It’s hard times for the UX consultancies in San Francisco. If they aren’t being bought like the recognized agency, Adaptive path, then they’re loosing their most talented design and development talent to employers who offer double salary and probably larger job security. For a recognized agency like “Smart Design”, the loss of talent has lead to closing their legendary San Francisco office.

Why is this happening? What do organizations expect that internal design and development competencies can offer? And why are they choosing to insource these competencies instead of hiring external counseling?

Companies are waking up to the fact that design and development are important drivers of innovation. First and foremost: design help put the use in the center. Designers are taking their starting point in the world of the customers and are gaining insights into what creates value for them. Even companies, who are traditionally driven by technology, such as software companies, advanced manufacturers and financial institutions, are now recognizing that the needs of users should come before technology. Facebook has established a new unit, who’s job is to strengthen the empathy with users in other cultures than North America. IBM has recently announced that they are globally hiring 1.000 extra designers. Last, but not least, it was the American bank, Capital One, who acquired Adaptive Path last year.

Why insourcing?

The big question isn’t anymore why design is being seen as something useful for larger organizations. What’s interesting is why design is increasingly drawn into organizations as an internal competence. Here there are at least three answers:

Control and capacity

There’s not a long way from the top management recognizing that design is a strategic and business critical competence, to wanting to control over what designers are contributing with. When something is important for an organization, most managers want to control it. When establishing and expanding internal design competencies it follows that designers and developers work can be more systematically organized and incorporated in all relevant parts of the business. Another strength could be that the thinking of designers and developers and their methods (i.e. agile approaches), can be used to build up capacity in other areas of the organization. Development practices from software and design can inspire and strengthen the abilities of co-workers to better innovation and problem-solving.

Time and money

Another benefit is speed and flexibility. With internal design and development competencies, there isn’t a need for external competitions and long procurement processes. Internal resources also provide better control over costs and more design and development for the buck. Internally hired staff costs less than external advisers, who invoices internal hours with built-in overhead.

Higher supply of design and development

There is a growing supply of talented designers and developers, who actually do want to work internally. It’s no longer more attractive and prestigious to be working in an external agency, who used to lure hires in with task variation, and good salaries. Companies like Google and Facebook are often paying more, and moving to an internal design and development department often also means being closer to where decisions are being made.

Letting design and development competencies being a larger part of the internal organization however isn’t without drawbacks. One is that organizations might not be able to catch up with the latest trends as design agencies are more exposed to through the varied work for many different clients. Another potential pitfall is failing to make design and development a broad competency in the organization with the end result of merely parking designers and devleopers in an internal silo, which then experiences limited impact. The challenge is then more to find the right strategic mix between internal and external competencies rather than choosing either or.

The good news for designers and developers are, that no matter if being insourced or outsourced: what you do is in high demand. It’s a win-win situation.

Anders Toxboe Author

Based out of Copenhagen, Denmark, Anders Toxboe is a Product Discovery coach and trainer, helping both small and big clients get their product right. He also founded and a series of other projects. Follow Anders at @uipatternscom.

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