock. In those cases, pulling the function out creates more friction than it solves.
It also pays off when volume is stable and high enough to occupy one person full-time, and when someone at the company genuinely has the time to train and cover for them.
When outsourcing is the right call
Outsourcing pays off when the work is standardisable — invoicing, collections, reconciliations, payroll support, liaising with the accountant — and when volume fluctuates across the year. It pays off above all when the company today has nobody able to train, supervise and cover for an admin hire, which is the most common case at a company of ten to fifty people.
A quick way to position yourself
Answer honestly. Each "yes" is a point in favour of outsourcing:
- If whoever handles admin work were out for two weeks, some legal obligation would be at risk.
- There is no written document with the company's monthly calendar of obligations.
- Admin workload clearly varies across the year.
- Nobody at the company has experience supervising an admin function.
- Management still does admin tasks it shouldn't be doing.
Three or more "yes" answers mean the problem is not a shortage of hands: it is a missing process. Hiring one more person for a process that does not exist just moves the problem.
Frequently asked questions
Can you start by outsourcing and hire later?
That is the safest path, and the most common one. The external team sets up the process and writes it down; when volume justifies a full-time hire, the company hires into a role that is already defined, with a manual and a calendar. Training drops from months to weeks.
Does outsourcing mean losing control over operations?
Only if the relationship is set up without approval rules. With defined spending limits, management approvals where they need to exist, and a monthly report, control usually increases — because what used to live in an unwritten understanding is now written down.
What if the company already has an accountant?
These are different, complementary functions. The accountant handles recording and tax obligations; admin work is what has to happen beforehand, so the accountant has something to work with. The split is detailed in what your accountant does and doesn't do.
In summary
The cost of both options is close enough that it should not decide anything. What decides it is continuity: what happens to the company in the week the person responsible is not there. If the answer is "we stop," the question is not who to hire — it is that operations do not yet exist as a process.