In the world of web development, there is an ongoing debate between outsourcing and in-house expansion. Both sides have excellent arguments to support their decisions, but the truth isn’t so simple.
There is no one-size-fits-all solution for deciding between outsourcing and in-house work. On its own, the decision to outsource is not a business strategy. Your agency’s business strategy comes first, driving the decision to source work from additional hires or from white label service providers.
Since business strategies vary widely, sourcing strategies have to be designed to accommodate them. The key to success in the world of web development is finding out exactly how outsourcing and in-house work fit into your agency’s long-term strategic outlook.
Identify Your Agency’s Competitive Advantage
Your agency probably cannot outsource 100% of its work and reliably meet its customer’s demands. At the same time, the decision to outsource no work whatsoever will generate inefficiencies somewhere along your workflow.
These inefficiencies are nothing to be ashamed of. The problem isn’t that you are worse at coding HTML than PHP. It is only a matter of determining how much time and energy your agency has to put into each activity to produce equally valuable results.
If your particular set of skills and resources lets you code PHP in a faster, more efficient way, focusing on that particular side of web development will maximize your revenue. Every hour you spend working on something that isn’t PHP-related is an hour you could have spent doing (and improving) what you’re already good at.
Every business, agency, and the individual developer has one particular strength that outshines the rest. If you can perform this action for less is what it costs other developers, you enjoy what is called cost advantage in classical economics.
But once you factor learning and experience into the equation, you may have what economist Michael Porter calls competitive advantage. This concept applies better to the web development industry – unless you are a real-life renaissance-era genius like Leonardo da Vinci, your skills will always be behind those of a single-minded expert in the field.
Even if you are a web development homo Universalis, identifying your agency’s competitive advantage will help you focus on projects that put your highest-earning skills to work.
What Processes Should Agencies Outsource?
Once you know what your agency does best – and at the lowest cost – you can start the process of choosing activities to outsource. There is technically no limit to how many services you can outsource, but most businesses start with one project or process and build up from there.
The most reasonable place to begin looking for outsourcing opportunities is on the opposite end of the efficiency spectrum. If your agency lacks certain skills or simply takes a longer amount of time to complete certain tasks, this is where you would want to begin looking first.
Occasional skills are another compelling option for busy web agency owners. The majority of your projects probably use the same group of skills. Nonetheless, you will certainly have clients who need particular skills in an area that your team is not deeply familiar with.
It makes no sense to hire an in-house employee with a specialty skill set for a single project. This is especially true considering the kinds of salaries that highly specialized programmers can demand on the market.
Often, highly specialized programmers offer their services on a project-by-project basis as part of a white label agency. This offers a mutually beneficial alternative to hiring a permanent employee and ensures that everyone – the service provider, your agency, and the client – wins.
Once you commit your agency’s resources to the one thing it can do better and more efficiently than everything else, you too will become a specialty service provider. This is one of the most powerful elements of the outsourcing equation – you may find that your outsourcing relationships are not one-way streets. Your agency can offer valuable work to others who are looking for your particular set of skills and resources.
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Assess Your Outsourcer’s Competence
Broadly speaking, the decision to outsource is part of a cooperative business strategy. If you want your web agency to exist in a sense of equilibrium on the market, you can find your niche and cultivate your services to fit it.
Anything that doesn’t fit that niche can effectively be outsourced – once you find the appropriate partner. Finding that partner can be difficult, though.
In order to produce meaningful results, your outsourcing partners have to demonstrate competence and integrity from the very beginning. You must trust that your partner can complete their part of a project on-time and at a reasonable cost.
These considerations speak to the primary reasons why outsourcing relationships fail. When this happens, it’s almost always because of poor governance, lack of communication, or misguided expectations.
- Good governance requires establishing accountability from the beginning, preferably before a specific project enters the conversation. All of the parties involved need to agree on who shares responsibility for what, at every step of the project timeline.
- Great communication demands patience and organization. The principles of good project management and onboarding apply to outsourced projects the same way they apply to client projects.
- When projects are well-governed and their terms are communicated clearly, it’s hard to have misguided expectations. However, businesses and markets can change over time, and you should regularly bring your agency’s overall vision into the discussion to ensure that you and your outsource partners see eye-to-eye when it comes to your collaborative partnership.
Very few businesses operate in complete independence from their peers. Whether they operate in a cooperative manner or a highly competitive one, every member of the web development marketplace influences the way the industry works. As more agencies find lasting value in a cooperative framework, a more streamlined, efficiency-oriented industry culture will emerge.
UnlimitedWP can help your agency improve project outcomes and expand your operations efficiently. Talk to us about your agency’s outsourcing needs today!