Key points in 30 seconds
- A make-or-buy decision means choosing whether to produce an activity in-house or buy it from outside.
- Keep in-house what differentiates you; buy or outsource what is standard.
- Compare total cost, not just price: hiring, management, maintenance, lead time.
- There is a third way: buy now to move fast, bring it in-house later.
A broader question than it seems
Make-or-buy is not just an industrial question. In an SME, it applies to digital marketing, software development, accounting, prospecting, customer support and training. Whenever an activity has to be covered, there are at least three options: build it in-house, hand it to a provider, or buy a ready-to-use solution.
The five decision criteria
1. Is it your core business?
If the activity is part of what sets you apart in your customers' eyes, keep control of it. If it is necessary but identical across all your competitors (payroll, hosting, standard CRM), buying it frees up resources for what matters.
2. Total cost
In-house cost includes fully loaded salary, but also hiring, management, tools, training, absences and ramp-up time. External cost includes the price, coordination and the risk of dependency. Compare over three years.
3. Speed
Hiring and training a team takes months. An experienced provider or an existing solution can be up and running in a few weeks, or even a few days for software.
4. Control and confidentiality
Some activities involve sensitive data or strategic customer knowledge. If you outsource, set out data ownership, confidentiality and reversibility in the contract.
5. Risk
What happens if the provider disappears or the key employee leaves? An activity that depends on a single person, in-house or external, is fragile.
| Criterion | Make (in-house) | Buy / outsource |
|---|---|---|
| Differentiation | High | Low, standard activity |
| Volume | Continuous and predictable | One-off or variable |
| Expertise | Available or can be built | Rare, costly to hire |
| Lead time | Compatible with hiring | Urgent |
| Control | Essential | Can be governed by contract |
The third way: buy then make
Many decisions are not final. A common strategy is to buy or outsource at first to move fast and learn, then bring the activity in-house once volume and skills justify it. To make this possible, require documentation, skills transfer and data portability from day one.
Example: digital marketing in an SME
An SME starting its digital presence often benefits from handing strategy and setup (website, SEO, editorial guidelines) to a partner, while hiring or training someone in-house for day-to-day management. It gets the provider's speed and expertise, and gradually builds its own capability.
Frequently asked questions
What does make-or-buy mean?
It is the decision to produce an activity in-house (make) or to buy it externally, from a provider or as an existing solution (buy).
Which criteria should guide the decision?
Five main criteria: whether the activity is part of the core business, the total cost over three years, the time required, the need for control and confidentiality, and the level of risk of each option.
Can you change your mind after outsourcing?
Yes, as long as you planned for it: documentation, skills transfer and data portability must be written into the contract from the start.