Outsourcing vs Automation: How do you decide which one actually makes sense?

I’ve been digging into how small teams decide between outsourcing work and automating it, and I’m realizing the decision is rarely about cost alone.

From what I’ve seen so far, it usually comes down to three things:

Predictability – If the task follows clear rules and repeats often, automation feels like the obvious win.

Judgment required – Anything that needs context, creativity, or decision-making still seems better handled by humans.

Risk tolerance – Automation failures can break systems quietly, while outsourcing failures are usually visible (and easier to correct).

One mistake I keep noticing is people trying to automate tasks too early, before the workflow itself is fully understood. That often creates more work instead of saving time.

I’m curious how others here approach this:

Do you automate first and outsource later?

Or outsource first, then automate once patterns are clear?

Any examples where automation backfired for you?

Would love to hear how other Indie Hackers think about this.