Outsourcing makes the world go ‘round. It makes it possible for companies to serve their clients efficiently by delegating tasks to others who can do them better, cheaper, and in many cases, both. One prominent example of outsourcing is how Apple’s products are manufactured by Foxconn and Samsung. By having other companies build their iPhones and Macbooks, Apple can focus on developing its proprietary software and furthering its brand.
The big guys aren’t the only ones who outsource—small and medium-sized businesses, agencies and nonprofits do it too. Over the past decade, online freelancing companies (like 99designs) have made it very easy for small business owners to outsource graphic design work with no risk of losing money.
As a digital agency, you’re already involved in the outsourcing chain; your clients come to you for work they can’t or don’t want to produce in-house. And you yourself may outsource work, for example by hiring an accountant to do your taxes (instead of having a full-time employee handle them).
Initially, the thought of outsourcing work can seem counterintuitive. It might even feel like cutting corners. After all, your clients hire you because they expect the quality work you provide. But it’s not scrimping, it’s a sophisticated, pragmatic move when you’re growing your business. And outsourcing doesn’t mean a drop in the quality of the work your clients receive. There are a lot of freelancers out there who can provide the same quality of work—or better—than an in-house employee.
The economics of outsourcing graphic design
Every business owner’s goal is to scale their company into something bigger, something that can serve the market better. Agencies shouldn’t be any different. Outsourcing fits right into a scaling plan because:
- It’s a smaller upfront economic investment than hiring an employee. Choosing to work with a freelancer gives you the flexibility to get work done when you need it, rather than having somebody on staff, costing a salary and employment benefits when work is slow
- It saves you time. Remember, time = money. If you have four freelancers working on individual projects simultaneously, you can deliver all four within roughly the same time frame and quadruple your profit.
Here’s a brief look at scaling in action:
Unicorn Marketing Co. (UMC), a one-person marketing startup. According to its calculations, it can earn an additional $100,000 in gross profit next year by providing website design and logo services to its clients.
At a salary of $50,000, hiring a full time graphic designer would cost UMC at minimum, $62,000 with benefits. This cuts the additional $100,000 in gross profit to a net of $38,000.
Having the designer on staff is still an asset to the company, but it’s an expensive asset even when there’s enough work to support a full time designer position. When there isn’t enough work to justify a 40-hour week for the designer, their compensation can cut into profits quickly while the designer’s skills stagnate as they stay bound to one company, rather than pursuing freelance projects.
But say UMC hires that same freelancer at an hourly rate of $40. At 40 hours per week, the designer costs UMC $1,600 per week, or $83,000 per year. Keep in mind that hourly rates for freelancers tend to be higher than hourly rates for employees because freelancers have to buy their own equipment, pay self-employment taxes and cover their own healthcare benefits. If UMC needs a full time graphic designer, creating a salaried position is the more economically sound choice. But since it’s a young company, it might not be at that stage yet. Like most startups, UMC’s early graphic design needs might look like this:
Week 1: 15 human hours needed for graphic design
Week 2: 25 human hours needed
Week 3: 0 human hours needed
Week 4: 50 human hours needed
At $40/hour, UMC pays freelance designers a total of $3,600 for this month’s work. If it hired a full time in-house designer, the same month of work would have cost $6,400. Also remember the flexibility working with freelancers can get your company in terms of cost. You can outsource work to freelancers who live in areas with lower living costs, which typically means they charge less per hour. A graphic design budget of $40/hour puts you in a much different designer market in Indonesia than it does in New York City.
In the example above, a marketing agency was looking to expand to include design as a service. But what if you already produce great design work? Would it ever make sense for you to consider outsourcing work?
The answer is yes. Here’s why:
You might be a great marketing agency, but are you a great real estate marketing agency? By choosing a graphic designer who focuses on one particular niche, you can expect a finished product that fits your client’s needs more accurately. Niches aren’t just specific industries, either. If you’re working with clients who want more technical-looking graphics, work with a graphic designer who has a background in CAD to deliver exactly what the client wants.
Sometimes, time isn’t the issue that drives a company to outsource its graphic design, but specialization is. Your in-house designer might be awesome at logo designs, but not have much experience with merchandise packaging designs. Instead of having your graphic designer create a good-enough packaging design to sell to the client, outsource the project to a freelancer who specializes in product packaging and who can knock it out of the park.
Breaking out of the box
Outsourcing can also help your company expand into a new niche or offer services outside your typical offerings to give the client what they want. Say your experience is strictly in web design, and you want to expand into print work. Working with a freelancer who has a strong background in print design can help your company bridge that gap and deliver work that exceeds the client’s expectations.
Outsourcing work is an effective way to work with fresh ideas. Bringing in a freelancer is bringing in outside creativity that can inspire the rest of your team. They’ll approach your project from a different angle and bring innovation to your company’s designs.
A great way to find the freelancer who’ll bring an outside perspective that complements your agency’s workflow needs, rather than clashing with them, is to hold a design contest through 99designs. A variety of freelancers with unique approaches to your request will enter the contest, then you can choose whose work is a best fit for the design you need to deliver. Alternatively, you can curate bids in a similar way by sending your project needs to a few trusted freelancers, then making your choice based on their drafts.
