You’ve got creative

Creatives made in India are being delivered all over the world. Indian talent is getting recognized. Can they handle developed-market sensibilities? Chances are that you would not have heard of Basil Communications, which occupies a 10,000 square foot, four-level office in Bangalore, or of Eon Premedia, based in Noida, on the outskirts of Delhi. Idea would perhaps make you think of the mobile operator, not of a company based in Kolkata.

These are advertising agencies that do not make news for participating, or not participating, in the Goafest. Yet, they are poised to give the frontline agencies a run for their money, not so much in the domestic arena but in the international one. These agencies form a small tribe that handles outsourced work for sustenance. The major catalogue companies from the US and UK are offshoring a major part of their work to India. "We provide virtual studio solutions to international agencies across media," says a Basil executive. According to industry estimates, less than half a dozen pure-play outsourcing outfits exist in the country with a combined turnover of $15-20 million (Rs 60-80 crore). But the trickle may soon turn into a torrent with the industry expecting to garner Rs 4,000 crore over the next five years from outsourcing deals. In advertising, that's a lot of money. The industry in India is estimated to be worth less than Rs 20,000 crore. Even if it doubles its turnover in the next five years, the outsourcing part could still be a healthy 10 per cent of it. No wonder, even the mainstream agencies — Ogilvy, Lowe, McCannErickson and Mudra, among others — are eager to sink their teeth into the new pie. It is not just the volume; outsourcing also yields lucrative margins. The margins for the frontline creative houses are estimated at 10-12 per cent, though many prefer to work on a retainer-based fee. The margins in outsourcing can be 25-40 per cent. "The more efficient your processes, the better the margins in outsourcing," says Ranjan Kapur, the head of WPP's Indian operations. WPP is the world's second-largest advertising network. Kapur, incidentally, is also the promoter-director at Eon Premedia. Open the source "Most of the source of business is the low-hanging fruit, namely the studio business," says Kapur. Back-end operations, ranging from photo touch-ups, creating manuals for the information technology and consumer durables businesses and studio work currently account for the bulk — nearly 80 per cent — of the work outsourced to India.

Seeing the opportunity, the bigger agencies are setting up studios in India. Global advertising network Interpublic Group's Lowe Worldwide, when it acquired control of its Indian business last June, said it would set-up a 24-hour studio in India that would create multimedia creative solutions for its clients across the world. The idea of setting up a studio emerged when Lowe started moving a major part of its digital production activities to its Indian office. Even advertising agency Mudra plans to set up a separate business unit for the outsourcing business "as there is a large scope for outsourcing the back-end" work, says Mudra Group managing director and chief executive officer Madhukar Kamath. It is not just the studio rush. The other part of the outsourcing business is to provide higher-end solutions like graphic design, creative solutions and digital marketing services from India. Ad agencies are also aiming to create what Kamath calls "centers of excellence" in India. In 2007, Ogilvy & Mather, one of the largest advertising shops in India, and part of the global WPP network, announced that it would handle the entire global marketing services of Chinese computing giant Lenovo in Bangalore, where the same office will house the client and the agency. Others like Lowe and McCann-Erickson have created ads for multinational clients like Unilever and Perfetti, respectively that found their way into international markets. The range of services might be different, but the promise is the same. Most outsourcing service providers hope to reduce costs for clients by 30-70 per cent and also deliver a shorter turnaround time. "India's geographical position and time-zone help us in serving clients worldwide in a much more efficient manner," Stephen Gatfield, the executive vice-president of Network Operations and CEO of Lowe Worldwide, had earlier told Business Standard. Process vs chaos As the outsourcing buzz gets louder in advertising, the industry also needs to do a reality check on the skills required to make it big. It is a different ball game, especially for the frontline agencies, which would need not only separate business units but also a shift in thinking to handle outsourced business. "It would be very difficult for an advertising agency to double up as an outsourcing service provider within its existing operating culture," says Venkatesha Udupa N S, director, creative services, Basil Communications. Agrees Kapur: "Outsourcing is far more process-oriented than the organized chaos that prevails in a creative agency." While the DNA of a mainstream agency is about creativity and innovation, an outsourcing service provider is more focused on quality, consistency and timeliness of delivery on pre-specified parameters for outsourcing related to studio work.

