People want one neck to wring,” says Vinod Harith, Founder, CMO Axis Outsourcing Services. He is explaining the rationale for marketing processing outsourcing (MPO). Instead of dealing with several firms – such as a Web design agency, an e-mail marketing agency, a database agency – it's simpler for companies to deal with one agent that handles all these functions, he says. Four years into this venture, the firm that claims to be India's first MPO has set its sights on the bottom of the pyramid which it sees as a multibillion dollar opportunity. “That will be the game-changer,” he says.
It's early days yet – but welcome to yet another big outsourcing story. After BPO, KPO, LPO, the buzz now is around MPO, which marketers believe can generate big bucks for India. With several companies realising that outsourcing hastens, standardises and automates routine marketing, there's a lot of work from the marketing domain being doled out.
“MPO is actually a subset of KPO (knowledge process outsourcing),” says Jessie Paul, CEO of Paul Writer Strategic Advisory, a marketing advisory firm. Paul, earlier CMO at Wipro, says Wipro too has an MPO business which targets large firms. Others in the business are the Champions Group, William Lea, and a few emerging smaller players from Coimbatore that promise to support a company's marketing efforts and provide a greater and complete brand experience.
Big-ticket deal
According to Harith, the opportunity for MPO, in “very, very broad numbers”, is $8 billion in the US alone. In India, the opportunity can easily be 20-30 times that, with its 26 million and more small and medium businesses (SMBs). Most of the business CMO Axis does today is through customers seeking it out, not the other way round.
“There's never going to be enough marketing managers for that many SMBs,” he says. “The business may be small, but it needs the same kind of marketing ammunition big companies need because the goal is the same share of wallet.”
The BOP services market is highly unorganised, populated by freelancers where the client could be the owner of a small neighbourhood business or the mom-and-pop store around the corner who wants a Web site or a poster designed. “You need to make the same effort as you would for a large organisation,” he says. CMO Axis is betting on these small businesses to play a big role in its journey to a Rs 100-crore-in-billings target by 2015. As of March 2012, CMO Axis expects to achieve $1.5 million in billings, and $5 million by 2012-13. It's a team of 100 people now.
The pros and cons
Barry Wehmiller International Resources (BWIR), a Chennai-based engineering services firm (an arm of Barry Wehmiller group USA), has been outsourcing marketing since 2003/2004. CMO Axis handles its go-to-market strategy, pre-sales, events and online marketing. Says Vasant Bennett, CEO, BWIR: “We are finding it very difficult to attract the talent we need to bring this in-house. All the seasoned marketing professionals want to work for the Cokes, P&Gs and Levers – and we don't want to settle for any less.” Does that mean they would, ideally, do it themselves? “No,” says Bennett, “even if we get the right people, we won't do it as our focus has to be on what we do best.”
Bennett says there were difficulties, but also benefits to outsourcing. As it went in for MPO when it wasn't a known phenomenon, “we got the attention of people at the highest levels of these companies, we felt we got tremendous value for money.” He sees no disadvantages in this arrangement. “With good knowledge base and best practices in place, and if quality and value improve, we will outsource more and more,” he says.
The advantages, as Jessie Paul points out, are fourfold. “You move from input to output, you are not bothered if somebody came to work or not. The job gets done.”
Second, companies are saved the burden of investing in automation. Many marketing processes today are about highly automated templates which involve technology investments. For instance, there is a piece of software which can write brochures. This ensures accuracy, she says.
The third advantage is cost, while the fourth is it offers companies flexibility.
For SMBs, CMO Axis provides total outsourcing solutions while for larger companies, it takes on some of the marketing functions. An important component of what they do is comprehensive CRM support, says Harith. MPO fills the gaps caused by lack of competence and capacity. “We're supplementing/substituting the inside management team of the organisation, we're at the core of the marketing/sales function.”
Of course, there are disadvantages too. Lack of control, says Paul, is a big disadvantage. On paper the MPO firm may claim it has all kinds of technologies and processes, but in reality, it may fall short.
Slow adoption
The consensus, though, is that the pros do outweigh the cons. Yet adoption is slow.
A reason, thinks Jessie Paul, is that outsourcing works best for companies when they have a centralised system. But most companies' marketing departments do not function that way. “If you have a hundred people in the US in the marketing function, you would assume they are under a single department. But it usually does not work that way in a large organisation,” she says. There are 20 people here, another dozen there. Also, marketers feel their fiefdom is under threat. This is even true of SMEs, she says. Indeed, she feels this is the biggest bottleneck right now.
First mover advantage
A lot of players are getting into the MPO space today. But Harith could have first mover advantage. With 17-18 years of marketing experience, he set out on this venture in 2007, on the brink of the worldwide recession – that's when people cut marketing budgets but still need to fulfil sales targets. However, CMO Axis doesn't sell itself on the cost advantage. That benefit kicks in only when companies abroad offshore work and a “big shot” at that market is a year away.
Right now, the MPO work being done may be only the low-hanging fruit. But there are those who think it may only be a matter of time before more value-added creative work could get outsourced and there could be juicier pickings.
(With additional reporting by Chitra Narayanan)