To Outsource or not to Outsource

There is a constant debate about whether you should outsource work or do it in-house.

Both sides of this debate have valid points, and there is not a one-size-fits-all clear-cut answer.

It is generally accepted that you need to ask questions that are related to the following key aspects, as confirmed by various sources. The below points are pro-outsourcing and from a digital marketing firm, and covered in this article:

• Cost - Outsourcing is often cheaper.
• Speed - Outsourcing to trained individuals allows a quicker start.
• Scale - Outsourcing allows your business to scale at a greater level.
• Quality - Specialists in their fields have strategy and tools to improve quality.
• Stress - Some of the stress of your project can be alleviated by outsourcing, especially if you manage many different vendors.

Please take a look at this image from that article - it sums up these points concisely.

But I do also want to add the following point to this list:

• Control - Keeping a tight leash on your work and/or Intellectual Property (IP) might also affect your choice on whether or not to outsource.

This decision is also affected by your available capital and upfront-investment towards overheads. Let me explain: If you are running a start-up company, and you have a single product that you offer, such as web development (which is how my company, Impero Consulting, started out), you are probably better off to do in-house work, if you have the skills. At start-up time, funds are scarce (unless you have good investors), and you often have to build up to a level where you can make the decision on whether to outsource or develop in-house. Saving money in the beginning by doing the work yourself is the best route here.

As a web developer with considerable skill, you know you can start off by developing yourself. But keep in mind, that you have all the other aspects of the business to manage as well: bookkeeping, project management, invoicing, client meetings, client service, strategic planning, and all those "business things" that are often overlooked. You will need to develop a certain balance between these aspects of running your business until you can afford to have someone else to do them.

But, to take your business to the next level -- to really excel into the future -- you need to stop doing all the day-to-day operations yourself. You need to get trusted people to do specialized work for you - while you focus on overseeing, delegating and enhancing your business' vision and path for the future.

This is where the debate really starts with regards to outsourcing or doing the work in-house.

Smaller companies tend to want to do everything in-house -- at least the smaller companies I have worked with in the past -- and I understand the reasoning: They want to save cost. They want to retain control. They are hesitant to trust someone with their Intellectual Property (IP). They are scared to trust someone with the success of their fledgling company.

I have learned another angle from my larger clients, too. They often prefer to do things that are directly related to their core focus in-house, and auxiliary services they outsource. An auditing firm, for example, will not (and probably should not, but that is a whole new debate) outsource their auditing functions. In this case, there is probably very little business sense to have a full-blown graphic design team in-house.

Look at companies like Airbnb, Facebook, Alibaba and Uber. At the time of this writing, Airbnb did not own a single property for rental (although there are plans) and Uber did not own a single vehicle for taxiing people around in, except for the small group of vehicles they use for researching self-driving cars. Alibaba is one of the worlds largest online retailers, and they have no stock of their own. Facebook is one of the world's largest media owners, but does not create content themselves. They thus have a very well defined outsourcing policy, and it works!

But then you look at companies like Microsoft and Google, and the trend is that they do a lot of their business activities in-house. These two giants often see something they like and acquire it, to bring this service in-house:

• Google saw Youtube many years ago, and acquired the company.
• Microsoft saw LinkedIN and Skype, and acquired them.

But even these companies are outsourcing some of their services:

• Google outsources lots of their IT and telecommunication services.
• Microsoft outsources a lot of their support services.

This thread on MSDN mentions that it is a good thought to outsource some work to the countries they operate in. It makes perfect sense: the local people know their own business and social landscapes better than what the large company could ever know. How you deal with a customer from the USA, for example, may not give the best results in a third-world country.

From the above, it is clear why this debate is still going on, with no definitive one-size-fits-all answer. Every company and every business department out there has their opinion on whether to outsource or not.

Next time you need to decide on whether to outsource or do in-house, I hope that the above information serves you well. If you ever need to outsource web development in South Africa, Impero Consulting is ready to assist.