Streamline your business operations; Theorem Inc.'s CEO explains how and when to outsource.

Mature industries like automotive, insurance, pharmaceuticals and banking have been outsourcing for decades even before the term entered common lexicon. These verticals have standardized processes in their industries which enable them to easily scale.

Online marketing is a fledgling business in comparison to these mainstays, however. Its growth is fueled by a new medium that is driven by innovation. Two of the traits of innovation are inefficiency and waste-- just look at the R&D budgets of any business.  However, as traditional advertisers migrate online or begin buying online businesses, they will come to expect the same level of scalability, efficiency and cost arbitrage that exists in other well managed businesses that leverage outsourcing.

While generic outsourcing focuses on costs, it is increasingly used to gain competitive, strategic and tactical advantages. Given that internet technology is widely pervasive, online marketers can tap into skilled outsourcing companies not just for fast turn-around times but also for strategic initiatives.

While outsourcing is generic, there are nuances that are specific to online marketing. Here are some of the criteria that online marketers, publishers and agencies can use to evaluate outsourcing either on a project basis or enterprise wide.

What to outsource and what not to
Identify what is core to your business and focus on it. The tasks that are peripheral and not revenue generating, yet are still overwhelming your employees, are key candidates. For instance, a creative shop spending a great deal of time testing action script for Flash is obviously not using resources intelligently. Or if you have a senior media planner who spends her time pulling data and generating reports for client presentations, perhaps it's time to rethink your strategy 

On the flipside, don't outsource that which is creative or strategic in nature. In addition, tasks that cannot be measured or tracked, or that require on-site supervision, should be saved for the very last in the outsourcing food chain.

Your outsourcing partner's domain expertise
Align your organization's needs with your outsourcer's skills. Does the outsourcing company understand your business, and can they scale with an online marketer's needs which may encompass ad serving, rich media technologies, SEM optimizations, list maintenance, web development, marketing analytics, and more? A generic outsourcing partner may have superb technical and support skills, but the onus of training them in your business will fall on your employees, possibly leading to a whole new drain on your resources.

Infrastructure
Campaign launches, tests, ad placement optimizations and creative mock-ups all have drop-dead time lines. Does your outsourcing partner have a world-class infrastructure with offshore cost advantages to swing these turn-around times? Do they have weekend coverage if needed with back-up teams to crank around the clock and get your campaigns up and rocking? In some cases, having a dual team both on-site in the Americas with an offshore center may be the best balance between cost savings and on-site support.

Institutional knowledge and smart teams
Given the rapid innovation and lack of standards in the online marketing space, teams that plan, deploy and analyze online campaigns have most of the key knowledge between their ears. Documentation is a novelty! If your team spends time training your outsourcing partner on some of your secret sauce, then you need to make sure your outsourcing partner establishes checks and balances to leverage the knowledge transfer. You can alleviate the situation if your outsourcing partner builds dedicated teams that are transparent, thus eliminating endless training with every new campaign. 

Cultural fit
As in any team building exercise, regardless of whether it is an internal team or outside partner, the ownership element and cultural fit is a key ingredient of success. Internal teams may resist the process at first as a loss of control. Turf wars will begin if executives don't position the move appropriately. If both teams don't buy into the relationship, and there is no executive support, the engagement is destined for failure from the get go.

Invest in long term
John Maynard Keynes, the noted economist, once remarked that in the long term we are all dead! For the outsourcing gig to provide any tangible returns, give it a generous amount of time. Have a road map and be clear about what your goal is. If you don't have a clear end goal, the results will be disappointing. Flexibility is key, since you will undoubtedly encounter variables you had not accounted for when you first started. Remember, there is a difference between hiring an outsourcing partner and an ad hoc creative freelancer.

Outsourcing is not for all online marketing organizations. However, as the space matures, there are significant competitive advantages in leveraging it. If you have not considered it, then it's probably a good idea to take a close look and see if it makes sense for your business. Competitive advantages are founded in differences-- if the others are leveraging it and you are not, your business may already be handicapped right out off the starting gate.

Jay Kulkarni is the CEO and founder of Theorem Inc., a leading provider of technology outsourcing services and data analysis products for online marketers. As one of the earliest employees at DoubleClick, Jay headed up product management for their advertiser solutions, taking the DART for Advertisers product from white board concept to over $25 million in revenue within two years. Later, he was director of product management for the DARTmail platform managing both organic development and technology integration through two mergers. Founding Theorem in Feb 2002, he's managed it from a four person startup to a company with over 150 global employees, sustaining triple digit growth year over year.