Fear Of The O-Word, Part 2
Overall, those who took the time to write didn't show any signs of fear. Rather, they were either amazed at what's happening behind the scenes or relieved to see some public discussion of the subject.
Rohit has plenty more to offer this week on the controversy, as well as politics. Let's return to the chat.
Search Insider: Say there's a search marketing agency with 50 or 100 U.S.-based employees. Should people working there fear that their bosses will have a chat with someone like yourself and outsource much of the work to India instead?
Rohit: No, I don't think so. I strongly believe you need a very strong presence as an agency in the U.S. to make a success out of any search marketing campaign for the client. Client interaction is the key, and people in the U.S. are surely required for project management, client interaction and quality analysis.
SI: Okay, but once you have a few people to put in the face-time, why do they need so many warm bodies here? Especially when it comes to behind-the-scenes work like optimization and copywriting... those people rarely interface with clients.
Rohit: Well, I look at it this way: now that they have outsourced a lot of their work, this would mean they have improved a lot on their operating margins, which can be easily invested to bring in more sales. This would only mean more and more people will be required on board to help the pace with the growing number of projects. Also, now that you are operating at lower costs, you can start catering to clients with lower budgets, which means larger reach. These are a few things which large agencies miss out on because of their huge operating costs. See, it's like this: on the Internet, everybody is equal. The one who acts more smartly, which is not necessarily the one with the larger budget, always is more inclined to win.
SI: But why not expand most of those roles in India? Say a U.S. search marketing company doubles its business and goes from a $5 million company to a $10 million company in a year. It has five copywriters in the U.S, and two copywriters in India who are doing just as good a job as their U.S. counterparts. In the next year, as it tries to grow from a $10 million to a $20 million company, why not hire 20 more copywriters in India and pare down to two in the U.S.?
Rohit: Working with small-budget clients and making them large entities is the real success of an interactive agency in the search market. See, outsourcing is a critical subject. Though it has many advantages, one should not forget that there may be risks involved and you would always like to have risk balanced. If I were a U.S. agency, I would never become greedy on saving the costs always. I would also want to make sure that things are fairly balanced.
SI: What are the risks involved in outsourcing?
Rohit: Risks can be on many fronts: political, geographical, social, etc. If tomorrow the American Senate decides that there will be no more outsourcing, it would be very difficult to go ahead and recruit back the same number of people in the U.S. again, because everybody will get back to recruiting in large numbers. Then investors in your company will be concerned, as they would not be able to see the same bottom lines again; the whole process you have gotten used to will be turned back. In another scenario, if the country you outsource to goes to war or if a natural calamity hits them, your clients will not want to hear [that] all their business was outsourced there.
SI: How much fear is there at companies like yours of the U.S. government taking harsh action against outsourcing?
Rohit: For me personally, [the fear] does not exist. I think the U.S. government would only do [terrible] wrong by going against outsourcing. I know outsourcing is in the larger interest of the economy there. We all know it. Though social and political pressure can sometimes take their toll... [John] Kerry spoke loud about anti-outsourcing during his campaigns. It was to gain the political mileage, but still, it's a risk, and in business you want to make sure all corners are covered... Hey, I know I am giving a lot of ammunition to you. I just hope this does not come out and [backfire for me]; I really do not want us or our partners to get affected in any way because of such controversial subjects. I am sure you understand.
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Yes, I understand. Though, like many of MediaPost's readers, there's plenty more I want to--and need to--understand about outsourcing and its role in the growth of the interactive industry. It's an issue I plan to revisit here before long. If you have something to say about it, and especially if you're involved in it, send a line--requests to keep your name and company anonymous will of course be honored.
Someday, such requests won't be necessary. A shift toward transparency is inevitable. Thank you again, "Rohit," for initiating the conversation.