Build vs. Buy? In-House vs. Outsourced? How to optimize your capabilities and future proof your org

Every marketing org goes through the in-house vs. outsource doom loop: build everything in-house for control, five years later we must outsource everything for efficiency, then swing back three years later when it feels we’ve lost control again.

Let us know if this sounds familiar:

“I’LL JUST DO IT MYSELF”

Every organization goes through this phase. "Why are we paying agencies when we could hire our own people?" The logic seems sound: internal teams understand the business better, they're more committed to (and incentivized by) business success, and they're available whenever you need them.

So, you build out your internal creative “agency,” hire your own recruiters, bring legal counsel in-house, and maybe even start your own media buying team. 

For a while, it feels great. You have complete control. No more waiting for external vendors to fit you into their schedule. No more explaining your business to outsiders who just don't get it. Go team. 

But then reality hits. Your internal creative team is great at executing to spec, but they're lacking outside thinking and inspiration. Your in-house media planners know your brand, but they're not plugged into the specialized technology partnerships you need for advanced programmatic capabilities. You're spending a ton of time on operations: tracking internal hours and billable costs to "transfer money" from one department to another. Your costs are fixed regardless of workload, and during slow periods, you're paying for capacity you don't need.

“Let the experts handle it” 

Frustrated with the costs and limitations of doing everything internally, leadership swings the other way. "Let's focus on our core competencies and outsource the rest!" Out go the internal teams, in come the agencies and vendors.

Initially, this feels liberating. You get access to specialized expertise you could never afford to hire full-time. Your costs become variable – you pay for what you use when you use it. You can scale up quickly for big projects without the overhead of permanent staff. Sweet relief. 

But soon you realize you've created new problems. Your outsourcing partner's priorities don't always align with yours. They're managing multiple clients, and your urgent project might not be urgent to them. You're spending more time managing vendor relationships than you used to spend managing internal teams. Worse, you've lost the institutional knowledge that helps you make good decisions about what to outsource and to whom.

Are we having fun yet? 

Breaking this expensive cycle requires nuance. The orgs that get this right move beyond binary thinking and reframe the question from "in-house vs. outsourced?" towards "what belongs where, and why?"

Consider these four critical dimensions when evaluating your capabilities and making strategic choices for your team and org. 

Does this capability provide competitive differentiation or is it table stakes execution?

• Defines you competitive advantage: Build core differentiating capability in-house
• Important but not unique: Requires internal oversight with specialized external execution support 
• Standard across the industry: Outsource operational or execution-focused capabilities 

What's the volume and consistency of work required?

• High and predictable volume: Invest in internal infrastructure and process maturity 
• Steady with periodic spikes: Blend internal capacity with external partners to handle overflow 
• Sporadic or unpredictable demand: Project-based outsourcing ensures flexibility and cost efficiency 

How rapidly is this domain evolving?

• Stable and mature domain: Long term investment in internal excellence makes sense 
• Moderately evolving domain: Pair internal strategy and ownership with partners driving innovation and agility 
• Rapidly evolving domain: Leverage external experts to stay current with constant innovation and upskilling required 

Do you have the talent infrastructure to build a best in class ecosystem?

• Strong talent ecosystem: Ability to attract, develop, and retain top-tier talent with clear career paths in-house
• Partial access and networks: Augment internal team with external specialists for advanced expertise 
• Limited access to talent: Leverage specialized vendors with established expertise and capabilities.  

Your core differentiators – the things that make customers choose you over competitors – should probably stay in-house. Everything else is a candidate for outsourcing, but with some nuance. 

Many successful companies use a "thin internal layer" approach: they keep a small internal team with deep expertise in the function while outsourcing the bulk of the work. This internal team provides oversight, maintains institutional knowledge, and handles the most sensitive work while external partners handle routine tasks.

They also build "reversibility" into their sourcing decisions. They structure contracts and maintain enough internal knowledge so they can bring functions back in-house if strategic needs change. 

They get comfortable with freelance and contract talent and build a roster of talent that they trust and that understand the brand but come with built-in flexibility and agility. 

And they experiment with incentivizing agencies and vendors in new ways, to bring them closer to the business. Think: performance-based SOWs. This will become more and more important as the use of AI changes how we think about time and billable hours.

Some tips! 

It’s critical to define clear ownership and accountability regardless of where work is performed, ensuring seamless collaboration across the internal-external boundary.

Treat this as a living framework, not a one-time decision. Ensure you are assessing whether capabilities should migrate along the spectrum as your business scales, market conditions shift, or new technologies emerge. What begins as outsourced experimentation in a new channel might migrate to a hybrid model as volume grows, eventually becoming fully internalized as it proves central to your competitive strategy. The reverse also holds true - previously internal capabilities may need to shift external as they commoditize or as maintaining cutting-edge expertise becomes unsustainable.

The capabilities that matter to your business - wherever they live - deserve proper investment: competitive compensation for internal talent, fair rates for external partners, the right tools and technology, and adequate time to do the work well. Budget constraints are real, but chronic underinvestment in the capabilities you've deemed strategically important is a choice that guarantees subpar results.

Remember: The decision is not a choice between two mutually exclusive worlds but rather a spectrum of realities requiring careful consideration of control, cost, and competitive advantage.