analysis Designed in NY,built in Bangalore

The expansion of Digitas’ offshoring unit Prodigious highlights the growing interest in using Asia-Pacific’s low-cost markets for digital production. David Tiltman asks what this means both for agencies and the clients they serve

Is offshoring the next big trend in Asia’s digital industry? There is certainly a lot of interest in it among the industry’s biggest players. When global digital agency Digitas last month announced it was moving into India and Singapore, it revealed that Prodigious, its digital offshoring unit, would be going with it. The purpose of Prodigious is to centralise digital production in low-cost markets. As part of Digitas’ alliance with Publicis Groupe marketing services agency Solutions, it will build a presence in six cities in India, as well as Singapore. These join Shanghai, Costa Rica, Kiev and Sofia in the Prodigious line-up. The model is simple: it has managers that work with marketers and creative agencies in their home markets, then offshore facilities that produce the work. Clients include General Motors. For Alan Rutherford, global CEO of Digitas, this model “makes obvious economic sense”. He adds: “As one-to-one marketing grows, there will be a bigger demand for tailored messages. Production costs could spiral. This model offers the chance to raise digital production and lower cost.” Other holding groups are looking at this. Interpublic’s MRM Worldwide currently has a digital production centre in Bangkok, alongside Warsaw and Buenos Aires. Strategy and creative are handled locally, then bulk production is moved elsewhere. “We have migrated several multinationals to this model, demonstrating cost and

digitalmedia-asia.com

General Motors... one of the biggest clients of Prodigious, Digitas’ outsourcing unit

time savings,” says Mark Cripps, regional director for McCann WorldGroup. Work sent offshore includes web build, Flash projects and bulk volume banner production. WPP is also looking at building its offshoring capacity in the next few months, according to Mark Read, CEO of WPP Digital. At present, it already uses its agency Blue in Singapore to process work for clients elsewhere in the region. The obvious benefit for clients is cost. But Read points out that many markets in Asia lack digital talent; building centres of excellence allows marketers in these countries access to better resources. That may be crucial in the future should salary inflation wipe out the cost difference. “If it’s just about cost then advantages will over time be removed,” says Read. “You have to look at other advantages.” The only clients this is suitable for are those with big, consistent digital production requirements. “Individual client requirements are really

Offshoring: the basics

b India and China have been the obvious digital outsourcing centres in Asia, given low labour costs and access to trained web programming talent. b However, Southeast Asia looks set to grow as a destination. Interpublic already has operations in Bangkok, and Digitas is studying the market’s potential. b Time differences with Western markets allow work to be done in the offshore centres after the working day in the home market has finished. b However, co-ordinating work between different markets requires water-tight internal briefing processes and transparency in terms of where the revenues end up.

broad,” says Jason Kuperman, Omnicom’s vice-president for digital development in AsiaPacific. “If your clients do the occasional micro-site or need a piece of mobile creative, how do you set up resources for all those digital needs?” Where it starts to make sense, he adds, is with complex projects that can be divided up into separate chunks of work and budget. At present there are few advertisers within Asia spending enough on digital for it to be worthwhile. For the holding companies, a further question this trend raises is who internally gets the revenue if spend is shifted from an agency in one market to a production centre in another. “Networks should look at a panregional internal compensation structure or simply lay down the law to the local markets that they need to forgo this revenue for the benefit of the network,” says Cripps. Other issues include finding resources in the outsourcing markets. This has a bearing on where the hotspots of the future will be. Low-cost is not enough; there have to be people to hire in the first place. Rutherford remains secretive on the markets Prodigious may move into next, but adds: “We know that in Southeast Asia there is a strong quality of digital talent.” In the long term, building centres of excellence can only be good for Asia’s digital industry – though hopefully they will begin to benefit home-grown companies as well as multinationals looking for a cheap deal. I

april 2008 digital media 21