Digital agencies continue to rely on outsourcing to manage unpredictable workstreams and in order to tap into outside technical expertise, according to new research published today.

The Digital Outsourcing Survey Report 2012, carried out in partnership with United Studios, found that 57% of responding digital agencies are outsourcing work to freelancers, other agencies or to specialist digital production companies. 

The research, which is based on a survey of more than 100  digital agencies carried out in July and August 2012, found that mobile application development is the most commonly required service, while Flash (design and build) is still the most widely sought production skill.

The survey, which follows a similar report carried out four years ago, found that the highest daily rates are paid for Microsoft.NET programming.

Responding agencies were asked about the following areas relating to outsourcing:

  • The type of work they were most likely to outsource
  • Their most required production skills
  • The split of work outsourced to freelancers and agencies
  • The average day rates paid to agencies

Some of the key findings are summarised below:

  • The most common reason agencies stated for outsourcing work was to manage fluctuations in work-stream effectively, and the most important criterion for choosing an outsourcing partner for the majority of agencies was quality, over reliability and cost.

The most likely areas to be outsourced are as follows:

1.    Technical work (66% of agencies stated this as most likely).
2.    HTML, CSS, and AJAX development (60%)
3.    LAMP (PHP/MySQL) programming (54%).

This survey highlights that although Flash has been said to be in decline recently, those predicting its demise maybe premature, as almost 100% of the respondents said that Flash design and build skills are the most required by their agency, showing it is still a widely used tool.

  • Mobile application build is the most commonly outsourced service (64%), which is unsurprising given the recent proliferation in the use of smartphones. Mobile is still a relatively new channel, and agencies evidently need to seek expertise outside of their network to capitalise on increased mobile internet and app usage.

Which services do you outsource or would you consider outsourcing?

  • Around half of the work outsourced is allocated to freelancers (53%), and just below half (44%) to other digital agencies. When using agencies for outsourcing digital work, the majority of respondents (69%) will use agencies based in the UK.
  • White-labelling of third party agency work is always carried out by around 40% of agencies, and only 20% never white-label. The main reason for white-labelling third party agencies was that respondents wanted to appear capable of offering all services in-house.
  • On average, 72% of a freelancer’s time is billable, and the typical mark-up of outsourced work by agencies is 38%.
  • Day rates paid for a range of services carried out by outsourcing agencies revealed that the service paid most for in the UK (by agencies with >50 employees) is Microsoft .NET programming, at an average of £640 per day.

Outsourcing can be a highly effective way for agencies to access skills and digital knowledge that they don’t possess in house. This survey shows that outsourcing to agencies and freelancers works well for those who find the right people.

As Tim Seddon, Founder and Managing Director at digital production agency United Studios,  said:

“Faced with challenging market conditions agencies need to control their costs and fixing headcount is one way to do so. For them to be successful, creative ideas must be allowed to thrive, so they can’t be constrained by the skills or availability of an in-house studio. Outsourcing allows the flexibility and quality demanded by clients; it ensures if done correctly, you can have the right people, on the right job at the right time.”

Econsultancy research analyst Amy Rodgers said:

“With the increasing complexity of campaigns and multiple consumer touch points, technical skills are being held at a premium and good developers are hard to recruit in-house. This is reflected by the fact that two thirds of agencies who outsource work rely on outside expertise for technical work.”