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T, here is my take on all of this:
Contract work is great - until they fuck up. There is nothing like putting your name on the line for something you can't control. If you are doing mission critical work (time constrained stuff) contract work often isn't the best route to go.
An in house person is great, except that when they leave, they take the house with them. You effectively go back many steps and start breaking in a new person.
My solution? Get yourself a good in house person, but don't be afraid to outsource some of your stuff to at least get contacts and find people that can do the work. I know that appears to add expense, but it will give you a variety of designs while still keeping the speed and controlability of someone in house. Plus you can have that in house person adjust, maintain, and modify outside designs quickly to keep looks fresh or add new features.
As a bonus, this gives you a list of contacts for when the next designer decides to leave, so you are not stuck if you need something short notice.
Alex
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