As someone who has been both in-house and a digital agency worker, I have a lot to say about the subject. It's best for me to break it down in bullet points and subheadings. 

The Expertise Issue

The biggest issue that you're going to find with hiring a single individual is that they are not going to be a fully rounded worker. Or at least, most of us are not. For example, I'm an SEO writing and branding guru. I love me some writing! If you give me a writing gig or ask me to put together a chic brand, I'll do it. 

Unfortunately, if you ask me to try to do PPC ad campaign, my head will hit the desk. It's not my thing. When you're hiring a single in-house web specialist, you are only going to be able to access their specific skill set. This means you may need to hire more people, or run the risk of having less-than-epic results. 

The Workload Issue

Keeping a website good to go, or even designing one, isn't really a single person's job. It takes a lot of work. If you want to make sure that you have your site running smoothly and up quickly, you'll let it be a team effort. A digital agency is good for this. 

Moreover, if you want to have your designer doing marketing work, you're going to end up overloading them. I've seen web specialists quit because they were expected to do all the work of an agency without the same pay. 

The Outsourcing/Price Issue

This is best explained in bullet points:

• It's easier to fire a bad agency than it is to fire a web specialist in most cases. It's true. The legal red tape could put you at risk of a lawsuit. 
• It's also cheaper. Since agencies have multiple clients, you don't have to pay them a full time wage. They have other clients they can use as a buffer. 
• You have other things to do aside from work on your site. You have major orders to ship, or clients to advise, or other things! Outsourcing this work means that you get to focus on the big picture instead.