HEAD TO HEAD: Offshore marketing services jobs

Is the movement of marketing services jobs offshore a threat to UK businesses rather than an opportunity?

YES - MARK PATRON, DATABASE MARKETING CONSULTANT, PATRON DIRECT

"We end up as a nation of fat cats and hairdressers" was how an eloquent Amicus trade union spokesman described the threat of jobs going offshore.

In February, the cover of Business Week asked, "Is your job next?". If your job entails mainly working on a PC and telephone, the answer could soon be yes.

Companies in the US and Britain account for 70 per cent of the business process offshoring (BPO) market. Analysts project that by 2015, roughly 3.3 million US jobs will have moved abroad. That translates to between 300,000 and 600,000 jobs in the UK moving offshore and many of those jobs will be in marketing services.

So which jobs will go? The enticement to companies of a worker who earns £1.50 an hour in India versus ten times that sum for a worker in the UK is obvious. For years, such wage differentials have attracted manufacturers to low-wage countries.

The majority of services jobs such as retailing, catering, health care, social services and transportation by their very nature can't be moved abroad. Repetitive IT and back-office operations such as HR, finance and admin are moving offshore. Marketing services functions such as data capture and call centres are well established offshore. Clearly, it won't stop there.

Over the next few years we'll see more marketing services back-office jobs moving offshore. Direct marketers are switching their production work to the Far East. Marketing services companies, similar to investment banks, will move their researchers and analysts offshore. So how far can this go? Using a PR agency as an example, client-facing 'rainmaker' jobs may stay, but all others, including stories in publications, can be done offshore.

Today there are some 200,000 back-office outsource jobs in India. This is growing at more than 50,000 a year, and there's no shortage of capital to fuel this growth. PricewaterhouseCooper estimates that private equity investment in BPO has grown from $1.1bn (£650m) in 1997 to $24.2bn (£14.3bn) in 2002.

So is going offshore a threat to UK marketing services businesses? If the same question had been put to UK manufacturers 50 years ago, with the benefit of hindsight, few would have said it was an opportunity. During that time, manufacturing has halved as a proportion of UK GDP to 20 per cent. Something similar looks set to happen to UK marketing services businesses.

NO - GUY SMITH, COMMERCIAL DIRECTOR, PROLOG

No one would deny the highly visible and accelerating rush for offshore contracts that has characterised 2003, with big brands such as BT, Prudential and HSBC leading the charge. But, after a year of being seduced by the hype surrounding the benefits of outsourcing marketing services offshore, the risks involved are emerging, highlighting the clear benefits of outsourcing to UK providers.

The failure of the majority of 118 numbers operating from offshore proves that even the simplest of marketing service functions aren't handled that well, and stories of agents not knowing of Scotland would be laughable if they weren't so frustrating. The other major issues which will affect people's ability to go offshore without losing competitive advantage include reliability of power and telecoms, integration with other parts of the business such as marketing and fulfilment, and service turnaround times. Not forgetting the public backlash against the thousands of recent job cuts.

The saying 'you get what you pay for' is beginning to ring true for the offshore option and if that means sacrificing good customer service, then maybe cost shouldn't be the primary consideration. After all, cost cutters always come under pressure from high staff churn, reductions in skill levels, lack of capital investment and the entrance of even lower cost competitors. Indeed, agent costs are rising offshore, therefore the cost advantage is reducing as demand for agents with an appropriate skill set increases.

The UK marketing services industry is well established and provides a network of supporting services that inherently improves the quality advantage over any new entrant - recruitment agencies, creative departments, benchmarking systems, specialised trainers, government support initiatives and incentive schemes. Moreover, the best outsourced solutions are those where the client is actively and regularly involved with the service provider. For a UK business outsourcing to India, for example, this is simply not realistic or sustainable.

Offshore outsourcing should be seen as an opportunity by UK marketing service providers to sharpen up their act and provide clients with the kind of quality and service that can't be compromised. Despite the dire prognosis, outsourcing to UK-based companies grew by four per cent last year and with the continual focus on providing a quality service, I'm sure this figure will rise.

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