I have built in house teams by insourcing work from agencies, and I have handed in house work back to agencies. Both were right in their context. The decision is almost never about cost, although that is how it usually gets argued.
The question that matters
Is this capability part of how the business competes, or is it a service the business buys?
If customers experience it, if it compounds with knowledge of your specific business, or if you need to change it weekly, it belongs inside. If it is specialist, cyclical, or benefits from seeing many companies rather than one, it belongs outside.
Most functions sit clearly on one side once the question is asked plainly. The arguments happen when the question is never asked and cost stands in for it.
If it compounds with knowledge of your business, it belongs inside. If it benefits from seeing many businesses, it belongs outside.
What insourcing really costs
- Recruitment, and the months before the seat is filled.
- Management attention, which is the cost nobody budgets.
- A career path, because specialists leave when there is nowhere to go.
- Cover, since one person is a single point of failure with holidays.
- The knowledge that leaves when they do, unless someone made them write it down.
The middle item is the one that sinks otherwise sound plans. Six specialists need a leader who understands their work well enough to prioritise it. If that leader does not exist, insourcing produces a group of individuals rather than a team, and the output is worse than the agency you replaced.
What agencies really cost
Not the retainer. The cost is in context. An agency starts every quarter slightly further from your business than your own team, and closes that gap with meetings you pay for in time. On fast moving work that gap is the whole problem.
There is also the incentive question, and it is worth being adult about it. An agency paid as a share of spend has a view on whether spend should fall. That does not make them dishonest, it makes them human, and the arrangement should account for it.
The hybrid that usually works
Own the judgement, buy the execution. Keep strategy, prioritisation, data and the customer relationship inside. Buy production capacity, specialist depth and peak load from outside.
The failure version of that is owning neither, where an agency sets direction and the internal team coordinates it. Nobody is accountable and everybody is busy.