The Pros & Cons of In-House vs. Outsourced Telecom Expense Management

A healthy budget and transparent paper trails usually separate the thriving companies and disconnected organizations that are bound to experience potential expense fraud or billing errors. Telecom expense management (TEM) is the proactive approach to reaching a cleaner and optimized communication future. TEM helps you escape the pitfalls that come with leaving a vital piece of IT, finance, and account departments to fall into disarray. 

When an organization is ready to kickstart its journey into controlling telecommunications on its own terms, it faces a crucial decision: should it handle the process in-house or consider an outsourced telecom expense management company? 

Both options have their own advantages and drawbacks, and the best choice usually depends on your organization's specific needs, resources, and goals. In-house management offers direct control and data security but is resource-intensive and troublesome to scale. On the other hand, external TEM services bring specialized experience, scalability, and continuous improvement but may involve higher costs and concerns about support. 

In this blog, we’ll dive into each option’s pros and cons to help you choose the best path forward for your business.

Choosing In-House Management

Managing telecom expenses internally can be an attractive proposition; no worries of constant contact with a partner company, and reduced spend on third-party management can be a dream for keeping extraneous costs low.

However, this approach also comes with significant challenges. It requires an informed judgment before moving forward as, if your telecom expense management is mishandled from the start, intervention from third-party experts may be necessary to untangle internal processes that are beyond saving. Internal teams must be prepared to handle the complexities of telecom management, from monitoring usage and optimizing contracts to staying on top of industry trends. 

Think about the aspects below and encourage different members of your teams to weigh in on the option. Remember: making an organization-wide choice will require organization-wide participation. After considering the pros and cons, you’ll be better equipped to make a decision that aligns with your company's goals and resources.

Pro #1: Total Control Over Processes

The first benefit of managing telecom expense management internally is maintaining direct control over your business. Without interference from outside sources, companies are left to tailor their telecom strategies to their specific needs and preferences. If your industry depends on make-or-break decisions that need to be executed on the fly, your business is able to make immediate adjustments to telecom plans, policies, and contracts without waiting for approval from external TEM services. 

Your on-staff team can quickly renegotiate contracts or switch providers to take advantage of better rates or improved services, ensuring the company always gets the best value for its telecom spend.

If your team has the bandwidth for real-time monitoring, they can stop potential discrepancies in their tracks before they start. Direct control over TEM processes enables businesses to closely monitor telecom usage and expenses, leading to timely preventive measures. This oversight helps identify unauthorized usage or billing errors without waiting for a report from an outsourced telecom expense management company to arrive.

Pro #2: Reduced Confidentiality & Security Concerns

The less hands on your data, the safer it is — a universal rule on protecting sensitive information. If your company prides itself on keeping internal communications and financial details safe and sound, declining the access most TEM solutions request may look like the most reasonable choice. Safeguarding elements of telecommunications like payment records, vendor credentials, and invoice trails with entirely on-site storage prevents breaches or malicious action, as long as your company has the digital infrastructure to support plenty of data archiving. 

Keeping data management and telecom processes internal means businesses enforce their own security protocols and compliance measures, handling telecom-related decisions according to their specific standards and requirements​. This approach also allows companies to respond to any potential security threats or breaches quickly, maintaining the integrity and confidentiality of their telecom data without waiting for an alert from outside monitors.

Pro #3: Cost Savings by Eliminating Fees From TEM Services

At the end of the day, the primary goal of effective TEM is to cut unnecessary spend and alleviate budget strain. This leads to what seems like an obvious conclusion: how is paying a third-party company going to help your bottom line? While a proven boon to companies across an array of industries, telecom expense management companies and their solutions still have a cost for implementation and continued use.

Avoiding the costs of TEM services can aid companies with smaller telecom footprints or those looking to prevent any additional budget use until the positive impact of internal TEM is realized. On-staff management allows companies to allocate their financial resources better, investing in areas directly aligned with their strategic goals rather than relying on the opinion of outside parties. 

The funds not spent on outsourced telecom expense management can be moved into other critical business operations, opening up the chance for improvements in different departments as well. By maintaining tighter control over their telecom expenses, businesses reduce the financial burden tied to outsourcing.

Con #1: High Strain on Internal Resources

With all the exciting benefits of letting staff manage their telecom expenses independently, what downsides should be considered? 

The first is self-referential: your staff actually needs to manage all telecom expenses associated with daily operations. Managing TEM effectively requires a dedicated team with specialized knowledge, which diverts valuable time and effort from other critical business functions. This resource-intensive approach often means that existing staff take on additional responsibilities, potentially leading to decreased productivity.​ 

The complexity of managing telecom expenses, from contract negotiations to keeping a close eye on each invoice and preventing billing errors, quickly overwhelms in-house teams, especially in growing organizations where telecom needs are constantly evolving. This high demand for internal resources can bring new initiatives to a crawl and limit a company’s ability to focus on its core competencies.

Con #2: Lack of Industry Expertise

While your staff may be well-trained professionals, telecommunications can be a different world altogether. Internal teams, even those with a working knowledge of telecom basics, typically need specialized experience to navigate the complexities of holistic telecom expense management. This often leads to missed opportunities for savings, as in-house teams might not be aware of the latest industry trends, best practices, or advanced software and analytics tools outsourced telecom expense management routinely uses​.

Without access to expert insights, you might struggle with maintaining your expenses, missing fine details in bills or invoices that open the door to false payments and siloed communication. 

The ever-changing nature of telecom technology and regulations requires continuous learning and adaptation, something internal teams might be unable to take on without dedicated resources​​. Simply put, relying on inexperienced and insufficiently trained team members places an organization at a competitive disadvantage compared to those who reap the benefits of specialized TEM solutions.

