In-house Staff vs. Outsourcing

May 2001

Once a CSO makes the decision to undertake a Web project, it will need to decide who would be best to undertake the project and maintain the site over time. There are a variety of skills that are required to produce and manage a Web site. Some of these skills may be found with existing staff. In other cases, management will need to decide whether to hire new full- or part-time staff or to contract the services to an outside source. The best approach for each instance depends on an analysis of the long-term strategic direction of the organization with respect to its presence on the Web, as well as cost comparisons and their attendant trade-offs.

What are the advantages of assigning and/or hiring in-house staff?

• Timeliness – If a staff member is responsible for creating and posting content to your Web site, you will have greater control of when material is posted and updated. If you are relying on a vendor to post time-sensitive or urgent material, you may have to take your place in a queue behind their other customers. This can be especially frustrating when only small changes are needed. Changes that would only take in-house staff a few minutes to make, could take a few days for a vendor.
• Content quality assurance – If you rely on a Web vendor to post and update material on your Web site, you take the chance that they could misplace and confuse content due to their lack of understanding of the issues. Mistakes commonly arise when vendors are working with foreign languages and when print materials are being modified for the Web.
• New funding opportunities – If you have made an investment in developing in-house capacity to produce and manage Web sites, you may be able to generate new income by selling new products and services (i.e., project Web sites, training, Web hosting, databases, etc.).
• Financial predictability – It is easier to estimate how much money you will spend on Web projects when staff time is included in your personnel budget. Vendor prices may fluctuate, and the amount they charge for individual projects may go beyond what you could accomplish with in-house staff. This trade-off may be difficult to assess in the budget forecasting process.

What are the advantages of contracting a commercial vendor?

• Technical expertise – Even if you decide to hire in-house technical experts, it is unlikely that you will be buying the depth and diversity of expertise that is present within most vendors. While you will probably be working with one main person assigned by your vendor, that person has access to the expertise of all of his/her colleagues when it comes to developing specialized functions (i.e., databases or animation), as well as solving problems that may arise. In order to stay competitive, vendors also tend to be on the cutting edge of technology, whereas in-house staff may have more difficulties updating their skills.
• They are easy to fire – If you are unhappy with the services provided by a vendor, it is much easier to switch to a new vendor than it is to fire poorly performing in-house staff and hire new people.
• Cheaper for small sites – If you are only planning to create a small Web site with limited updates, it would be cheaper to pay a vendor a set amount for managing the site, rather than hiring new staff. Staff members need to be paid benefits, and entail the expenditure of time and money on supervision and management.

Other issues to consider

• Sustainability – If you invest in hiring full-time staff to run your Web site(s), you will have to maintain a steady stream of income in order to pay their salaries. If you are dependent on project funding, the loss of major income sources may force you to lay off staff.
• Ambiguity in pricing – Given the newness of the Web, there are no clear standards for pricing. Vendors are testing out pricing schemes as they go along, so there is a chance that you could be grossly overcharged for a service when it is difficult to assess the value of what you are receiving. It may be tempting to go for an hourly rate contract, but given the difficulty in assessing how much time Web projects may take, this could end up being considerably more expensive than a set project price.
• HTML vs. Dbase – Up until now, Web development has been mostly focused on the creation of Web sites with static, html-based pages. For such sites, the software and equipment requirements can be quite minimal. However, there is growing interest in the use of database-driven Web sites which, while more difficult to develop, can be maintained quite easily by non-technical content managers (i.e., with no knowledge of HTML). In trying to decide which type of technology to use, there are a few key cost issues to consider:
• Databases cost more to develop initially, but the cost may even out over time because you will not need to pay staff for creating HTML pages.
• More software and equipment is required to manage such a site in-house. A database program is needed and it may need to be stored on a dedicated server.
• Databases take more technical knowledge to maintain and modify than HTML pages. Such specialized knowledge is likely to come at a higher price than the average HTML designer.
• Pay attention to contracts – Especially with the development of more sophisticated tools and databases, you must be aware of what you will own when you finish paying your invoice, and what you won't. Therefore, read and/or write your contract carefully. If the vendor has developed a special tool that they consider to be their intellectual property (i.e., a conference tool), you may not be able to take it with you if you choose a new vendor. You may be able to extract the content, but the content may be useless without the tool. This will create a situation of "vendor dependency." You may also find that you do not own the content on your own Web site, and that it has been copyright protected by your vendor.