Adapting to varying workflow demands
As you know, your agency has busy times and slow times. When outsourcing graphic design is part of your business plan, you can adapt to the volume of work you’re facing at any time. More work? More freelancers. Only a little bit of work? Hire one designer to take care of it. Businesses rarely scale at a consistent pace. Speed up the process (and slow it down when you need to) by hiring the number of freelancers you need to meet the demand you’re facing without having to take time to hire and onboard new employees at specific growth benchmarks.
Outsourcing is also a way to get overflow work done—there might be less glamorous design tasks (like a bunch of banner ads) that you need to do. Freelancers are great for this!
And of course, outsourcing work can get it done faster. If your in-house designer already has five projects on her plate when a new one comes in, don’t bog her down with a sixth. Outsource that project to somebody who can get on it immediately.
How to outsource graphic design effectively
The flexibility and savings that come with outsourcing can make it an attractive option, but don’t let them eclipse the importance of delivering quality work that meets your client’s specifications. This should always be your priority when you decide which projects to outsource and how to handle outsourcing them.
One option is to hire an in-house designer or design manager who creates relationships with freelancers to complete projects. The individual in this role should have the background to effectively vet potential freelancers and do some of the design work themselves, which can mean creating high-level design concepts, tweaking freelancers’ work, and/or maintaining your company’s style standards to ensure that all graphic work conforms to your style and standard.
If you’re a smaller agency, you might have to be the one in this role. You can find quality work and talented designers through online freelancers and contests. If you aren’t confident in your design skills and ability to vet freelancers, consider choosing a freelance creative director you trust to take on all or part of this role. Services like 99designs Pro for Agencies can also make this easier as they hand-pick the best creative talent and help you learn to source the best designers for your needs.
Five years down the road, your company’s graphic design needs could be a lot different from its needs today. And that’s normal. You might find that by that point, your cashflow and work volume make it economically feasible to buy “white glove service” from a design agency.
Or you might find that you were able to do the outsourcing yourself in the agency’s early days, but later, you’re too busy to continue giving this aspect of the business the attention it needs. When it comes to that point, it’s time to hire somebody. Whatever decisions you make regarding your company’s graphic work, always ask yourself how the decision will positively impact the company and its ability to serve its clients. If a decision won’t save money, make your workflow more efficient, save time, or result in a better product, it’s probably not a good decision.
Considerations to make when you outsource graphic design
Outsourcing your graphic design needs can be a great choice, but it’s not always the right choice. Before you set up a 99designs contest or post a job listing, take some time to consider the following:
- Your graphic design budget. Determine what you can afford to spend on graphic design and what the work you need will cost you if you work with a freelancer.
- Who will manage the graphic designer, whether they’re a freelancer or you create an in-house position?
- Will you tell your clients that you outsourced the graphics they ordered? You might feel they have the right to know or you might feel there’s no reason to tell them—there’s no “right” answer to this; you’ll need to determine what works for your company.. If you do want to white label designs, make sure the freelancer you’re working with is comfortable with this. (Sites like 99designs offer you the ability to setup an NDA with designers so they know off the bat how you’re working.)
- How do you plan to have the designer work? Do you need them to be in the office full time or can they work remotely and only come in for specific meetings? Do you need the graphic designer to come to the office at all, or can your relationship be purely remote?
- How will you handle conflicts with the designer? Always have them sign a contract before work begins that clearly states how much they will be paid, their pay schedule, and how conflicts will be resolved. Work with an experienced employment lawyer to draft an enforceable contract. It’s also a good idea to understand the differences between an employee and an independent contractor and what they mean for you, the employer, before you outsource graphic design work.
When outsourcing isn’t the right choice
You might determine that outsourcing graphic design work isn’t the right choice for your company. If you anticipate making graphic design an integral, ongoing part of your operation, it could be better to hire one or more in-house designers. Doing this can save the agency money by paying a salaried designer for the volume of work you need produced, rather than paying hourly or by piece for the work. It also means your design costs are fixed, rather than variable according to the amount of work you need, which makes budgeting and projections easier to calculate. With an in-house designer or design team, you also get more consistent work—you know how your designer/team works, you know where their strength lies, and they know your agency’s demands, your company culture and your niche in a more intimate way than a freelancer could. It’s also a lot easier to discuss projects when your designer is sitting a few cubicles away, rather than on the other side of the world.
On the flip side, working with a freelancer can save the company time and money while allowing it to allocate more resources to the things it can’t outsource as easily. It can also be the beginning of a strong relationship with the freelancer you choose, who could become a full time employee some day or continue to work with the agency, potentially helping to grow its business by referring new clients to you.
Like every other choice you make to scale your agency, determining how to handle your graphic design needs requires you crunch numbers and look closely at all the relevant factors. Start your calculation with numbers to develop an understanding of how outsourcing graphic design will impact your bottom line. Use this figure as a starting point, not an end point. Never sacrifice quality to save money, but don’t lose sight of your financial resources. Having a firm grasp of the financial side of outsourcing graphic design work will help you walk through your thought process to determine how to fit it into your growth strategy. You should always approach outsourcing asking yourself “how can this help my agency deliver better designs now and in the long term?”