Cloudmanic Labs

So you have a fresh new idea for a product. Maybe an iPhone app, a web application, whatever. You saved up some money or wangled some investors, but instead of hiring a team to develop your project you want to subcontract out to an agency. Your thinking is that the agency can get your product to market swiftly as they have in house all of the designers and developers needed to build your dream.

In the last 15 years I have hired many agencies. I have also worked for many agencies. Heck, I even ran an agency. Let’s say I’ve seen the agency issue from all sides. So I wrote this post to share a few things to keep in mind when going the agency route. Most also apply to hiring a freelance designer or developer, but the focus is agencies—the types of companies that have fancy offices, charge boatloads per hour, and invite 25 people to every meeting (account managers, project managers, salespeople, developers, designers, freelancers, random dude not doing anything that day).

You Can’t Have It All

When hiring an agency you can’t expect to get a high-quality product at a good price delivered on a fixed schedule. An agency salesperson will always try to convince you that they can deliver on your schedule. If they are working on an hourly basis they will assure you that they “already added tons of padding to the budget.” And besides, their designers and developers are the best in the world! Simply accepting that you can’t have an outcome where quality, budget, and schedule are achieved you should maximize for one or two. Don’t be fooled into thinking you can have it all.

Most Agencies Don’t Care About Your Little Project

The best agencies spend their days working with the big boys, the Fortune 500. These clients have massive budgets and are a good agency’s bread and butter. Simply put, your little startup project is not going to get the best resources or the most attention. An agency will always choose a Fortune 500 client over you. Sorry.

Agencies Hire Lots of Freelancers

Agencies rely on freelancers to save money. They pay some eager freelancer $50 an hour (no benefits, no taxes) and bill them out for $150 an hour. The problem with these subcontractors is that they come and go—in some cases halfway through a project. Transferring knowledge from one person to another is costly, jeopardizes the schedule, and can negatively impact quality. Agency turnover can make you wonder if you should have just hired a freelancer yourself.

Your best bet is to make sure your agency is not going to subcontract out your project. If it’s unavoidable, be sure that your contract details what happens if things go wrong with the subcontractor. Also, confirm that an agency employee will manage the project. I have seen it happen over and over again: the agency hires a subcontractor for your project, puts you in contact with said subcontractor, and then takes a backseat. Dumping project management on the client is pure negligence on the part of the agency. (I doubt that it happens with their Fortune 500 clients.)

Employees of Agencies Are Tired and Distracted

Lots of great talents start their careers at agencies. Or at least start their W2 careers at agencies (lots of freelancers eventually become employees). But working at an agency is stressful, so agencies tend to be a revolving door of talent. Clients are needy—particularly the Fortune 500—and agency employees often end up working nights and weekends just to make their big boy clients happy. Often, they are working on multiple projects at a time as well. Overwork, distractions, and deadlines simply do not add up to someone’s best work.

And So—When Should You Hire an Agency?

I just broke the silence on some tough facts about agencies. So when should you hire an agency if you are a small upstart? In short: when you can’t build your own team. You might not have a network of freelancers to pull from. You might not know how to communicate with designers and developers to get great results. In some cases the safer risk is to first hire an agency to get you off the ground and later hire your own team of employees.

I think the biggest benefit of an agency is stability. Though employees and contractors might come and go, good agencies stick around for years. You will always be able to walk in and get what you need done. But if you are planning on building a lasting startup, look around—I can’t think of many (any?) great companies that started via an agency. Maybe a few have, but quickly moving on to an in-house talent pool of designers and developers is key. Agencies are not a viable long-term labor force.  

The Upshot

When considering an agency make sure the services offered match your needs. Keep in mind my points about quality, budget, schedule, staffing, contingencies, and project management and contract around them. Try to make sure everything is in writing. Also make sure that what is said in meetings is documented. (Agencies love meetings.) You don’t want your agency going down a path you did not agree to and then getting stuck with the bill to correct it.

Most important, don’t let things get out of control. Too often something critical comes up when the project is 80% complete. A major feature is missing, the budget has completely run out, the quality is wanting—and you’re stuck accepting something you did not plan for (lack of features, bigger budget, lower quality, etc.). You could fire the agency, but then what? You are cornered. Being very actively engaged with the agency and your project will help you avoid this situation. As with employees you should “hire slow, fire fast” (if firing is the correct solution for your agency relationship).

I have engaged with at least 30 agencies in my life. If you are looking for a great design, mobile, or web agency feel free to pop me an email at spicer@cloudmanic.com. I would be happy to help you find one that meet your needs—or connect you with some top-notch freelancers if that is a better solution.