Agencies embrace outsourcing

19 June 2012

NEW DELHI: Advertising agencies are "outsourcing" an increasingly diverse range of activities either in-house or to partner organisations in India, reflecting the cost and efficiency benefits this can bring.

Some estimates peg the value of transferring advertising-related duties such as analytics, animation, creative, media planning, digital execution and production to India at Rs1,000 crore.

Within this, it is suggested that digital, search engine marketing and production currently take between 70% and 80% of returns, with rapid revenue growth expected going forward.

"This space is growing at a phenomenal rate, almost 80% to 90%," Ashish Bhasin, Aegis Media's chairman in India, told the Business Standard. "It capitalises on our key strengths like expertise in information technology as well as a large English speaking population."

Bhasin also argued that, alongside accessing highly skilled employees, there were considerable cost advantages to pursuing this approach, with savings potentially reaching 30% to 40%.

Lenovo, the IT specialist, has a worldwide marketing services unit in India, which is involved in developing marketing materials covering everything from print, outdoor and TV to websites and emails.

"Currently, we are developing close to 5,000 assets each year from our Bangalore hub," said Ajay Kaul, its executive director, global brand communications.

Group FMG, the advertising agency based in New York, and boasting clients like Disney and Microsoft, deploys its Indian arm, housing 250 of its over 400 staff, to work on production, artwork, and to design apps, offering a saving of 20% to 30%.

"We use the phrase 'globally balanced work,'" Dilip Keshu, Group FMG's global chief executive, said. "No one in Manhattan should be sitting and retouching photographs."

M G Parmeswaran, CEO of Draftfcb + Ulka, added that creative activities generally remain centralised at present, but backroom functions in this area are increasingly being divested to India.

"Creative outsourcing, like original ideas, original print campaigns, or television campaigns, or even digital campaigns is not very common and the amount will be a fraction," he said. "What we have seen happening of late is the outsourcing of the execution of campaigns instead. So the campaign idea is adapted to various markets out of India."

Leo Burnett recently delivered a campaign for Minute Maid, the juice brand owned by Coca-Cola, in India that was adapted for the US market. Arvind Sharma, the agency's chairman for the Indian subcontinent, stated this was an achievable goal for local shops.

"Instances of complete campaign development for global markets being managed out of India are rather sporadic. A more common occurrence would be that a campaign developed for the Indian market finds resonance with the client and is picked up for the global market," he said.

Data sourced from Business Standard; additional content by Warc staff