The Dangers of Outsourcing Web Design & Development

- April 11, 2009 - by , in Web Agency Management, with 2 comments -

Introduction

I would always strongly encourage any small web agency to build and maintain a stable and trusted freelancer network that can be called upon in times of project management crisis, however, there is a long-term and real danger of outsourcing work on a regular basis that can go un-noticed until it is too late.

Why outsource at all?

At any one time, a web agency will need to outsource web project management, design or development work to a freelancer for a variety of reasons. These range from lack of in-house skill, employee illness to a sudden influx of business that cannot be resourced internally.

All of these are solid reasons to outsource work and can prove commercially viable. Because most of the reasons are a reaction to an unforeseen event, a wise agency management team will always have a bank of reliable freelancers with a vast array of design and technical skills to call upon in such times.

The snowball builds

The negative effects of outsourcing are slow to develop at first making them very difficult to identify, but once the seed is sown, the effects gain velocity and size and by the time they are plain for all to see it is difficult to recover from. This snowball building usually follows like so:

  1. Small web project arrives that needs management/technical/creative skills or resource your in-house team don’t currently have
  2. The in-house team are working on large client work that is too in-depth and risky to handover to a freelancer given timeframes and account relationships
  3. Small project work is outsourced to a freelancer
  4. In-house remain on large client work and/or within skill set
  5. New small web project ends and in-house team haven’t learnt any new skills
  6. In-house team can’t take on any new small projects that require new skills
  7. Go back to Step 1

The snowball effect

The effects of this on a one-off basis is negligible, the project is completed, and with a drastically reduced cost to the business resulting in a higher profit margin and a happy management team, but if repeated it can have disastrous long-term effects on your business, for example it can:

  • Stop your internal online team from developing new skills
  • Reduces the chance of the in-house team gaining valuable experience
  • Decrease team morale due to being kept constantly on the same large client projects

As the cycle continues, the in-house team slowly becomes out of date with the latest web trends and technologies (given that larger clients are generally slow moving) thus impacting on your agency’s ability to respond to new web projects effectively, and staff members become increasingly frustrated with the lack of opportunity to develop their skills and experience online, eventually opting to leave the agency for one where these kind of opportunities are available.

The reality

I have personally seen, over a three year period, a web agency go from having a high revenue generating skilled in-house web project management, design and development team become a low revenue generating relatively un-skilled team where all web design and development work was outsourced. The passionate and ambitious skilled employees left one by one, and were replaced with employees who were mostly indifferent to the industry and saw it as a job rather than career.

Was the overall revenue of the agency the same? Just about, was the business a creative and skilled web agency still? Not at all

This slow but devastating transformation impacted almost every part of the business, for example, potential clients did not recognise the business as a web agency any longer and ceased to invite to tender for web projects and thus the client list reduced and it became almost impossible to attract new web skilled employees to the company.

Spot the warning signs

Early identification, long-term strategy and pre-emptive action are the keys to avoiding this negative spiral. The early warning signs are there to be spotted and come in several forms:

  1. The need for freelancers seems to become more frequent than the month before
  2. One regular freelancer becomes two, then three
  3. Freelancers are used on the smaller projects while in-house staff are on the large projects
  4. Team morale drops
  5. There are ‘office whispers’ of frustration at freelancers “getting all the fun work”
  6. More new project briefs are answered with use of a freelancer in mind from the outset
  7. Skilled and experienced employees choose to move on to another company in the same industry

The long-term strategy and pre-emptive actions that must be applied to avoid this predominately focus around a disciplined approach, from the start, and an on-going commitment, from the directors and senior management, to developing the in-house team’s skills and experience.

Pay now, not later

The willingness of a business owner to resist the temptation of using a freelancer and reduce profit margin in the short-term on some projects, and allowing for in-house team research and training (and mistakes – the most effective training technique in the world!), for the long-term benefit and growth of the agency is the essential ingredient to avoiding the transformation.

It takes determination, discipline and a fair amount of sheer entrepreneurial courage in the face of adversity to apply this long-term strategy, but in doing so the future of the agency is only made more secure by the skill set and the value of the in-house team being kept on the cutting edge of the web industry.

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- Comments -

  • Hi,

    As a freelancer I can see some of your points, but my experience is quite different. In fact I’d almost turn it on it’s head.

    The core projects are where the interesting work is. The little extras that need to be sorted that are worked on by freelancers tend to be baby sites / micro flash apps or just finishing up on something that no one’s got time to finish (picking up someone else’s code – always fun!). The learning that goes with these little projects are very little compared to working on something more in depth like a larger project.

    t

  • Hey Tim,

    It’s an interesting point of view you put across and not something I had really considered when writing the post having not been on the freelance side of things too often. I can defintely relate to the joy of picking up someone else’s code!

    I guess it depends on what the type of work is involved in the core work, often it could be endless database migrations or hero banners that must be designed to strict brand guidelines at all times – in these cases, the baby sites or flash apps seem like the fun work…

    Or could it be we always crave what the other has? Hmmm

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