Midsourcing Lowers Costs, Drives Revenue
Are you tired of the rising costs of running a digital agency? Are you struggling to stay competitive in a crowded marketplace while balancing the demands of clients, customers, and stakeholders?
If so, you’re not alone. Many marketing leaders in the digital space are facing similar challenges and are searching for innovative ways to cut costs and drive revenue growth.
As a digital agency owner, e-commerce merchant, or online entrepreneur, you’re always looking for ways to grow your business efficiently.
While outsourcing has long been a popular solution for businesses seeking specialized skills and cost-effective labor, there’s a new concept on the block: midsourcing.
Midsourcing is a strategy that’s gaining popularity among savvy marketing agency owners and marketing leaders: a cost-effective and efficient way to outsource certain processes to highly skilled professionals in developing countries. By partnering with a reputable midsourcing provider like Specialist.PH, you can access top-tier talent and expertise at a fraction of the cost of hiring and training new employees in-house.
In effect, midsourcing combines the best aspects of outsourcing and in-house teams, enabling you to access a global talent pool, save on costs, and enjoy increased productivity and business agility.
This way, you can grow and scale your digital agency, e-commerce store, or other online entrepreneurial endeavors more efficiently.
According to a Deloitte survey, 59% of businesses cited cost reduction as the main reason for outsourcing, while 57% pointed to a need to focus on core business functions. Midsourcing addresses these concerns by offering cost savings and enabling businesses to focus on their core competencies.
In this article, we’ll explore the differences between outsourcing and midsourcing, and how leveraging midsourcing can help you take your business to the next level.
Did you ever get an email from a Google Ads representative wanting to talk to you about your Google Ads account?
If you have a Google Ads account, the chances are high that you’ve seen these email messages.
It’s possible that the email message came from a representative in the Philippines who is well-trained on Google’s products and they want you to spend more on Google Ads.
They don’t work directly for Google even if it looks like they do. They happen to work for the HR partner company that Google contracted with for ad sales and account support services.
The brilliant Google Ads team, by contract in the Philippines or other developing countries, does the implementation work and research, and also supports Google’s sales teams all over the world.
One former Googler who was in charge of key clients spending several billion dollars in ad spend in the US market said “…I had a team of 24 or 25 in the Philippines who did everything for us – created sales presentations, did audits, implemented campaign ideas, and more.”
Google makes billions of dollars in net revenue by leveraging HR partners in developing countries who professionally support ad sales efforts all over the world…
And this is exactly what midsourcing is all about.
Midsourcing is an innovative method to scale your team quickly and effectively.
It combines the benefits of scaling a team in-house with the flexibility and affordability of outsourcing.
It’s new to e-commerce marketing teams; however, tech companies were the first to leverage midsourcing: They hire HR partner companies to help administer labor in developing countries for them.
HR partners do the recruiting, hiring, productivity coaching, skills development, payroll admin, benefits admin, discipline, and more – all done for you so you don’t have to build that competency for hiring and growing talent from developing countries in-house.
So, in our earlier example with Google, here’s how midsourcing works:
Being aware of these distinctions between midsourcing and outsourcing empowers you to make informed choices that align with your business’s objectives, leading to greater success and growth.
Enhanced Control and Teamwork: Midsourcing provides better control over your remote teams, as they focus on your business and collaborate with your in-house team. This leads to improved communication and collaboration compared to regular outsourcing. Knowing this distinction enables you to make informed decisions about which approach suits your business goals and resources.
Customized Teams for Specific Needs: Midsourcing delivers remote teams tailored to match your unique business requirements, guaranteeing the perfect fit for your organization. Being aware of this difference helps you allocate your resources effectively and prioritize the right approach.
Scalability and Adaptability: Midsourcing allows for effortless scaling and adjusting of your team as your business expands or your requirements shift. Understanding the differences in scalability and adaptability between midsourcing and outsourcing helps you choose the right model based on your growth plans and flexibility needs.
Higher Quality and Better Efficiency: Working closely with your remote team in a midsourcing model ensures they understand your business goals, resulting in higher quality work and more efficient processes. Recognizing the differences in quality and efficiency between the two models helps you select the approach more likely to deliver the desired results.
Midsourcing offers several benefits for businesses of all sizes and industries. Here are some of the key advantages:
By leveraging these advantages, your business can thrive and grow in today’s competitive landscape.
