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Why an Internal/In-house Proxy Operation Is No Longer Viable?

There is a misconception among enterprises that operate their own server network in the cloud. They believe that having access to global IP distribution helps them a lot. It doesn’t. I am writing this so that the CEOs and CTOs/CIOs of such enterprises will understand the reason for stating this fact. Allow me to explain this and clarify why you should select an external IP proxy vendor operator and not operate your own proxy hub.

Why do many Enterprises follow the rising trends of outsourcing? Here are a few basic reasons. First of all, it saves costs and creates an environment for faster business growth. Also, it helps in improving overall results pertaining to business finances and business reputation. In fact, on the technology front, it creates an entirely new paradigm within an enterprise.

As technology is constantly changing at a very fast rate, competition among peer business players is becoming tougher day by day. In days gone by, it was not as tough for a business to survive, sustain, and grow. In fact, then when organizations had a need of access points or static IPs for the purpose of openly accessing the web from various locations across the globe, the easiest solution was to lease cloud servers from the major cloud service providers like AWS and Azure and lease a pool of IPs from their respective Internet service providers (ISPs). Similarly, when there was a need for mobile IPs, building a lab of devices, and SIM-cards was the solution. In a nutshell, it once was a creation of their own in-house proxy network.

Recent research from Luminati Networks (the largest IP proxy network operator) indicates that it was just a waste of time, money and energies, without achieving any useful results.

Today all organizations realize that the management of such an infrastructure is a costly affair in terms of capital expenditures and operative costs. In addition to the costs, the infrastructure consumes a lot of time for their human resources. Outsourcing is easier and it saves significantly on both fronts.

There are overall 4 key reasons for selecting an external IP proxy network operator versus an in-house one:


I remember when in my last organization we needed a large pool of static IPs and our ISP was unable to meet that requirement because of a shortage of IPV4 IPs. At the same time, whatever number of available static IPs in our pool was, it had a humongous recurring cost per annum. In today’s scenario, the situation is no different. IPV4 IPs are very costly, as much as $20 per IP. It is practically possible for a small business that wants to create an in-house proxy network to shell out $15k as a first-time IP’s purchase and continue spending at a recurring rate of $10k per month merely to manage its operating costs for engineers and servers needed. The only feasible solution here is to outsource at a much lower cost.

Leasing a smaller number of IPs will carry an even higher price tag and reach as high as 4 times the larger pool.

Another major hiccup is leasing on an annual basis. But what if you have a shorter requirement or a dynamic requirement for a changing number of IPs every now and then? What would you do then?


Buying is the first hurdle. Even if you are able to cross it by convincing your head of finance and get approvals from senior management members, the recurring cost of managing an in-house global proxy network will be a killer in terms of the consumption of time and resources. You will need to source servers from data centers in all required locations. Expertise will be required to set those servers, update configurations, and install all software types an enterprise needs for its operations. Routing through a 3rd party upstream provider to manage IPs and servers, is another large-scale task. The story doesn’t end here. It needs continuous updating or fixing of each IP’s geolocation in various databases that your target domains would be referencing.

All this will require regular monitoring of your in-house proxy network on a daily basis. Above all, you need to refresh IPs on a regular basis by replacing IP subnets and setting them up again by assigning appropriate routing, geolocation, databases, etc.


Most commonly, the smallest subnet is a ‘/24’ subnet of 254 IPs. It clearly reflects that any small and medium in-house proxy networks will be struggling with one of the following situations:

  • An unnecessary but obvious increase in the overall proxy expense.
  • A larger proxy network than was initially planned which is required for its diversity.
  • There could be a situation when you have the right size network but with no or very little scope of diversity at all. When there is low diversity, it creates a larger risk of getting blocked. In such a scenario, when one or more of your subnets get blocked, a bigger chunk of your proxy network becomes unusable or the opposite case of a highly diversified network that would have affected a smaller portion of subnets.


You have to keep up with the rapidly changing market dynamics to keep your business fit for its survival. Despite such a stringent situation when it comes to certain requirements like changing infra, replacing blocked IPs, changing or testing of IPs can never happen in a short period. It always takes weeks or months! Any kind of change is not simple. It always demands expert resources and a large amount of time.

Looking at all the factors above, it is pretty much clear that outsourcing your web-access points or internal proxy network makes a lot of sense in terms of business continuity and risk mitigation. Also, operationally and commercially.

Authored by: Jaideep Khanduja, Enterprise Technology Blogger, Global Mentor, Founder and Director in India

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