THE AGENCY BUSINESS: The lure of savings may prompt PR firms to send jobs overseas

Having seen companies in various other sectors save money by going abroad for cheap labor, PR firms may find it hard to dismiss the benefits of overseas job allocation.

Having seen companies in various other sectors save money by going abroad for cheap labor, PR firms may find it hard to dismiss the benefits of overseas job allocation.

Imagine receiving a media-monitoring report from Prague or a new-business PowerPoint presentation from Bombay. Or how about a media-relations campaign based in Bangalore? OK, maybe not yet on the latter, but don't dismiss the first two as quickly. Confused? Let's explain. Since the early 1970s, intense competition among manufacturers has sent companies looking overseas for cheap labor. Nowadays, many firms produce some of the same goods that had once been made in the US in places like China and Mexico. As a result, by the end of 2002, the US had about as many people employed in the manufacturing sector as it did in mid-1950s, even as the nation's entire workforce has grown nearly threefold over the same period, according to US Labor Department statistics. Yet over the last few years, another similar market shift has taken place as US-based companies operating in the service sector have begun to mimic their manufacturing brethren by sending jobs abroad in search of cheap labor. Consider a study published earlier this year by A.T. Kearney, the management-consulting arm of EDS. The study found that over the next five years, the financial-services industry, which includes the nation's banks, brokerages, insurance companies, and asset managers, intends to send 500,000 jobs overseas - representing about 8% of the sector's current workforce. According to Kearney, many of the jobs being considered for export involve high-end knowledge-based functions, including stock and financial research, regulatory reporting, accounting, and graphic design. Most of the targeted countries include developing nations with pockets of well-educated citizens. The favorite relocation destination is India, although several other nations are said to be in line for some share of the jobs. "Any function that does not require face-to-face contact is now perceived as a candidate for offshore relocation," said Andrea Briece, an MD at A.T. Kearney, who helped compile the study. "The debate at major financial-services companies today is no longer whether to relocate some business functions, but rather which ones and where." The rationale behind this exodus mirrors that of the manufacturing job exodus that started a generation ago - cost savings. According to Briece, a newly graduated MBA from a top business school in India hopes to earn about $12,000 a year, while according to US News & World Report's latest rankings, a Stanford MBA can expect to earn about $107,000 during his or her first year after graduation. The A.T. Kearney survey coincides with other research that suggests that many IT jobs - including many computer programming jobs - are now being shipped offshore. Gartner, the market research firm, has predicted one in every 10 jobs in the US IT sector will move abroad by the end of 2004. That brings us to marketing communications. GCI Group, which has been working on a new business strategy that involves a focus on measurement, institutional knowledge, enhanced productivity, and client relationships, has told PRWeek that it has begun to mull sending some of its media-monitoring and research operations overseas. "We are looking at this very much through an efficiency microscope and saying, 'Where is the best talent and where should it go?' That's not to say we're about to ship out most of the firm's operations. Instead, we're talking about small portions of it that we think will serve clients better," says GCI's director of strategic planning Debjani Deb. Deb and CEO Bob Feldman are quick to point out that it may still be a while before the industry is able to run a US-focused media campaign out of Bangalore because of basic cultural issues. For instance, a media effort for a product launch targeted at US consumers is probably best directed by folks who live among US consumers. Nevertheless, it's a safe bet that other multinational PR firms, and even some of their parent companies, have been considering similar moves. "PR firms and their parent companies could look at things like PowerPoint presentations and all document presentation for that matter - whether in a pitch to new or existing clients - as things that can be handled offshore," says Briece. "I think we're at the point where companies with a global footprint can no longer ignore the cost reduction that this affords them." ----- US jobs go abroad
  • An A.T. Kearney study found that over the next five years the financial-services industry, which includes the nation's banks, brokerages, insurance companies, and asset managers, intends to send 500,000 jobs overseas - representing about 8% of the sector's current workforce.
  • Market research firm Gartner has predicted that one in every 10 jobs in the American IT sector will move abroad by the end of 2004.
  • According to US News & World Report's latest rankings, a Stanford MBA can expect to earn about $107,000 during his first year after graduation. Meanwhile, says Kearney's Andrea Briece, a newly graduated MBA from a top business school in India hopes to earn about $12,000 a year.

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