Almost every activity in a modern business is in a quiet tug-of-war: Should it be outsourced? Or if it’s outsourced, should be it insourced? A couple of decades ago, these questions didn’t occupy much executive mindshare because the right answers seemed obvious. Not so today. We’re in a world of increasing complexity; and that world moves at unprecedented speed. Deriving the right answers requires weighing many more factors than in the past. And the right answer this year may turn out to be wrong next year.
It’s no longer just about cost, though that dimension is never far from any such discussion.
Marketing doesn’t escape this angst, but fortunately the scale and impact of outsourcing decisions are smaller than in other functional areas. Mistakes are more easily corrected, but in most cases you don’t get many chances to fail before the C-suite loses confidence. You still need to think about these decisions very carefully.
You can, theoretically, outsource an entire marketing department to one or several companies without too much difficulty. Is that common? No. Is it wise to do so? Probably not. Marketing and related functions that are responsible for sales and customer management require a level of passion and a sense of ownership that external vendors often can’t provide. On the other hand, marketing service providers bring deep expertise to table when none is available internally. For example, consider these areas:
- public relations
- social media
- paid campaigns
- event marketing
- creative design
- marketing automation
- marketing strategy
There is a size threshold below which typical companies can’t staff to cover all these areas. So inevitably those below that threshold need to go outside for help.
Let’s look at other reasons, beyond cost, that might compel you to outsource work.
- Speed. You can buy time with money, so to speak. You may have a capability within your company, but perhaps not enough of it to meet timing requirements. Or, you want to augment your staff to enhance a capability, but finding and ramping new employees takes too much time.
- Specialization. Sometimes you need deep expertise in a narrow area. For example, you may need campaign specialists who know how to fully exploit Google Adwords, LinkedIn, Facebook, etc. External service providers will have already done these things for other clients many times and will know tricks of the trade that average companies would never be able to amass.
- Domain Expertise. You might need a copywriter with a strong background in an obscure area of technology or a new business process that isn’t well known within your company. The only choice is to go outside.
- Relationships. When you hire public relations firms, you’re buying their rolodex and their industry experience, among other things. Very few companies have those contacts and knowledge in-house.
- Creativity. When you need a change – for whatever reason – you may need to go outside. We’re not just talking about aesthetics and artwork. Sometimes you need a breakthrough approach that only an outsider can provide.
- Brand Trouble. Conventional wisdom says that you MUST bring in external viewpoints to fix branding issues. Getting fresh perspectives from people and organizations who are not vested in the status quo makes sense.
Although there are lots of great reasons to outsource, doing so comes with elevated risks:
- Security and privacy. Any relationship you establish with a vendor comes with a built-in level of trust that the vendor will take care of your secrets, proprietary information, and so forth. Most of the time there are no problems. But it’s never going to be as secure as limiting access to your own employees within your own firewall.
- Lack of internal project management bandwidth. The most effective outsourcing engagements are the ones that are managed closely by your own people. Without that kind of supervision you run the risk of “alignment drift” or unintentional disengagement that may produce unwanted results.
- Premature engagement. Sometimes companies have a misplaced sense of urgency and consequently outsource before they are ready to do so. If you haven’t locked down your strategy and expectations (and perhaps your processes), wait until you do so. Otherwise, you’ll waste money and time.
- Lack of visibility. If you or your bosses are micromanagers who want complete transparency and up-to-the-minute status updates, think twice about outsourcing. You’ll need to get used to a new way of working. You’ll be managing your partnership largely by WHAT your vendor delivers, as opposed to HOW the vendor produces it.
On balance, outsourcing is usually a positive experience. But you need to manage it properly to maximize the probability for long term success.