Outsourcing vs Insourcing: Pros & Cons
The decision to outsource or insource is one almost all businesses will be familiar with. It’s particularly pertinent to startups, for whom making permanent hires is an even bigger step than it is for established businesses, but it’s a quandary we all face.
It’s common for businesses to find themselves deep in this debate when it comes to their marketing. Should we hire a marketer to run our campaigns? Would a freelancer be able to do the job, without the national insurance obligations that come with hiring full time? Or would an agency be best? Which will take me out to the best lunches (always the agency!)?
In this blog we are going to discuss the pros and cons of insourcing versus outsourcing, especially when it comes to marketing.
What is Insourcing?
It’s always helpful to start with a definition of terms. Essentially – insourcing is having an existing employee undertake a task or process, or hiring an employee to do it. By taking a decision to insource a piece of work you are deciding that you either already have the skills/resources/time among your staff to do it, or you are deciding the task is large enough or the skills are specialist enough to warrant a full time hire.
Insourcing Pros & Cons
There are a lot of very good reasons to insource. The main reason is control – when an employee of your organisation undertakes a task, they generally have a management structure above them that can directly oversee what they’re doing. The employee can have a large chunk of their time dedicated to the task, and their incentive for doing it well is extremely high because it could affect their performance reviews, pay and, ultimately, longevity of employment.
Accountability and performance isn’t the only thing you’ll have more direct control over. You’ll also have a stronger say over how the task is performed. You can train your employee to undertake it in exactly the way you want.
But if it were that easy and obvious, we wouldn’t ever have this debate. There are obviously drawbacks. If you’re using an existing employee you may be putting a square peg into a round hole. They may not have the specialist skills to do the job, in which case they may not do it as well as an external resource, or you may need to pay to train them up.
If you’re hiring a new employee there are obvious cost implications – a full time salary, national insurance and benefits adds up. To decide to do that you’ve got to be sure that A) the task is worth enough to the business to be worth a full time hire and B) the person you’re hiring is the right fit. Not to mention, hiring takes time! For some roles, especially more senior ones, it’s not uncommon for the hiring process to take between 3 and 9 months.
Example of Insourced Digital Marketing
The classic example of insourcing from a marketing perspective is hiring a single generalist digital marketer, to be made responsible for search engine optimisation, pay per click marketing, email marketing, brand awareness, putting the wallpaper up, organising the Christmas party etc etc etc…
It’s an approach many businesses take when they know they need marketing help, but they’re distrustful of freelancers or agencies. It’s understandable, but it causes problems – mostly because you’ve hired a generalist to do the job of several specialists.
The other example would be building a full marketing team with a senior role to set the strategy, and a string of more junior roles to execute it. This is obviously a great way to run your marketing – but it’s expensive, and it takes a long time to build a high quality team.
What is Outsourcing?
Outsourcing is taking the decision to hire an external resource to undertake the task or business process. That could mean finding a consultant to help you set a strategy, or a freelancer to help execute it, or an agency to do all of it. An outsourced resource can also work to support any existing resource you have on the task.
Outsourcing Pros & Cons
The pros of outsourcing are significant. The first of which is cost and commitment – by using a consultant, freelancer or agency you are likely to spend far, far less than you would hiring the equivalent skills or seniority. If the person or agency is the right fit, you can end the relationship without having sunk too much time or costs into it.
The other, and in our view more important pro, is quality of work. It’s especially true in the field of marketing that an outside perspective can work wonders. An outside resource or agency can bring creativity, innovation and won’t be bogged down by internal bureaucracy or ways of thinking. They’re more likely to challenge senior decision makers than an employee would, which can only be a good thing.
And, especially when using an agency, you’ll get access to a range of specialists for a similar cost to hiring one generalist. Instead of piling all of your affiliate marketing, TV buying, podcast sponsorship and viral marketing needs onto the shoulders of one employee, you can get absolute experts in each niche to execute them.
There are of course downsides to outsourcing too. You do lose an element of control – your consultant, freelancer or agency is not as behooven to you as an employee. They have other clients, other revenue streams, and ultimately are not likely to be in real trouble if you are disappointed with their work. So if that element of motivation and control is important to you, outsourcing may not be the right direction.
Examples of Outsourced Digital Marketing
With regards to digital marketing, there are three common ways outsourcing is done:
1. Finding a consultant. Often this comes in the form of a fractional CMO to come in on a regular basis to set and oversee a marketing strategy. Or it may come in the form of an expert, brought in to audit your marketing and provide technical or tactical recommendations.
2. Using freelancers. Finding freelance resource to execute marketing tasks such as copywriting, design or performance marketing management. This is generally done when you have someone in house in the same field who can oversee them.
3. Hiring an agency. Finding an agency to help you with your strategy and its execution. It can be difficult to find the right one though, so we wrote a guide on how to find the right digital marketing agency.
Insourced and Outsourced Digital Marketing: Our Verdict
Ultimately, as long as your reasons are sound there isn’t a clear winner. Both insourced and outsourced digital marketing have their strengths and weaknesses.
If you are large enough to know that you need certain specialist roles to be done full time, and you have the budget for it, hiring or transferring internal staff to them makes sense. But if you’re not sure which marketing channels to run, or you’re not sure it’ll take someone 40 hours per week to run them, outsourcing makes far more sense. If you’re not sure what the best route to take is, it’s a good idea to speak to some consultants, freelancers and agencies – you may come out of those conversations with a firmer idea of the direction you want to take.
Ultimately, it’s important to remember one thing: the heart of marketing is creativity. The best, most effective marketing campaigns are almost always underpinned by creativity in positioning, tactics or execution. And full time employees, who live and breathe your business, are often not best placed to think creatively about it. There are too many ingrained assumptions and accepted self-evident truths in the way. When you outsource in the right way, you get access to a new level of creativity which can transform your marketing.
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