Con #3: Difficulty Scaling Alongside Company Growth

No ambitious organization intends to remain at its current size — striving for a prominent presence among its industry peers and exceeding its own goals should be top-of-mind. The only problem with increasing your scope is your tech stack will need to match your pace. As your company grows, the demand for telecom services also increases, overwhelming your teams that are already stretched thin. 

The struggle to keep up with a growing number of devices, invoices, and chances of security flaws stem from the same limited resources and expertise voiced earlier. On the flip side, specialized telecom expense management companies, like Sakon, sidestep these bottlenecks with TEM solutions purpose-built to handle increased reliance. 

Opting for Outsourced Telecom Expense Management

When unifying telecom infrastructure feels like an impossible hurdle, an expert helping hand can be your best friend. This is true whether a business has tried to manage expenses on its own to no avail or is taking its first step in optimizing its network. 

The first point to consider is a fact rather than a pro or con: TEM solutions provided by third-party companies quickly relieve the strain on internal teams. Putting your data and financial health in the capable hands of specialized TEM providers brings a host of benefits, most notably lending bandwidth back to staff that would otherwise spend hours painstakingly monitoring incoming and backlogged expense records. 

Determining if you need support from an experienced telecom expense management provider can highlight the pain points that matter most to your company, equipping you with a list of priorities for evaluating partnerships.

Pro #1: Access to Expertise and Advanced Technologies

On-staff accounting and finance employees may be experts at balancing a company budget, but telecom expenses can extend far beyond standard invoice receipt and payment. The larger a company is, the more devices it needs to manage, necessitating an external company that knows how to tie up an increasingly disparate communications network. 

Third-party TEM servicers have deep industry knowledge and years of experience that in-house teams don’t have the time or resources to gather. With knowledge of the ins and outs of telecom expense management, external support can find opportunities for improvement only after working with countless clients searching for the same cost-reducing changes.

Telecom expense management companies offer solutions that automate invoice validation, usage monitoring, and contract management and are far more accurate than manual processing. Throughout a less strenuous telecom expense process, TEM services gather valuable insights through reporting, enabling businesses to make decisions based on real-time data​.

Pro #2: Flexibility to Scale as Businesses Grow

Companies that adopted telecom expense management software in the past may put further optimization aside, but the software previously implemented would likely become outmoded even faster than the organization’s expansion. Third-party TEM-focused companies are equipped to handle the increasing volume of telecom expenses that come with business expansion. As a company adds new locations, services, or employees, your partner in expense management can seamlessly adjust to additional telecom needs without burdening staff already focused on driving success. 

Knowing you have a collaborator who is always searching for opportunities to integrate new telecom technologies quickly, optimize service plans, and manage larger volumes of data and invoices inherently brings peace of mind. The agility of third-party TEM services allows your business to adapt to market changes and customer demands swiftly, shaving hours off of daily processes using automation to eliminate the hassle of manual cataloging and payment.

Pro #3: Constant Improvement & Updates

Letting your company do what it does best is the fastest way to increase your business's prominence and attract clients. When your team is honed in on developing more knowledge in their field, changes in telecommunications strategy can quickly become a second thought or fall off your team’s radar if they consider implementing a TEM strategy as the first and last step of telecom optimization.

By leveraging outsourced telecom expense management, you gain access to continuous improvements in the form of regular software updates and new tools that incorporate enhanced security measures and improved functionalities. This ensures your business always benefits from the most advanced and efficient solutions on the market. This proactive approach to technology and process updates helps you avoid the pitfalls of outdated systems and practices that can lead internal TEM efforts to spin out into costing rather than helping you.

Con #1: Initial and Ongoing Costs

While outsourcing telecom expense management (TEM) offers numerous advantages, it's essential to consider the initial and ongoing costs involved. Engaging a third-party provider requires an investment that includes setup fees, software licensing, and service charges. These initial costs can concern some businesses, particularly smaller ones with tighter budgets. 

Despite these costs, many businesses find the long-term savings and improvements to company-wide health achieved through outsourced telecom expense management more than justify the initial and continued expenses. Finding a service provider that offers free and easily accessible resources on their solutions helps reduce the need for one-on-one training sessions and enables independent training without incurring additional fees. 

Con #2: Placing Your Financial Health in Outside Hands

Entrusting an outside company with sensitive financial and operational data is never an easy choice. You may worry about information confidentiality, and it can be a significant change to allow an external party to manage it off-site or via cloud access fully.

However, reputable TEM providers are well-versed in data protection, implementing stringent measures to protect client information. They often have advanced security protocols and compliance standards that meet or exceed those of many in-house teams. This helps to mitigate the risks associated with sharing sensitive data externally​.

Con #3: Potential Security Concerns

In an era when cyberattacks seem to happen daily, opening your servers to telecom expense management companies may sound like a ransomware event waiting to happen. Reputable TEM providers prioritize the security and confidentiality of their clients' information. 

By using advanced security protocols like encryption, multi-factor authentication, regular security audits, and stringent access controls, businesses can safeguard data against hackers and other malicious threats​. By choosing a trusted provider with a proven track record in cybersecurity, businesses can significantly mitigate these risks and ensure their data is well-protected.

Internal or External — Which Fits Best?

Ultimately, the best choice for your organization is the one that aligns with its goals and objectives. Your decision on in-house or outsourced telecom expense management significantly impacts your company’s financial health.

If you're searching for an experienced and trusted TEM solution or still deciding if third-party telecom expense management fits your business, Sakon's experts are ready to provide guidance and solutions tailored to your specific requirements. Contact us today to learn how we can help simplify how you can start communicating with a cost-effective mindset.