What Make vs. Buy Means in the Context of Virtual Assistants
In operations and supply chain management, the make vs. buy decision asks whether a company should produce a capability internally or acquire it externally. Applied to virtual assistant staffing, the question is: should your business build an internal administrative support function (make) or engage an external VA provider (buy)?
The framework is more useful than a simple cost comparison because it forces you to account for the full cost of the make option—not just the wages of a new hire, but the organizational investment required to recruit, onboard, manage, retain, and replace that capacity over time.
The Gartner 2023 Workforce Strategy report found that 72% of organizational leaders underestimate the true cost of building internal functions when external alternatives are available. The make option almost always looks cheaper in the initial budget model than it proves to be in execution.
Modeling the "Make" Option Costs
The make option for administrative support typically means hiring a part-time or full-time in-house employee or building an internal coordinator role. Full model costs include:
Direct labor costs:
- Base salary (entry-level U.S. administrative assistant: $35,000–$48,000/year per BLS 2024 data)
- Employer payroll taxes (7.65% of wages)
- Health insurance contribution (average $7,911/year per KFF 2023 data)
- Paid time off (average 15 days = ~6% of wages)
Organizational overhead:
- Recruiting costs ($3,000–$7,000 per hire for administrative roles per SHRM 2023)
- Onboarding and training time (40–80 hours of management/peer time at loaded rates)
- Management overhead (ongoing supervision, performance reviews, HR compliance)
- Physical workspace if applicable ($8,000–$12,000/year per CBRE 2023)
Risk factors with economic value:
- Turnover risk: 33–50% annual turnover rate for administrative roles (Work Institute 2023)
- Replacement cost: 50–150% of annual salary per departure
- Coverage gaps: Vacation, illness, and departure create unmanaged administrative backlogs
Total fully loaded annual cost for a $40,000 in-house coordinator: $57,000–$68,000 with moderate overhead assumptions, plus risk-adjusted replacement cost of $15,000–$30,000 averaged annually based on role turnover rates.
Modeling the "Buy" Option Costs
The buy option encompasses several sub-models: freelance platforms, dedicated VA agencies, VA staffing firms, and hybrid arrangements. For comparison against a full-time in-house role, a dedicated 40-hour-per-week VA engagement is the appropriate equivalent.
Direct costs:
- VA hourly rate: $12–$25/hour depending on skill level and geography
- Annual cost at 40 hours/week: $24,960–$52,000
- Agency placement or management fee (if applicable): $0–$3,600/year
Organizational overhead:
- No recruiting cost (agency handles sourcing)
- Reduced onboarding burden (agency provides pre-vetted, trained candidates)
- Minimal management overhead (1–2 hours/week for experienced VA relationships)
- Zero physical overhead
Risk factors:
- VA turnover: Managed by agency; replacement provided with minimal gap
- Coverage: Established agencies provide backup coverage during VA absences
- Quality variance: Mitigated by agency vetting and performance guarantees
Total fully loaded annual cost for 40-hour/week dedicated agency VA: $26,000–$56,000 with substantially lower risk-adjusted cost given managed turnover.
When Make Wins
The make option wins under specific conditions:
- Deep institutional knowledge requirement: The role requires understanding of complex internal systems, relationships, or history that takes years to build
- High confidentiality or security requirements: Internal employment provides stronger legal and contractual frameworks for sensitive work
- Career path integration: The role is a logical stepping stone within an internal organizational hierarchy
- Scale economies: Large enough volume to justify full-time employment with minimal idle time
Research from Deloitte's 2023 Global Outsourcing Survey found that confidentiality/security concerns and institutional knowledge requirements are the two most common legitimate reasons organizations choose the make option for administrative support roles.
When Buy Wins (Most of the Time)
For the majority of small and mid-sized businesses, the buy option wins decisively on:
- Speed to capability: 1–2 weeks to productive engagement vs. 8–16 weeks for hiring cycle + ramp-up
- Cost at lower volumes: Part-time VA needs are uneconomical to staff in-house
- Flexibility: Easily scale up or down as business needs change
- Expertise breadth: Access to specialized skills (bookkeeping, social media, CRM management) without multiple in-house hires
For businesses working through the make vs. buy framework and leaning toward the buy option, Stealth Agents provides structured VA engagement models designed to match specific business capacity needs.
The make vs. buy analysis rarely produces a definitive universal answer. But applied honestly to the real costs of both options, it almost always reveals that the buy option is undervalued and the make option is undercosted in initial business models.
Sources
- Gartner, "Workforce Strategy and Organizational Design Report," 2023
- U.S. Bureau of Labor Statistics, "Occupational Employment and Wage Statistics," 2024
- KFF, "2023 Employer Health Benefits Survey"
- SHRM, "Average Cost-Per-Hire Benchmarks," 2023
- CBRE, "U.S. Office Market Statistics," 2023
- Work Institute, "2023 Retention Report"
- Deloitte, "Global Outsourcing Survey 2023"