There is a profound structural shift happening in the supply of multi-channel marketing services and it’s all happening through technology. Why are marketing strategies, both on the client and agency side, being planned and created in the UK more often, yet the implementation of them is being outsourced overseas?
For example, more than a few digital agencies are designing online campaigns and websites in the UK but actually coding and building them in South Africa. Likewise, a number of larger agencies are outsourcing artwork and production facilities to Asia – one northern design agency has 100 artwork staff based in Mumbai, India. Our own company manages various data processing and database management tasks for UK clients from the Philippines, with a head office in London.
The New York Times recently carried a story about how outsourcing was so successful that countries like India were starting to outsource tasks themselves. It cited the example of Infosys, the Indian technology giant, which outsourced an American bank project to Northern Mexico. In effect, a US bank paid an Indian vendor 11,000 kilometres away to supply it with Mexican software engineers working 240 kilometres south of the US border.
The New York Times concluded that outsourcing was now global, and not limited to demographic regions or first-world to developing-world technology transfers. It added that the future of outsourcing is “to take the work from any part of the world and do it any part of the world”. One Indian company, Wipro, is actually planning to build hubs in US states like Idaho to take advantage of ‘states that are less developed’.
B2B multi-channel marketers can now go worldwide
For B2B marketers, the implications of this outsourcing revolution are profound. Marketers can now choose vendors and suppliers of services that match their multi-channel B2B requirements anywhere in the world, reduce their costs by 50 per cent or more whilst simultaneously experiencing greater levels of service. B2B marketers can even choose to outsource part of their own product offerings offshore.
What makes outsourcing so attractive for B2B multi-channel marketers is that the technology exists for companies to outsource specific functions and be able to seamlessly integrate the management of them. In short, technological communications advances allow remote, secure electronic access to internal data and processes. This is the same technology that routinely allows servers to be remotely serviced and managed by IT support. It means that you don’t have to send information, artwork or data anywhere – everything is accessed electronically through technologies such as Virtual Private Network (VPN).
Using VPN, companies can now outsource on a micro level. A small marketing consultancy in Surrey can outsource its artwork to India; a CRM consultancy can outsource data processing to the Philippines. In effect, any company no matter how large or small is able to outsource specific departmental functions. What was previously only the domain of corporate giants is now accessible to any company, no matter how large or small.
Skill levels
Outsourcing, particularly for B2B multi-channel marketers, can only work if the skill base in a foreign country is equally as high as can be found in the UK. Yet, unbeknownst to many, a lot of developing countries offer an outstanding talent pool. Take the Philippines: with a population of 87 million it has the third largest English speaking population in the world and literacy rates of 94% - the highest in Asia. Add the fact that the country supplies 385,000 new young professional graduates each year as well as churning out 70,000 IT specialists, the outsourcing prospects in the Philippines alone are immense.
Indeed, the Philippines has such a high level of technology expertise, it has now become a magnet for data bureau and data processing functions and we have chosen the country to host our own company’s data centre (we now have 80 staff permanently based in the Philippines managing outsourced data bureau and data processing functions for UK clients). We are in good company - Accenture, Amex, AOL, Citibank, CMG, Dell, IBM and Nortel are just a few names to have set up front and back-end operations in the Philippines over the last few years.
Data protection concerns
A common objection to offshore outsourcing for B2B multi-channel marketers is the grey area of data protection, with many companies afraid of testing the water in case they fall foul of the guidelines. However, using a company’s VPN links the outsourcing of functions such as data processing does not breach EU data protection legislation. How can it? After all, the data is held within a company’s own secure internal computer network and is not moved – it is simply ‘accessed’. Even the DVLA is using the Philippines for data handling & processing work, as are other UK Government departments making a mockery that offshore data breaches EU regulations.
The advantages of offshore outsourcing are clear - cost savings are anywhere between 50-70 per cent. Not only does this deliver cost savings to B2B marketers’ profit margins, it also allows B2B marketing budgets to stretch further. Other offshore advantages include 24/7 operational service, huge back-up resources and what is referred to as ‘follow-the-sun’ development – for example, the eight hour average time difference between Asia and the UK allows marketers to send work abroad in the evening and receive it back in time for the next morning. Moreover, in the offshore world, weekends don’t exist allowing campaign implementation to be speeded up.
The outsourcing of marketing services is set to be the next stage in the evolution of B2B multi-channel marketing communications. According to US-based Ventoro Consulting, 19 per cent of all companies have an offshore strategy. However, when it comes to the US’s top 1,000 firms, the number of companies using an offshore strategy jumps to 95 per cent. That’s a clear guide to the future……
Author: Jed Mooney, Managing Director, Datahold
Source: The Marketing Leaders
Publication Date: 07 November 2007