Social networking has a place in online businesses as it provides benefits to companies that allow the likes of Facebook to be used, according to British think-tank Demos.

The report stated that relationships could be forged and built up through such technology, allowing employees and consumers alike to relate to each other and create a more effective and cohesive working environment.

Researcher and author Peter Bradwell said companies could utilise the websites for controlled innovative and democratic working.

He added that the answer was not to simply close down access to social networking websites or to "blindly" invest in collaborative platforms for the company as a whole.

Mr Bradwell continued: "Rather, we argue that we need to understand how, once we accept the implications of social networks, we can manage the new challenges and trade-offs."

Facebook, the world's most popular social networking website, was founded in 2004 while its rival MySpace was founded in 2003.

A recent Connect survey found that the two major concerns about outsourcing services like IT support were 'loss of control' (56 per cent) and 'budget over-runs' (43 per cent).