Wondering if it’s the right time to explore midsourcing for your business? Here are some signs that indicate it might be the perfect solution for you:
Struggling to keep up with demand: If your business is growing rapidly, and your in-house team is having trouble keeping up with the workload, midsourcing can provide the extra support you need to meet customer demands and maintain high-quality standards.
Limited resources: If you’re short on resources, such as time or money, midsourcing can be a cost-effective way to access specialized skills and expertise without hiring full-time staff or investing in extensive training.
Difficulty finding talent: If you’re having trouble finding skilled professionals in your local area, midsourcing can help you tap into a global pool of talent, giving you access to experts who can help your business thrive.
High turnover rates: If your business is experiencing high employee turnover, midsourcing can offer a more stable and reliable workforce that helps you maintain continuity and reduce the negative impact of employee churn.
Inefficient processes: If your current processes are inefficient and time-consuming, midsourcing can help streamline your operations and improve productivity by providing access to experts who know how to optimize workflows and implement best practices.
Need for scalability: If your business needs to scale up or down quickly in response to market changes or seasonal fluctuations, midsourcing offers the flexibility to adjust your team size as needed without the long-term commitment of hiring full-time employees.
If any of these signs resonate with your current situation, it’s worth exploring the benefits of midsourcing. By leveraging this powerful strategy, you can help your business grow, stay competitive, and achieve greater success.
E-commerce teams should consider their company’s “product” first: do you sell one product? A category of SKUs? Is your secret to success in your sourcing? Manufacturing? Customer service?
Where is your company’s biggest revenue source coming from? What is being sold to the end user? And what differentiates you from your competitors the most?
If you’re Zappos, then customer service is your key differentiator. You’ll invest in customer service as a fully in-house department. You’ll build your company culture around it. You won’t outsource that key differentiator, or business core, except in the very rare case that another company can do it better than you can.
At Zappos, anything outside of customer service is open to midsourcing – the hybrid in-house/outsourcing strategy for scaling teams.
If your marketing or branding is what differentiates you from your competitors the most, which is usually the case with commodities like deodorant or toothpaste, then bring all marketing functions in-house or source to an agency who is exceptionally close to your audience and your company… otherwise, ask yourself this question:
Is marketing being sold as our primary “product” to the end user?
The answer should be:
No. The exception is if you’re an ecommerce marketing agency. But if marketing or branding helps sell the product of your company, then you probably want to consider having some roles in-house, such as marketing strategists or marketing leadership roles, as you scale your team.
The rest of your marketing team can be midsourced.
Before you midsource, or hire full-time level help outside of your company, you should have an in-house leader who can manage, guide, and continue owning the midsourcing strategy while adapting to, and adopting, outside help.
There’s one exception: sometimes it pays to outsource strategy – especially to agencies or influencers or fractional CXO types who deeply understand your audience or your industry!
Outsourcing as many business functions as possible is generally a very good business practice to consider…
“It’s no longer a company’s ownership of capabilities that matters but rather its ability to control and make the most of critical capabilities, whether or not they reside on the company’s balance sheet. Outsourcing is becoming so sophisticated that even core functions like engineering, R&D, manufacturing, and marketing can—and often should—be moved outside.” (Source: Harvard Business Review)
You can outsource a strategy, a project, or any other one-off component of your company. Media buying or customer service are popular longer-term outsourcing options for ecommerce brands and agencies.
Finally, the last option for scaling your team, after in-house growth, is midsourcing.
Midsourcing is where you get the best of both the in-house and outsourcing worlds.
Midsourcing was created to help lower the risk of the cons of scaling in-house or outsourcing and increase the effectiveness of the pros of in-house and outsourcing methods combined.
Need ideas on which roles to midsource in 2023?
Let’s take a look at a few common challenges for e-commerce companies this year and how midsourcing fits in as a solution to those challenges.
The three most common challenges, with solutions, that e-commerce businesses are facing in 2023 are:
Is it too bold to say that every e-commerce brand runs into sales slumps throughout the year?
Most products have some seasonality to them.
Kris, running a brand in the health and wellness niche, was running into that seasonal dilemma with ad costs rising, supply chain challenges, and more – all creating a perfect storm of slow sales.
So what should you do if you’re running into slow sales volume?
The solution that Kris’s in-house team decided to focus on was email marketing because their buyer list was 100,000 people deep. They ran specials every once in a while, but email was largely untapped for them as a channel.
