Analyst Relations is a darn important part of business. You realize you need resources to support the potential benefits, but do you hire or outsource?
It’s an interesting comparison. The right choice is different for different companies at different times and in different circumstances. I’m offering a variety of guidelines, considerations, and measurements that you can use to make your best judgements.
I’m a consultant, but I’ve worked on both sides of the in-house vs. outsource question. Ultimately, I’m an AR evangelist who believes in doing AR and doing it right. My intention is to pose questions that lead you to the best decision for you and your company.
Maturity of the firm. Startups almost always outsource AR to get a valuable jump on the benefits without requirements from a stretched staff. As vendors mature, it may make sense to bring on an employee.
Flexibility and focus. AR workloads change tremendously from month to month. You need resources that can handle this fluctuation. You also need people always dedicated to the function so it is consistently prioritized.
Volume of work. This is a tough one. Small firms in a crowded space with many reports probably require full-time attention. Larger firms in a lightly covered space probably can get benefits with a part-time resource. Most important is to "right-size" the program and then look at whether to do it internally or externally.
Numbers and organization. This is often a dollars and cents exercise. What adds up? And is it easier to hire, or bring in a contractor in your world?
Continuity. Which method gives you stronger consistency to build long term relationships?
So first, why outsource?
You get top-notch resources. Good AR people can be hard to find. You need people with the skills and experience to gain tangible benefits, because AR is nuanced and challenging. Bring in a strong outsourcer to deliver the quality you need.
More cost effective. AR professionals tend to be highly paid. Outsourcing can often deliver value at a much lower ticket price.
No paying benefits. Related, the cost of an employee is much more than the salary. As you know, it includes healthcare, 401k, vacation time, sick leave, training, equipment, office space, and more.
Flexibility with resource types. Responsibilities for effective AR run the gamut from highly strategic to highly tactical. Not only is it difficult to find individuals that perform at each step of this continuum, but it isn’t a good use of resources to have highly skilled talent performing administrative-type work. Within organizations it’s often difficult to parse out the responsibilities to different individuals, therefore AR professionals end up spending at least 40% of their time on tasks that don’t require their skill level. With an outsourcer, these responsibilities are shared among a team, optimizing the delivery at a beneficial price point.
Flexibility with workloads. The AR job has peaks and valleys, with some months filled with events and evaluation reports, and others without pressing deadlines. Outsourcing gives you flexibility to burst up when needed, and tail off when it’s quiet. You don’t have to commit to more resources than you need.
Focus. Unless you have a dedicated full time employee managing AR, it is very difficult to maintain laser focus on the priorities.
No long term commitments. Hiring an employee means you are committing for the long haul. This requires careful screening, which typically takes months. And if a hire doesn’t work out, it takes great effort to break the tie.
You get capabilities better done by an outsider. There are many functions that work better with an outside consultant, like evaluating spokespeople (and giving them some tough feedback), perception audits, strategic advisory, training, and program evaluation.
Reasons to hire
Better integration into the culture. Company culture is important to any function, and it can be challenging for an outsider to adopt the style. When interacting with analysts, it’s important that the company be represented appropriately.
Easier collaboration with peers. Strong AR works with a variety of roles within the company. An outsourced resource can be distant from the team and miss such collaboration opportunities.
Tighter relationships with executives. AR demands executive involvement. This becomes challenging when not an employee.
Demands call for a FT resource. If you require a full headcount, it often makes more sense to commit to the role permanently.
Require domain expertise. While AR is generally domain-independent, in some obscure, highly technical spaces, domain background helps the AR professional succeed.
Budget and organization is not set up for outsourcing. Sometimes it’s more difficult to go down the outsourcing route. You need to establish budget, get on the approved vendor list, and address purchasing requirements. Sometimes there is already a headcount dedicated that you will lose if not filled.
More control and easier management. Providing direction and management to employees is simpler.
Risk mitigation. An outside resource requires a NDA and confidentiality agreement, which is automatically handled with new hires.
How to make the decision
There are a lot of puts and takes involved in the outsource vs. in-house decision.
Part of it comes down to budget and headcount. It’s relatively easy to calculate which decision makes the most sense financially and organizationally.
Some of it is the availability of resources to hire. You may be very lucky!
The rest of the value is more difficult to sort through. You have to think hard about what’s most important in your environment and for the individuals overseeing the functions.
Many of the issues, such as culture integration, team collaboration, continuity, and executive management, depend totally on the people you engage. The best employees make this easy… and the best outsourcing relationships address these beautifully when you truly incorporate them into your team. Whatever you decide, make sure you select for this carefully.
A special consideration during economic turmoil. When the economy is uncertain, outsourcing makes a lot of sense. Headcounts are often cut or frozen, yet the opportunities to benefit from analysts grow. Buyers depend more on analysts when their budgets are limited, when they must get projects right, or when they want to leapfrog the ailing competition. Therefore, if vendors lessen their AR focus, they miss out on tremendous influence opportunities.
I’m an AR Evangelist. During my varied and successful management career with tech behemoths, I discovered the underused and misunderstood field of analyst relations and fell in love with its power and potential. I know from firsthand experience that both in-house and outsourcing can work.
And although I’m extremely proud of my team and the success we bring to our clients, the right answer for you might be in-house or might be to hire a different AR consultant. The wrong answer is to not invest in AR. That will leave tremendous business potential untapped.