When to hire vs. when to outsource

Please note that this post was originally published on February 17, 2009. As a result, any external links or videos used may no longer be functional.

istock_000007707944xsmallWhether the economy is in high gear or at a standstill, the debate on whether to hire or outsource is eternal. How do you decide when to add marketing staff and when to farm the work out? It seems to hinge upon four key factors:

1. Who has the expertise? Up to a point, many people believe they can do an adequate job of marketing their own organizations. (The number of business owners appearing in their own TV advertising is proof!) From designing your own business cards to hiring full-time web developers, do it internally and you “own” it.

Eventually, however, you may have to admit that you and your staff, no matter how large, do not have every necessary area of expertise covered. How important is it that all of the talent reside within the organization? The answer depends upon how integral the expertise in question is to your success. Some knowledge you want to own, and some you may be comfortable buying from outside.

Another consideration is whether the desired expertise is available for employment or outside consulting only. Even the largest marketing departments outsource some areas of expertise.

2. Who has the time? You and your staff may have the know-how, but do you have the time? If not, do you hire it or outsource it? Your decision will be dictated by your comfort level with giving up close day-to-day supervision as well as  your company’s current financial condition and position on hiring.

3. Who wants the accountability? Do you want it or would you rather hold someone else responsible? Hiring a marketing firm, for example, shifts some of the accountability for performance to them. Some marketing managers are uncomfortable with this arrangement; some prefer it and even embrace it.

4. Which approach is more cost-effective? Some believe hiring is less expensive than outsourcing to high-priced consultants. Some prefer to avoid paying expensive employee benefits and like the flexibility of paying for services on an as-needed basis. If money is the key factor, you will need to run a comparative cost analysis to decide between these two approaches.

Whether to hire or outsource may also depend upon which stage of the life cycle your company is in.

• Start-ups typically have both accountability and time on hand. If funded, they may be able to hire outside help. If not, they will market themselves, usually with limited staff.

• Small mom-and-pops have lots of hard-knocks expertise. They are also typically reluctant to give up accountability to an outside firm. With limited dollars and little time, they will choose between hiring a marketing manager or buying some outside expertise, usually on a freelance basis.

• Mid-size firms have a little time, a little talent, and a little money. They are particularly eager for expertise they don’t have and demand accountability. They are more likely to hire in-house expertise first, then look to an integrated marketing firm for support.

• Large firms have more expertise and money, and embrace more in-house accountability for managing the marketing process. To fill in the gaps among their marketing staff, they buy time and expertise from freelancers, integrated firms, and specialty firms. Keeping multiple consultants on strategy is an additional demand.

What factors do you consider when deciding whether to add staff vs. outsource?

This entry was posted in budgeting, client-agency relationships.

0 Responses to When to hire vs. when to outsource

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  2. Brad Snyder says:

    My assumption is that the economy influences which of the four factors you listed is dominant… for example, do you find that time becomes the main factor for outsourcing when the economy is at a high point and money becomes more of a factor during a recession?

    • Kirk says:

      Great point, Brad. When the market is expanding, organizations will buy time, expertise and accountability to fill their internal gaps. During a period of contraction, they will likely seek the more cost-efficient solutions. Sometimes that means keeping the work in-house; sometimes it means layoffs and outsourcing.

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