Research shows that “the average ROI through email marketing is $36 for every $1 spent.” (Source: Constant Contact)
It makes sense to constantly optimize your email marketing channel in ecommerce – especially when Klaviyo reports that 27% of revenue for ecommerce stores is (or should be) driven by email. (Source: Klaviyo)
Email is one fantastic way to climb out of a sales slump…
But here are two more ways you can overcome a drop in sales:
Website Conversion Rate Optimization where the focus is on the user’s experience with your website.
And Ad Conversion Rate Optimization where the focus is on the quality and quantity of traffic coming to the website, or the user experience with the ad.
Both conversion rate optimization options require creativity, technical, and analytical skills. They also require ongoing commitment, focus, and a long-term investment. Once you start optimizing, you’ll never want to stop!
Kris’s health and wellness brand turned to midsourcing as a way to scale their email-driven revenue because their in-house team members were busy implementing other strategies in ads, search engine optimization, and website conversion rate optimization.
Roles you can midsource to help with getting out of a sales slump might include:
Most people see inflation simply as “it’s costing me more to buy eggs and milk at the store than ever before.”
What they don’t see is what you go through as an ecommerce brand (or agency) owner.
You know that the supply chain is getting squeezed:
The bottom line is that it’s costing more than ever before to create products and deliver them to buyers.
That increased cost dips right into your profit, and it stings, doesn’t it?
So what should you do if you’re running into higher costs?
The good news for business owners or agencies is that prices are going up everywhere due to inflation – so you can increase your prices!
However, pricing in your industry might be regulated by local, State, or Federal government institutions. If you’re in a highly regulated climate, then start increasing prices while you can and follow those regulations precisely.
The downside to price increases is that they can lead to sales slumps, but the solution to sales slumps may be easier to handle if you have the cash flow to support those solutions discussed above.
You might also consider financial optimization options – capital allocation, planning, and projections. Talk to your CPA or CFO regarding these options.
What roles can you midsource in this case?
Pricing may be considered a core business tenet. This is one area that you will want to seriously consider keeping in-house or consider hiring a pricing consultant or agency, to get a good plan in place to navigate the higher costs of doing business.
This will be one of the biggest challenges for e-commerce brand owners and agencies in 2023!
You’re probably scrambling right now, looking for any way to cut costs, especially in this economy with the pressures of rising costs everywhere you turn.
Bryan, an e-commerce agency owner and brand owner, was running into this challenge with his agency.
His e-commerce courses were selling like crazy – that’s a good thing.
Demand for his e-commerce agency services also skyrocketed – that’s also a good problem to have.
Bryan was scrambling to find a way to fulfill on-demand while smartly managing his fulfillment costs.
Any brand owner, and agency owner, can relate, right? You’re always looking for the best way to manage or lower the costs of doing business.
Bryan didn’t have time to hire locally beyond his existing team, because that can take months! And fulfillment needed to happen right now!
So what should you do if you want to cut costs (such as in this case)?
Bryan opted for a slight restructuring of his team so he can midsource talent who then fulfills on his agency obligations.
He saved over 50% on people power by using marketing talent from developing countries versus expanding his team in his city or State.
Not only did he save a lot of money, but he also paid the top 1% salaries to talent overseas and provided health benefits and more perks than they’ve ever had before – enriching their lives, their families, and communities.
There are a lot of ways to cut costs in ecommerce:
Bryan focused on option #6 because people are usually the largest source of costs (and ROI) in marketing agencies. He also wanted to prepare his company to adopt a midsourcing strategy.
Depending on your brand’s core and focus, the price of people may be your 2nd or 3rd largest cost center.
Rather than join the layoff trend happening in the technology industry, simply adjust your future hiring by turning your in-house team into strategists and give midsourcing a try.
What roles can you midsource in this case?
One of the biggest struggles when scaling teams is when in-house team members go from task to team.
You get used to performing and owning specific tasks and deliverables in a given role. And it’s really hard to let go of that familiar territory.
For example, in marketing, you might be responsible for Facebook Ads so you consistently test new ad creatives and new audiences and spend hours implementing new strategies.
The downside to this type of work is that when you’re implementing, you’re not strategizing.
And when you’re not strategizing, you’re ROI on time and talent isn’t as high as it can be.
Turning your in-house team into strategists is essential for taking advantage of midsourcing.
That starts with you.
Your role might change so you can focus on internal and external strategy, and then communicate test ideas and strategies to your new team members so they can implement them for you.
