The Outsourcing Dilemma: When Should Agencies Do It?

By | June 4, 2012
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Outsourcing DilemmaTo control quality and revenue, hybrid agencies looking to grow revenue and staff should try and keep most services in-house. Essentially, you’ll want to own all core pieces of an ongoing integrated campaign, which generally includes social, search, content and PR.

That said, it sometimes makes sense to outsource services that require very specialized capabilities, software or equipment to soloists or specialists. A few examples include: custom programming, video, web design and niche writing.

This begs the question: when should agencies outsource, and when should they dedicate the resources to expand capabilities? Below are some factors to consider when deciding.

Key Considerations

Consider the following factors when deciding which services to outsource to trusted partners and which to keep or move in-house.

  • Service Popularity—Is the service in high demand from customers and prospects? If so, then it may be an opportunity to expand offerings. If only a few clients are interested, then it’s probably best to outsource—unless the market dictates that it will be a highly valued service in the future.
  • Internal Resources—Is your current staff capable of mastering the new skill, or would you need to hire or acquire to fill the gap? Consider the time commitment and resources needed for internal professional development, and the costs and available opportunities for expansion.
  • Expertise—How knowledgeable is your staff on the subject matter? Do you feel confident you can deliver the quality of work your clients deserve? Sometimes partners’ specialized experience can provide better ROI for clients and help with account retention, than trying to do something in-house.
  • Efficiency—Do you have the processes, technologies and talent in place to perform the service efficiently? Use time tracking tools to make educated decisions on whether an in-house service makes financial sense based on the time put into it. You may find that a partner can deliver the same quality work faster and more cost effectively.
  • Profitability—Do you earn high profit margins off service completion, or does it suck agency resources with little return? Keep profitable services in-house, and either revamp your processes for unprofitable services or find a great partner. 
  • Integration—How much does this service affect the performance of other services? Anything that is integral to the success of the campaign is often best left in-house, while one-off projects or siloed activities can more easily be outsourced.
  • Quality of Partners—Do you have a quality network of partners to rely on? Your brand will ultimately be judged by their performance, so make sure you are comfortable with their work. For tips on selecting partners, see Why Marketing Agencies Should Get in Bed with the Enemy.

Since each agency and situation is unique, there is no definitive answer for when to outsource. However, the above criteria should help you form a business case either for or against bringing a service in-house.

As the need for specialized expertise and services expands, are you finding it harder to do everything in-house? What have you outsourced and why?

Do You Outsource Everything?

If so, we'd love to hear how you successfully built a scalable distributed network of partners for potential coverage in an upcoming blog post. 

Image Source: Julia Manzerova

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