Growing A Marketing Agency: Outsource or In-House

June 16, 2014

By Mike McAuliffe

Growing_A_Marketing_AgencyAs a marketing agency who is looking to grow, meeting your clients goals are extremely important. However, to effectively meet those goals, you might need to augment your existing team with additional technical expertise.

In order to grow, you need to consider the current workload of your existing team as well as the timeline needed to complete current and future projects. Not sure how you can grow your marketing agency while meeting your clients goals?

You have several options for expanding and augmenting your existing client services and web development teams to improve the technical expertise and development of your clients software. Here’s a closer look at hiring an outsourced or in-house team.

In-House Employees

Building or hiring an additional staff of software engineering employees is the classic approach at a marketing agency. However, it is also the most expensive one, requiring cash for salaries, office space, and equipment. But will those added costs outweigh the end result of that development project?

Interviewing, hiring and building out the team can take months. It’s important that the team has a strong technical management to lead the team, the ability to implement an effective software development process and meet your critical deadlines. This is not always easy, even if you already have some technical talent on your team. When looking to build upon your existing team, you also need to look at the timeline for specific projects. Will you have enough time to build the right team and have the projects completed on time?

Pros of Using In-House Engineers:

  • Direct access to, and control of the team

Cons of Using In-House Engineers:

  • High cost of salaries and overhead

  • Takes months to find, hire and ramp up

  • Requires daily management

  • Employee churn and recruiting needed to replace team members quickly

Depending on the structure of your marketing agency and the disadvantages cost play in hiring additional team members, building an in-house team can be ineffective and problematic. I have seen several marketing agencies in the Silicon Valley cut costs by offering their engineers stock instead of salary. It can work for several months. After that, financial pressures on individual team members and discouragement due to lack of income can lead to attrition and turnover. In other words, paying engineers only with stock is just not a long-term strategy. Although it allows you to reduce salary expenses, you must still pay for office space and equipment.

Also, if you do not have offices and everyone is working from home, you lose the advantages of informal interaction among the individual team members in a company office. Employing a team of widely distributed individual engineers also poses a significant management challenge. You must make sure the results of their work will be useful to the company and that they meet the goals of your client.

Outsourcing

Using outsourced engineering talent to develop software for your client has many key benefits and fewer risks compared to the other approach. The first key benefit is low cost - critical for most projects these days with limited funding. Second, you can hire an instant team, fully staffed with engineers who have worked well together on previous projects. Existing teams are more stable and have a good sense of strengths and weaknesses of individual members. This leads to more accurate schedules and completion of critical product milestones.

When outsourcing, you have the option to contract an offshore, onshore or nearshore team to meet the requirements and needs to complete your clients’ development projects.

Onshore contract outsourcing involves hiring a company in your own country to handle your clients software or web development project whereas nearshore is outsourcing to a firm in a nearby country and similar time zone. The most common form of outsourcing is contracting to a company that is in another country where the labor rates are lower.

For any type of outsourcing, the work can either be performed on a time and materials basis, where you pay for the work performed on an hourly, weekly or monthly basis, or your agreement can specify milestones at which well-defined features and functions are to be delivered.

The savings of offshore outsourcing are too large to ignore for a marketing agency. The cost of outsourcing is 25 to 50 percent of what it costs to develop your clients software in-house. So the question is not whether you should outsource but rather how you can make outsourcing work for you and your clients.

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