Here are some common internal strategic initiatives and learning opportunities for leaders:
Here are some common external strategic initiatives and learning opportunities for leaders:
The following simplified organization chart showcases strategists (in-house) and technicians (midsourced):
You may be going through a role transition, or several people on your team may be going through it, and it can be frustrating.
The antidote to frustration with team members, midsourcing, and outcomes is time.
Spend more time with your team one on one. At least an hour every day per team member for the next 6-8 weeks.
They’ll get to know your strategies, they’ll help document your previous “technician” role, they will tackle and begin to own the tasks you owned and they’ll know how you like to get them done.
Your time will start to look like this as a strategist focused on your team’s outcomes instead of on your previous task outcomes:
While midsourcing offers many benefits to businesses, it’s not without some challenges. In this section, we’ll discuss common obstacles you might face when midsourcing and share tips on how to tackle them.
Effective communication can be tricky when working with a midsourcing provider, especially if language or cultural differences exist.
To address this, set up clear communication channels right from the start, and ensure everyone understands expectations and deadlines. Assigning a project manager or point of contact to facilitate communication between your business and the midsourcing provider can also be helpful.
Ensuring quality control when midsourcing can be challenging, particularly for complex tasks or those requiring specialized knowledge.
To handle this, establish quality standards upfront and create a system to review and approve work before delivery to clients or customers. This could involve setting up checks and balances or providing training and resources to the midsourcing provider to meet your desired standards.
Cultural differences might pose challenges when midsourcing, especially if there are varying expectations or norms around communication and work styles.
To tackle this, be aware of cultural differences from the beginning and collaborate with the midsourcing provider to establish a comfortable work style for everyone involved. This might include providing cultural training or resources or simply being open and communicative about expectations and preferences.
By understanding these common challenges and taking proactive steps to address them, businesses can ensure a successful midsourcing experience.
As the business world keeps changing, companies need to stay updated on trends and strategies, including midsourcing.
In recent years, some fascinating developments have emerged in the midsourcing sector that businesses should consider.
One key trend is the growing use of midsourcing for core business tasks. Traditionally, midsourcing was mainly for support and non-core functions, but now more businesses are exploring it for their essential operations. This change comes from the desire to cut costs, boost efficiency, and access high-quality mid-level talent in emerging markets.
Another trend involves using technology to enhance midsourcing. Advancements in communication and collaboration tools make working with remote teams and managing outsourced processes more straightforward. As a result, virtual midsourcing has gained popularity, allowing businesses to leverage 24/7 operations and reduced costs by collaborating with providers in different time zones.
Lastly, there’s a rising trend of midsourcing partnerships. Businesses and providers work together to build long-term relationships and strategic collaborations. This approach lets companies benefit from their providers’ expertise and knowledge while maintaining control over their processes and ensuring quality standards.
These new developments demonstrate that midsourcing continues to grow and mature as a strategy for businesses aiming to cut costs, enhance efficiency, and stay competitive in today’s global market. By staying up-to-date with these trends and exploring new midsourcing opportunities, businesses can leverage this powerful strategy to achieve their objectives and drive growth.
Once you decide that midsourcing is the right choice for your business, picking the best provider is essential. This critical decision can significantly impact your midsourcing success. Here are some factors to consider when choosing a midsourcing provider:
Search for a provider with experience in your industry or niche. They should have a team of experts who understand your specific needs and can offer top-notch solutions.
Effective communication is crucial for midsourcing. Choose a provider that communicates well and keeps you updated on your project’s progress. Ensure they provide reliable support throughout the project and even after completion.
Compare prices and seek providers with flexible payment plans. Ideal midsourcing providers allow you to scale your team up or down based on your needs.
Check that the provider has the necessary security measures to protect your data and intellectual property. They should have a secure system for transferring and storing data.
Lastly, investigate the provider’s reputation and reviews. Review previous clients’ feedback to see if they’re happy with the provider’s services. Industry forums and review websites can give you an idea of their reputation.
Evaluating multiple providers will help ensure you choose the right midsourcing partner for your business’s success.
Now that you understand midsourcing and its potential benefits, it’s time to act. As a busy business owner, follow these steps to start implementing midsourcing in your company:
Remember, midsourcing isn’t a one-size-fits-all solution, but with careful planning and execution, it can help your business grow and succeed in a competitive market.
Ready to unlock the power of midsourcing for your business? Get in touch with the Specialist PH team today! Our experts are here to help you find the perfect midsourcing solution tailored to your needs. Don’t miss this opportunity to grow your business and stay ahead of the competition.
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