You see, I believe there is certainly value in an internal team - but not for everyone. Obviously the financial aspect of employing someone full time, may not be feasible where only a small amount of design work is needed throughout the year. Or, if design is primarily required very seasonally, then again it wouldn't make much sense to hire.
However, some businesses have a massive bulk of work to get through on a weekly basis and it could easily keep a good creative artworker game fully occupied full time. These people, in order to make their life simple and to ensure brand consistency, need clear design direction and this can mostly come in the form of a comprehensive set of brand guidelines.
One extra thing to consider is the value of working with an external agency to complement your in-house skills. This keeps the brand expression fresh, and new ideas flowing in to what, in the worse case scenario, could become a stale creative environment.
Imagine the pleasure you can give your in-house design team by introducing fresh thoughts about the brand. Their enthusiasm could immediately be reinvigorated and they'll love their job loads more as a result!
On this basis, in-house design teams don't need to be a threat to design agencies, but seen as another opportunity to get our clients excited about their brand again. And, more importantly, working to be as effective as possible to reach the clients' target customer in their marketplace.
David Tingley, Kipper