Outsourcing vs. in-house

In general, there is a trend among many companies to outsource more work, but user experience seems to go against this trend. Instead, companies are bringing more UX in-house. Why is user experience brought in-house, while other functions are outsourced? In this article I’ll try to highlight a few key factors companies consider when making these decisions.

How important is user experience?

The basic principle in deciding if a function should be outsourced or not depends on how important the competency is in order for the business to stay competitive. The more important functions should be kept in-house, while the less important functions should be outsourced. This competitive focus can be broken down into two factors:

  1. How important is user experience in the industry? If UX is not that important in the industry, it might be a good idea to consider outsourcing.
  2. If UX is important in the industry, is your company the leader? If you are the leader, you should consider keeping the UX in-house.

The simple reason for keeping functions with superior knowledge/processes in-house is that you want to make sure this knowledge does not leak out to competitors so you maintain your competitive edge. If you outsource, there is a risk some knowledge is being transferred to others.

For example, Ecco produces and sells shoes. One of the core principles of the company is their focus on high quality. Because of that, they keep their superior leather production (upper part of the shoe) and high pressure molding technique (to produce the bottom of the shoe) in-house. If they outsource these to a supplier, Ecco would have to train the suppliers to be able to produce at their quality level. Once the suppliers learn this higher standard of production, how are they supposed to work with other shoe companies (one supplier often produces shoes for many different brands)? Should they somehow “forget” the better methods? This is very unlikely. Therefore, outsourcing these processes to a supplier would result in Ecco’s superior processes leaking out to the competitors. On the other hand, Ecco does not have any special competencies when it comes to producing other types of shoes such as flip-flops, so it would make perfect sense to outsource these. The supplier may have more competency and gain new knowledge as they work with multiple shoe companies.

So, if your company, for example, has built up superior procedures around ideation, make sure you keep it tight to your company. On the other hand, if you don’t have any specific processes around validation, make sure you outsource it to gain high quality results from consultants.

Even if UX is not that important in your industry or your company is not the UX leader in the industry, there are circumstances where you should still keep UX in-house. An example is if your company has built up a strategy where you copy best practices from the UX leaders in the industry. By taking this approach, the company has probably created unique processes that efficiently copy these best practices. Therefore, the company should make sure other competitors using the follower strategy do not gain access to this competitive knowledge.

Other factors

Apart from this main high-level approach, here are some other factors to consider:

  • What is the demand? If there is a variable demand, it might be better to outsource the activity so you transfer risks associated with idle capacity. For example, if your business usually has a variable demand of user experience resources due to project schedules etc. it might be a good idea to outsource.
  • Can pooling create benefits? If you and other companies outsource, the supplier might be able to gain cost advantages by implementing large scale operations. For example, Android is used on multiple smart phones models.
  • Can quality be maintained? If your company has created high quality standards, it can be hard for the company with which you choose to outsource to maintain them. For example, if you outsource the design, they might not include the sufficient validation steps throughout the process in order to cut costs.
  • What is in the future? If you have it in-house and decide to outsource, will you ever need to bring it back in-house? For example, if you decide to outsource design, you might let some of your designers go. If you then later on decide to bring the design back in-house it might be difficult to build up this capability again.
  • Are your strategic goals to become a leader in UX? If you want to be a leader, you should keep the UX in-house so you can build up a superior competency.
  • Does your current UX division have the necessary skills? If they don’t have the skills and it is only a one-off project, you might want to outsource it. If it on the other hand is something that is recurring, it would probably be better to acquire this skill.

Conclusion

So why is UX going against the trend? I believe it is because more and more companies understand how important UX is to stay competitive. This leads to inclusion of UX in more projects, which in turn increases the demand of UX in the organization. Therefore, even if there would be a variable demand of UX in the organization, the overall demand is growing, so no UX person is ever without work or the potential to take on additional UX work. In addition, it is hard to find cost savings since pooling is rarely an option, largely due to each company wanting to have their unique look and feel that correlates with their brand.

It might be beneficial at times to outsource UX, especially if there are one-off projects and no competency exist in-house, or if specialized competency is needed in a project. If you do outsource, it is important to still have knowledge in-house to make sure you are able to evaluate the suppliers and the quality of their deliveries.

© David Juhlin and www.davidjuhlin.com, 2016

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