What you need to know before you decide to outsource digital
As digital becomes business critical many organisations are attempting to build in-house digital teams. But this is not without its challenges. One option would be to outsource digital.
Organisations are realising how important digital is to their future success. They are starting to question whether they can outsource digital through a series of digital projects. They are beginning to understand that they cannot just redesign their website every few years. Or get an intern in marketing to post the occasional update to social media. They are shifting digital from being a periodic capital investment to an ongoing operational one.
But that creates a problem. They have been using external agencies every few years to undertake large development projects. That might be to revamp the website or launch their first mobile app. But that kind of relationship is not going to work if you want to embed digital into day-to-day operations. It is an arms length relationship that does nothing to influence the direction of the business.
We are starting to see organisations build in-house teams. Real teams that have more than a couple of people doing maintenance. This is what I am advising many of my clients. But that is not without its challenges.
Why it can be tough building an in-house team
The sad truth is that many organisations are incompatible with hiring good digital staff. Let’s just take a moment to consider some of the problems they face.
Many organisations are incompatible with hiring good digital staff.
Many larger organisations have strict salary bands. Bands created before jobs like designer or programmer demanded the salaries they do today. This prevents some organisations from being able to offer competitive salaries.
The undervaluing of digital staff extends beyond salary. There is no obvious career path compared to more digital savvy companies and so this leads to a higher turnover of staff.
An issue of culture
The problem is one of culture. Traditional companies cannot compare to their more digitally focused alternatives. With such a high demand for digital professionals, salary is only one small consideration. These people also look at the organisational culture. Will they have freedom to innovate, build their career and make a real contribution? This makes large, bureaucratic organisations unattractive.
Does your company give digital staff the freedom to innovate, build careers and make a real difference?
These cultural incompatibilities can manifest themselves in all kinds of ways, including a lack of empowerment. For example I encounter organisations where the default is to block sites like Dropbox or Facebook. Tools essential to a digital professionals job. Sure, you can ‘get permission’ to allow access to these tools. But the fact you have to do that screams of a counter-digital culture.
From under-investment in training to restrictions in what hardware an employee can use. All these barriers seem petty in the face of a more flexible working environment they could have at a start-up or working for an agency.
Problems with recruitment
But in truth, these problems often never become an issue. This is because the good digital professionals never even see the job ad in the first place. That is because all recruitment goes through HR. A department with little experience of recruiting for digital positions.
These departments don’t think to advertise on specialist sites. They don’t attend conferences and networking events seeking to raise the profile of the jobs they have on offer. Instead they slap an ad on their website and post to a few generic job boards. Sure, they will get applicants. But the quality will be low.
So in the face of such a bleak picture, what is a manager within a large organisation to do, if he or she wants to build a digital team?
As I see it there are three options available.
The three options available
In an ideal world you would tackle the underlying cultural issues. You would develop career paths for digital professionals including changes to salary banding. You would also tackle operational procedures and replace them with a more agile method.
This is possible in organisations where there is a clear vision from the top. In such cases you find that HR, procurement, IT, and compliance are willing to adjust their procedures. This is because they feel supported from above and don’t fear the results if things go wrong. But without that kind of support, progress will be slow.
The second option is to create some form of innovation centre. This is a place that is set apart from the rest of the organisation. A group where the normal rules do not apply. A place that can operate as a start-up within the larger organisational structure.
This can work with a strong-willed executive sponsor. But it can also cause resentment too, because this group gets special treatment. It can make cross departmental collaboration difficult as the two cultures clash.
In some companies it might be necessary to outsource digital to protect the team from internal culture.
The final option is probably the least desirable. But it maybe the best fit, short of reinventing the entire organisation on day one. That is to outsource digital to an external team. We are not talking about an agency you go to for periodic redesigns. But a permanent team working on your digital strategy from within an external agency.
There are an increasing number of agencies that are building teams who are 100% dedicated to specific clients. Teams that operate as an internal digital team for that client, but without the complications of being in-house.
In many ways this makes a lot of sense.
The benefits that with the decision to outsource digital
By building your digital team outside your organisational structures you avoid many issues.
- The agency is not constrained by salary banding.
- An agency can offer a variety of work and career paths that are hard to match within many pre-digital organisations.
- An agency has its own ‘digital friendly’ culture that is free from most of your internal systems.
- You do not need to worry about managing risks associated with digital staff. The agency takes on these risks.
- An agency knows how to recruit digital staff and already has the network to do so.
- You do not need to add to your headcount. This is something many organisations are reluctant to do because of the long term commitment involved.
- It would be relatively easy to pull in extra short term staff as required from elsewhere in the agency.
But be careful. If you decided to outsource digital you will need a well written agreement. Many of the key members of the team will need to be either on site or nearby.
If done right, using an outside agency to man your digital team allows you to kickstart digital transformation.
You will also want at least some level of staff dedicated to your work at all times. You want people to get to know your organisation as well as any employee. If the agency is swapping people out of your team too often you will lose that.
Unfortunately, even at its best this approach is not perfect.
The drawbacks to consider if you outsource digital
I must confess I was slow to write this post. Because I know many organisations will see this as an attractive option. But although it is attractive, I don’t believe it can be a long term solution.
It wallpapers over the underlying issues many organisations have with digital. It bolts digital onto the side of the existing model. This is something that is inadequate over the long term. It leaves your organisation in a vulnerable position. A position that will allow more digitally agile competitors to surpass you.
It also carries with it significant risks. At any moment your entire digital team could disappear. The agency could go out of business or another client could buy the agency and bring their capability in-house.
This is an even bigger problem because even with the best will in the world the agency team will be working in a bubble. They will not be as effective at transferring knowledge as an in-house team. Ideally the whole company should become more digitally aware through osmosis. As the in-house team interacts with colleagues you will in time move towards digital being ubiquitous. But this is less likely if you use an agency. That digital expertise remains locked up in the agency.
Finally of course, there is the cost. Outsourcing to an agency is going to be more expensive than hiring those people yourself. But that is a minor point in the light of the other issues.
A starting point, not a permanent solution
I have agonised a lot about how I feel about the decision to outsource digital. It has some worrying drawbacks. But I also see it as a way of kickstarting the process of digital transformation. It allows organisations to quickly inject a team of digital professionals into the business and show what digital can do.
My current feeling is that this can work as a stepping stone towards something more permanent. That it can allow you to build a team and start demonstrating value fast. But it should never be the final solution. Sooner or later you will want to build your own team in-house if you ever want to move beyond the ‘digital bolt-on’ stage.
Originally published at boagworld.com on May 3, 2016.