article | February 27, 2013
Outsource or Insource? Evaluation Lens for Marketing Leaders
It is a common business practice among world class companies to outsource significant levels of strategy and execution. The strong get stronger. But when do you do it in-house? When do you outsource?
Top marketing leaders focus on building a strong internal team, while outsourcing key projects. Consultants can be brought in to provide these benefits:
When outsourcing you should expect more. The following are ‘multiples’ to evaluate when considering whether to outsource or do it yourself. Every marketing team is different. Not all multiples apply to every case. Gravitate toward the multiples that dovetail with your team’s capabilities. Download the Outsource Evaluation Worksheet to calculate the impact factor of outsourcing.
Execution Multiple – Does the firm provide strategic input and execution support?
Companies that embark on a major consultancy engagement can find it difficult to execute. Companies struggle going from strategy to execution. The digestion period can be months before springing into action. I’ve had senior executives tell me after a major strategic engagement that they need another consultant like they need a hole in their head. My personal favorite quote on this topic is “I don’t need more Bain pain.”
Examine your outsource firm’s ability to support execution. This plays a significant factor in whether you will be able to shift from strategy to implementation. In reality, as much as 40% of the overall strategy requires modification once it enters the real world. Why pay for gold standard consulting that gets unwound by a junior staffer during execution?
A firm that stays around to support execution is more likely to recommend a strategy that works. Why? The consultants know they have to execute what they recommend. Execution based firms think through the change management required to be successful. You can’t just spout esoteric nonsense from the mountain top. You have to make it happen. The net benefit to the customer is that recommendations are grounded in reality.
Effort Multiple – Will the firm extend my team’s capacity?
Outsourcing should multiply the efforts of your team. Outsource projects require staff time to perform internal stewardship. Time is also required to contribute subject matter expertise to inform the efforts of a consultant.
This is particularly true on the execution side of the strategy. Time is required to make it a reality. Include both the strategy and implementation into your consideration of whether to outsource.
Does your outsource firm have a record of retaining information? Do they have good documentation discipline to capture conversations for use in the immediate and future projects?
You should expect at the very least that every hour of staff time on an outsource project is multiplied at least 4x. The firm should carry the lion share of the weight when you are looking to extend the capacity of an overburdened team.
Effectiveness Multiple – Will the end product be SIGNIFICANTLY better?
The end product should be radically better than what can be produced in house. If the billable rate of your outsource firm is 3x your average staff cost, then you should expect 3x the value.
This is not a negative reflection on your internal team. Outsource firms literally have dog years of experience from performing similar assignments across multiple industries. The firm intuitively knows what works. They have confidence based on proven execution. Strong momentum is imbued into the project.
Speed Multiple – Will the firm get it done quicker?
You should expect an experienced outsource firm to have the ability to complete an assignment faster than your team. They’ve been through the battle and know what to do. Dedicated resources can steadily make progress without the interruptions an internal team faces. Outsource firms are motivated to reach billing milestones.
Typically in-house projects take 1.5- 2x longer than an outsource assignment. This is a major factor in determining whether to outsource a high priority project.
Experience Multiple – Has the firm successfully performed similar assignments?
Review the relative experience of internal talent vs. outsource. Often times the internal project lead will be taking on a project they have never executed. Take inventory of the past experience of internal staff. Review projects of similar scope. Determine the level of net new learning faced by your internal team.
Compare the quantity of successful project implementations of the outsource firm to the internal team. Carefully consider the firms experience vs. the individual members of the team assigned by the firm.
Equally important to outright experience is the type of background the outsource firm has among their working team. Analyze the outsource firms execution team. Ask yourself if you have a team that has walked in your shoes. Can they relate to the challenges involved? Or are you dealing with a professional consultant who has never walked in your shoes. An experienced team who has walked in your shoes will carry a tough assignment to success.
Summary: Calculate the Impact Factor
Leverage the Outsource Evaluation Worksheet to calculate the impact factor of outsourcing. Select the multiplier factors that fit your business. Download the Outsource Evaluation Worksheet to calculate the impact factor of outsourcing. This tool provides you a lens of clarity to comprehensively evaluate an outsource decision.
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