If it operates like an agency, it’s already at a disadvantage because the real profit is being made by someone else anyway. Otherwise it’s a neat idea.

You don’t hire an agency to break even, you hire an agency to work on projects you assume will bring you profit. In my industry in particular, you might hire some agency employees, spend a few hundred thousand a year, to help finish a product that will rake in tens of millions a year, or to create some internal tooling that saves you millions in employee productivity.