Outsourcing vs. Insourcing Your Mail Operations
Which is Best for You?
For some companies, outsourcing mail operations makes the most sense from a financial, logistical, and security perspective. For other companies, insourcing is the better option. The one thing all companies should do? Revisit the decision on a regular basis.
 | It’s a continual process,” says David Bilodeau, a product marketing manager for Pitney Bowes. “Organizations need to be asking whether they’re communicating with their customers the best way possible and whether they’re making the best use of the resources available to them.” That last point is particularly important since a recent InfoPrint Solutions survey of mailroom managers found 90 percent of respondents felt ongoing pressure from management to lower costs. What’s more, nearly 60 percent said they weren’t confident they were paying the least amount possible for postage, by far the most expensive cost in mail preparation. |
Managers, Bilodeau stresses, must take into account all mail-related expenses when comparing the cost of in-house and outside options. Some benefits to outsourcing: it may lead to a bulk postage rate and discounts on materials like paper and envelopes, and it can also free up company space and employees for more profitable tasks. However, not all outsourcing services are created equal.
“Many services not only mark up the postage and materials, but also charge extra for updating your list,” Bilodeau. “Others may charge more of a fixed cost and can include services such as document redesign, electronic communication delivery, and other mail piece tracking.”
Mark Fallon, president and chief executive of The Berkshire Company, a consulting firm specializing in mail and document processing strategies, says many people harbor myths about whether insourcing or outsourcing is less expensive. "Most people today think that outsourcing will always be cheaper," he says. "Sometimes it is, and sometimes it isn't. That's why you have to do a good analysis on it. When you outsource, someone has to manage that relationship, that company has to make a profit, and you probably have to pay taxes on the service. With internal, it's not just the people. You have to think about the space, the equipment, and the utilities. You have to look at all the overhead."
Another misconception, Fallon says, is the idea that outsourcing can solve all your problems. Not true. “You’ve just moved your problems to an outside vendor,” he explains. “If you’re getting customer complaints about your bill, and you outsource the bill but customers are still unhappy with the way that bill looks, you haven’t solved your problem.”
In fact, says Karim Manassa, National Solutions Consultant for Compliance & Business Regulations at Pitney Bowes, if a company doesn’t choose its vendor wisely, outsourcing mail operations can introduce entirely new problems, including privacy and security breaches involving sensitive information. If a fulfillment house isn’t asked to sign a confidentiality agreement, for example, it might sell a charitable organization’s list of significant donors. If the donors then receive unwanted solicitations and trace the breach back to the charity, it’s the charity—rather than the mailing house—that will suffer brand damage and the loss of donors’ trust.
In addition to asking vendors to sign confidentiality agreements, companies that outsource their mail operations should insist that procedures are in place to protect sensitive data included in the mailings. A cable company, for example, might want to ensure that no employees at a third-party mailer are able to see their neighbors’ bills. “Organizations that outsource mailings must gain visibility into their fulfillment houses’ practices to ensure that no one is abusing their lists,” Manassa cautions.
Lastly, but perhaps most importantly, companies in highly regulated industries must ensure that outsourced service providers can keep consumer data safe and stay in compliance with state and federal laws protecting the information. “If you’re in a vertical such as finance or healthcare, you either want to bring mail operations in-house, or if you outsource them, you need to really vet your vendor to make sure they have that security,” Manassa says. “If you outsource your mailing to someone, you’re still liable for all the compliance. You can outsource the work, but not the responsibility.”
Bilodeau says businesses can gain trust in vendors by learning about their experience—not only the number of years they’ve been around, but the types of clients they’ve worked with. “In sending your list to any sort of outsourcing services, you’re giving an organization your customers’ data. There’s no way around that. You want to make sure you’re working with an organization that can be held accountable.”
Fallon notes that, for many organizations, such as utility companies and banks, mailings are the primary way they communicate with customers. For other businesses, such as grocery stores and florists, mailings are secondary to in-person interactions. The more central mailings are to a company’s business model, Fallon says, the more strongly that company should consider insourcing its mailings.
“If it directly supports your business, having people there [in-house] who own that with you means you’re not just a customer,” Fallon says. “It’s an intangible, but I’ve seen the difference.”
For many companies, Manassa says, the best option may not be simply insourcing or outsourcing, but a combination of both. For example, an organization might decide to perform its day-to-day mail operations in-house, but send out more complex or specialty mails runs. “It’s not always black and white,” he says.