A tech executive’s quandary: To build in-house or to outsource

Q. We need to enhance our security system, and this is something that we have the expertise to do in house. I think it will be done far more quickly if we outsource it—but it will come with a cost—and I don’t think the work will be done as well as if we do it ourselves. I’m not sure which path to take.

-Tech Exec

Dear Tech Exec, 

I’m happy you bring up this “make or buy” question that companies often have to address. 

First, though, if you are outsourcing it, you should outsource it to someone who can do it better and faster. You shouldn’t have to settle. Most people don’t have the competency, expertise, or time and would rather buy from a trusted third party. You want to find somebody who could do this for you the way you want it to get done. It doesn’t have to be either/or. You might have to pay more, but you can get a quality product and get it done faster. 

I think to make this decision you have to dig deep into the costs. It sounds like for more cost you can get the work done sooner. But what’s the opportunity cost for you and your team to do the work? Let’s say it will take your team one month and if you outsource it the project will be complete in one week. What is the opportunity cost for that month? What is the aggravation cost to do it? On the other hand, what is the aggravation cost to have someone else do it and have you frustrated that you didn’t? 

We all make decisions like this all the time. Think about the last time you went out to a nice restaurant. Sure, you paid more than it costs to be fed, but you also got to enjoy the experience. You didn’t have to source the food or prepare it or clean up at the end of the meal. You had to pay for that, but you may have found it worth it. It’s the same thing here, you will have to pay more for this service, but there is value you are receiving too.

On the other hand, there are many people who would not find dining at a fancy restaurant worthwhile when they can enjoy a nice meal at home. Maybe they even get irritated by the service or are more critical of the food when looking at it through this lens. Will you be annoyed by having someone else do something you can complete? Will you think the work is shoddy when you compare it to what you would have done? If that’s the case, then it seems like you want to do it yourself. 

Think through if you and the team would have fun doing the project and if so, go for it and take pride in the savings you are achieving and being able to design something to your exact specifications. Then revisit the idea of whether doing this will really move the needle. If what you can accomplish is the same as what someone else could do, outsource it so you can work on what is really in your genius zone. 

Either way, make the decision, get everyone aligned on the outcome and move on.