The Question and Dilemma
Every business has to determine whether they should perform a service themselves (in-house with staff) or outsource that particular service to an outside vendor. Social Media Marketing is a service that can be performed either in-house or outsourced to a vendor. As technology and this whole world are constantly in the fast lane, it becomes a bigger problem and question for companies who want to survive.
This is a conversation that companies must have. Social Media has already become imperative for businesses to use. The real question is: who is going to manage it for us?
The following graph shows the relationship between company size and potential need for outsourcing. As a company reaches 1,000-10,000 employees, the potential need for outsourcing drops dramatically.
At first glance, it seems counterintuitive for a company to outsource highly-visible or important services. Once you look at all the things a company must do to handle a service in-house (and keep it running continuously), it becomes more evident why many companies choose outsourcing versus operating a service in-house. If a service is provided in-house, a company must:
- Locate a qualified employee
- Train the employee
- Pay employee wages and benefits
- Provide the employee a physical workspace
- Provide the required technology items (computer, phone, Internet access, copier, fax machine, etc.)
- Pay telecommunications costs (phone line, inbound toll-free calls)
With outsourcing, the company must only:
- Locate a reliable and high-quality vendor
- Pay the vendor for the services provided
Cost Comparison of Inbound Marketing
This cost comparison is for a company that needs to handle 500 inbound responses monthly.
In-house work is done by employees on your payroll. Outsourced work is done by specialists in their field and paid per job. In-house work must be done by employees who generate labor costs, payroll taxes, insurance costs and may be unavailable when required. Outsourced labor does not require payroll taxes, unemployment insurance, benefits or vacation time.
Outsourcing has always existed. Why retain a janitor on staff who may be out sick when you can hire a cleaning company? Why pay a Certified Public Accountant a salary year-round when he can be paid to do taxes on a quarterly or annual basis? Outsourcing is simply a matter of hiring individuals or companies to provide a specific service or product instead of relying upon employees on the payroll to do it.
Main Benefits of Outsourcing
- Outsourced labor does not require payroll taxes, unemployment insurance, benefits or vacation time.
- Outsourced labor is hired for a specific task and time period without requiring the complex process of hiring and firing employees.
- Outsourcing eliminates the ongoing cost of maintaining an employee and converts it to a periodic cost.
- Outsourcing via the web allows companies to tap into expertise located anywhere in the world.
What do you think of the matter? Should a company outsource their Social Media or handle it with appointed staff? Which is more beneficial in your mind?
John Zahn is a Co-Founder of Omnibeat. As a long-time business owner with an interest in technology, he strives to help businesses embrace new technology while sharing their unique story online. John loves helping business owners catch the wave.