Blog post

Outsourcing Your SDR function is a Bad Idea

By Todd Berkowitz | July 18, 2017 | 4 Comments

SDRssales enablement

Street signs Outsource Road versus In House Street ERM supply chain business decision

I’m probably going to take some heat for this statement. And I’m sure there are many examples for where the approach has been successful. But I will restate the view that I share with clients. If you are trying to sell into enterprises in North America, do not outsource the SDR function. Full stop.

Why shouldn’t you outsource the inbound qualification or the outbound appointment setting responsibilities, especially when it may not make financial sense to hire in-house? Because it generally doesn’t work very well, and even when it does, you may be providing a less than stellar impression to a prospect during the first direct interaction they have with you.

Look I know all of the benefits of outsourcing. It’s cheaper, the firms have people ready to start making calls right away and have access to data that you don’t have. But the drawbacks are significant. They include:

  • “Dumbing down” of messages to adhere to a simple script required by outside firms
  • Limited opportunities for ongoing and continuous enablement of SDRs and the ability to adjust based on what is (or isn’t) working
  • Misaligned incentives where the firms are paid for appointments regardless of whether they turn into opportunities
  • Lack of control around the specific experience being provided by the outsourced reps
  • Pressure from firms to expand outbound targets when they quickly exhaust the initial ones

I can add a lot more to the list including the fact that you can’t promote external SDRs to field or inside reps, a disconnected relationship between the outsourced SDR and the rest of your company and near impossibility to use them for ABM programs unless you have a massive number of accounts.

Yes, there are some scenarios where it may work. You have a more transactional sales process and/or are selling into a very mature market with a broad-based solution that appeals to a large population. Or you are selling into European companies that are typically more accepting of outside “telemarketing” reps. But these are the exceptions, not the rules. I count on one hand the number of North American clients that have reported success with outsourced SDRs and I have lost track of the number of clients that tried it and deemed it a failure.

The best option is to hire a young and inexperienced (and thus far less expensive) SDR, put them through rigorous training and then make a point of having product marketing (or someone acting in a product marketing capacity) take responsibility for ongoing enablement. If you don’t have the volume to focus that person entirely on inbound lead qualification, then have them do outbound prospecting as well.  You can also task them with researching accounts and contacts as part of ABM effort or find other valuable uses. Done right, you will see a compelling and rapid return on your investment.

If you are a Gartner client, I’m happy to have a conversation around this topic. Or can you read some recent research we’ve published on making inbound and outbound SDRs more effective.

The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.

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  • Mike Jenner says:

    We have this function in the business today but have tried outsourcing it. Really interesting article. Something else we should talk about.

  • Bead idea for people who learn already the whole SDR function. They would create a pretty cool disaster

  • Dave Brock says:

    Great article Todd. If anything, I think you may have understated the challenge with outsourcing the SDR function–or even many of our own SDR strategies.

    The SDR creates the first impression many prospects have of our products and services. Too often they are ill equipped to engage prospects in meaningful ways. Rather than creating interest, they create a very negative impression through theri inability to engage the prospect in an unscripted conversation.

    I don’t know how many SDRs have called me, saying I can improve the performance of my business. When I ask them, “How did you come to that conclusion, what am I doing wrong, what should I do to improve, they are completely unequipped to respond in a meaningful way. All they can do is attempt to sign me up for a demo.

    It’s not their fault, they are doing what they have been trained to do and what their management is measuring them on.

    We might consider revisiting our strategies for SDRs, particularly if the initial contact is a C level. We may, in fact, want to put our very best people on these calls.

  • Todd: I am going to give you heat, but not from an outsource vs. in-house perspective. You are correct that outsourcing the SDR function often fails, but what you fail to recognize is that in-sourcing the SDR function also underwhelms way more than often than not.

    Your post doesn’t address the root cause problem regardless of who the SDR is employed by; and that is the efficacy, precision and consistency of the underlying methodology being deployed.

    Your solution to hire young SDR’s and put them through rigorous training is spot on, but how many companies are equipped to do this well? That answer is “very, very few”. If you are going to build out your own enterprise SDR funtion, you should consider outsourcing the training to a firm with a proven, repeatable and teachable solution.

    Otherwise, if you are going to outsource the entire SDR function, scrutinize the underlying methodology and training program employed by that firm.