The Pros and Cons of Using Third Parties

No matter the business, every leadership team is inevitably faced with a variety of special projects, and the decision on whether to hire a third party or take on the project internally is a reoccurring decision it has to make. I’m here to help with some of the pros and cons of using a third party:

Experience

Pro: Third parties are specialized in what they do. They bring years of talent and experience, as well as relationships and resources. When a leadership team is assigned a special project that may or may not be within its team’s ability and skillset, they should weigh the benefits of bringing in an experienced third party. Ask yourself, “Is my team capable of producing the quality work that is expected?”

If, the answer is “No,” or “Maybe,” hiring a third party is the solution because the quality of work produced would be worth the cost. For example, many companies hire public relations (PR) agencies because they have strong media and community relationships within a company’s target market. The PR agency’s relationships are vital to a company’s success in garnering media coverage in an unknown, new or unfamiliar market.

Con: The third party may not be right for your market. Third parties typically work with a type or size of business. For example, KPMG works with big banks. Smaller financial institutions wouldn’t be able to reap the same benefits as a big bank because the recommendations KPMG suggest might be outside of the abilities to implement and not right for their market.

Accountability

Pro: Removing the accountability for a special project from staff that already hold daily job functions can ensure the project receives the attention necessary for a successful implementation and is a huge stress relief for staff. Imagine the most stressed out person you’ve ever seen . . . for me, it was my fiancé and I in the middle of wedding planning. The best decision we ever made was hiring a wedding planner. This wedding planner took all the accountability and responsibility of planning from us, and it made the entire process a million times less stressful. All we had to do was show up and everything was taken care of. Removing a special project allows staffs to continue working on daily functions that they are accountable for and the organization depends on.

Con: Giving up control of a project can be difficult. Hiring a third party means relying on it to complete a project to your level of standards with guidance. If you foresee a project needing a lot of hands-on guidance and internal knowledge, it may be better to work on the project internally.

Time Savings and Cost

Pro: In community banks and credit unions, staff wear multiple hats and manage multiple assignments. Hiring a third party creates significant time savings in labor, and team members can continue to move forward on other projects that would otherwise become stagnant with the introduction of a new one. This allows the company to accomplish more projects in a shorter time frame.

Con: There is an expense to use a third party, but that’s just looking at the straight-out-of-pocket cost. Businesses should also take into account other cost savings through labor and resources, not to mention, the project can be completed sooner and the company can begin to see financial or operational benefits sooner. I recommend asking yourself, “Will completing and implementing the new project sooner save or make money for the company?”

A good example of this is third party software solutions. A company can choose to use a software as a service (SaaS) solution to solve for a problem they are having, or they could choose develop something internally. If they choose to do it themselves, it will take longer to create and will take time away from other projects. By implementing a third party SaaS solution, though it may be more expensive upfront, a company will receive the benefits from the solution sooner.

Value of an Outside Perspective

Pro: One of the biggest arguments against using a third party is that it won’t fully understand your company’s needs. However, using a third party brings in an outside, unbiased perspective. The most common phrases our consultants hear from clients is, “We never would have thought of that.”

Con: Even though using a third party will often bring new ideas to the table that maybe you wouldn’t have thought of, no one knows your company better than internal team members. A third party could bring the best idea you’ve ever heard to the table, but you may not have the resources, labor or time available to accomplish those third party recommendations.

Overall, there are many areas to consider when choosing to hire a third party or take on a project internally. The time savings and cost, years of experience, an unbiased outside perspective and accountability are significant factors in the decision-making process and should be evaluated carefully.