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The Case for Web Site Outsourcing

Should a Large Company Outsource its Public Web Site?

For very small companies (single proprietors and startups), using a template or automated "web builder" software to build and manage a web site can make sense. This is by far the cheapest option, as long as they don't dedicate too much time to it – because, don't forget, time equals money.

This approach, however, will not work for most small businesses (those with anywhere from five to 75 employees), due to the limitations inherent in the above option, both from a design and functional flexibility standpoint. Templates and other do-it-yourself options are built to accommodate people with very little knowledge, and if a solution is easy to use, it must, by its very nature, be restrictive in scope. On the other hand, these companies simply cannot afford the equipment, software and staff to handle their web site in-house. Therefore they expect to outsource some, if not all, of their requirements to professional web site providers.

Until recently, larger companies (75-plus employees) assumed that a full marketing and IT department would be a necessary overhead expense and that these departments would manage the company web site on a joint basis. Due to recent economic conditions, businesses across the country have found it necessary to cut back on overhead. Marketing and IT departments have been slashed. Outsourcing the company web site is now a necessity.

But really, outsourcing was always the better choice. In some ways, the recession is reminding management, who may have forgotten, that too much overhead is a killer and that staffing costs have a natural tendency to grow over time beyond need, representing a significant amount of fat in a corporation that eventually needs to be trimmed.

Internal vs. Public Web Sites

Before we go any further, it's important to note the difference between internal and public web sites.

Many companies that have several physical locations use the web as a method of information exchange within the company. They achieve this through secure, internal, password-protected web sites that are never seen by clients – only by employees, and sometimes by trusted suppliers and agents. These are commonly called intranet sites, and they're not public.

Keeping such a web site in-house can make sense. An internal site like this does not need to look pretty and does not need to be kept 100-per-cent up-to-date, live and available 24/7. Search engine optimization is not a concern. Often, most of the documents are not even in HTML format, but are Word documents and PDFs instead. Many of these sites are simple document storage and retrieval repositories, and as such are manageable by a single IT person on a part-time basis.

But even if a company has its internal web site managed by one of its IT staff, it can still be more cost-effective to outsource the firm's public web site, which demands many more resources.

Public Web Sites: Doing the Math

A typical public-facing web site for a large company might have 100 pages. Prices vary in the industry, of course, but let use Back2Front's numbers for this example:

Setup Fee:                          $5,350 (one-time)
Management Fee:              $2,675 per year
Update Handling Fee:        $20 per update

With an estimated five pages updated per week, multiplied by 52 weeks, that adds up to $1,300 in updates for the year.

The total cost in the first year (including initial design and build) would therefore come to $9,325. Each year after that, the cost would be $3,975.

This is the total cost, including hosting, software, hardware, and most of the staffing. The only costs the company would still incur would be the time required to produce the content, which would normally be done anyway in the course of traditional marketing efforts.

Now, compare this to the cost of an in-house solution:

Hardware: PC for webmaster, dedicated server for web hosting, various pieces of networking and security equipment.
Software: Image editing (Photoshop), web authoring software (Dreamweaver), FTP, programming and database software.
Staff: Two full-time: one for graphics, design, and editing and one for programming and development, costing $40,000 to $60,000 each just in salary.

Many companies try to hire just one person to do it all and are disappointed when they are unable to find such an individual. There is a lot to know and keep on top of, and it is unrealistic to think you can have it all in just one person. As well, many companies assume that web duties will only be a part-time job, only to find that somehow the web site ends up taking up all of the time of the person(s) they hire.

When you add up the salaries for each staff member, plus benefits, office space, etc., you can see that we do not need to put figures on the equipment and software. The in-house solution is already costing several times as much as Back2Front's services.

Addressing Outsourcing Fears

Costs aside, why do some large companies still opt for an in-house solution?

There are three reasons – and only the last one is a good one:

  1. Speed and reliability

    Many companies fear that outsourcing will be much slower – too slow to be practical. But when asked how long it takes in-house staff to execute simple change requests from other departments, they say, "about a week." Back2Front averages three business days.

    It is understandable that reliability is a concern, since web site companies form and fail with alarming frequency. In addition, most of them do not specialize in ongoing web site management, focusing instead on the "next big sale." Back2Front has been in business since 2002. We have 20 experts on staff and we specialize in web site management, with nearly 200 clients currently on our roster. Companies like ours make concerns over speed and reliability invalid reasons to avoid outsourcing.

  2. Brand compliance, accuracy and approvals

    Many large companies assume that control over the design, the look and the accuracy of the content will be compromised by using a third party. They also worry about approval procedures and having errors show up on the public web site for clients to see.

    At Back2Front, we have no trouble adhering to any brand specifications our clients care to specify. In fact, this makes our job easier! As far as approvals go, we always work on a test server, and only publish to the live site after we have obtained the necessary approvals from our clients. This means clients never see a site that is "under construction," "temporarily taken down for maintenance," or otherwise broken or incorrect. So if you have a company like Back2Front on your side, it doesn't make sense to stay away from outsourcing.

  3. Security
    If the company's public web site is tied into its back-end systems for inventory control or other types of sensitive and critical real-time data exchange, an in-house solution may be necessary. This is, however, a rare scenario – and one that should only be considered when all costs are calculated, including the major costs of keeping the public web site in-house.

Comparing Flat-Rate and Per-Hour Pricing

Another real advantage of outsourcing to Back2front, as opposed to most other web site providers, is our flat-rate pricing model.

Here is what an owner of a very large electrical supply company I recently spoke with explained to me:

"We have three different operating companies within the larger corporation and need to keep cost accounting for these entities separate. If they share the web site (which would be preferable to having multiple web sites), how will I be able to allocate costs correctly? Say there are several updates per week from each department and multiple people requesting them. If you charge on a per-hour basis for your work, I can see how the accounting could quickly become very complicated and unmanageable. As well, if you work on a 'quote-per-project' basis, the specification requirements will make the process too slow and restrictive to meet our ongoing and changing needs. It will also require a lot of 'back and forth' each time work needs to be done. And I just do not have the time to manage that."

I sympathized with her and told her that I was familiar with the realities inside companies such as hers, and that we had developed our pricing model with her scenario in mind.

Flat-rate pricing means you already know exactly how much each page will cost you. You also know which pages in your site to allocate to which department. So the setup and management costs of the web site are easy to calculate per department. In addition, when it comes to updates, all you need to do is ask your department heads to keep track of the number of updates requested. Since they all cost the same regardless of the work involved, the calculation is simple and quick.

Needless to say, our pricing model sealed the deal, as far as the electrical supply company's owner was concerned!

One additional note for those considering an outsourcing solution:

Many web site companies know the math as described above, and calculate that they can quote upwards of $30,000 per year to a company like yours and still have a good chance of getting the contract. Since your company still stands to save considerably by choosing to outsource instead of keeping things in-house, they could very well be right.

But now you know to check with Back2Front first, right?