"In a studio-outsourcing scenario, the structure of the organization — the approach to project delivery, including how a project is sliced and diced to ensure quality, consistency and timeliness, are different from how agencies typically approach studio work," says Udupa. For instance, in a typical advertising studio, the creative partner sometimes sits along with the studio person, mumbling over-the-shoulder advice on the changes to be made in real time. While working with creative personnel based in a remote location, the process of communication with the studio has to be well established. There should also be pre-defined processes for escalation and approvals, say outsourcing experts. Advertising agencies will need to keep pace with the processes, where the specialists are moving ahead. While both Basil and Eon have either acquired or are looking for ISO certification and implementing Six Sigma, such systems are unheard of in conventional advertising. Kapur talks about the importance of using superior technology and developing "proprietary IP (intellectual properties) to keep ahead of the curve" and stay ahead of other low-cost destinations like Bangladesh. "We could be bypassed in no time if we do not pay attention to developing technology and talent," says Kapur. Different strokes Nothing can be taken for granted. "Indian talent is being recognized across the world and this studio will enable us to make the utmost use of the talent pool here," says Gatfield. Of late, frontline advertising agencies have been guilty of not investing enough in people as they have been reeling under margin pressure. "Yes, it is increasingly becoming a big obstacle," agrees Prasoon Joshi, McCann-Erickson's executive chairman and South Asia creative director. "We definitely need to do something about it. There are better opportunities, exposure and money that is being offered by the entertainment industry and a lot of our talent is going there." Kapur says the lack of talent is an issue with only the "prima donnas" of the business as outsourcing needs a different kind of talent. Udupa seconds that, "We employ art-workers who have the skills to work on specific print software like Adobe illustrator or Quark, and people with experience in HTML, Flash, and Action Scripting and so on." In a typical advertising environment, these roles do not get much opportunity. In off-shoring, the people playing these roles get the opportunity to grow into team leaders, project managers or technology experts. In addition they also get onsite opportunities. "In fact there will be an additional influx of personnel," he says.

The other challenge is to create advertising that is in tune with the demands and expectations of the overseas market conditions. Pranesh Misra, Lowe's global director, market accountability, says, "Advertising needs to take account of cultural sensitivities, which require face-to-face interaction. There are local nuances that an outsourcing service provider might not be able to understand completely." Most Indian agencies are used to communicating with the developing markets. Catering to a developed market can make a different set of demands. However, Misra says India can become an outsourcing hub for Asia "as we are familiar with the cultural hues of the region. But the country might not create advertising for high street New York." Joshi disagrees. "We have a mixed bag of consumers. India is a country of contradictions. It has market for BMWs as well as for one-rupee sachets. The advertising fraternity is well-versed with both and more such groups," he says. But with more than 80 per cent of the work being studio-related off-shoring, there are fears that Indian service providers may remain trapped at the lower end of the value chain, which can be compared with the voice part of business process outsourcing. "In artwork, touch-up and production-related work, the volumes could be big and narrower margins can be compensated by the gain in volumes. There is an investment case in that," says Misra. Joshi says there is a strong case to do work at the top end as well. "Earlier, India might have been looked upon as an economical hub to execute work. That is no longer the case. There are increasing instances of global briefs coming to India and work for other markets being conceptualized in India, on both strategic and creative fronts. India is defining thought leadership and that is surely at the highest rung of the value chain," he says. Like basil, the Indian herb that that found its way into Italian and South East Asian cuisine, the flavour of Indian advertising, too, may spread far beyond its shores.

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