Foreign companies have begun outsourcing new media work such as online reputation management, data mining, influencer identification and crisis management directly to small and mid-sized Indian social networking agencies. This is even as big agencies continue to sub-contract work to smaller agencies in India.
Mahesh Murthy, founder of Mumbai-based social media company Pinstorm, prefers not to call it outsourced.
He would rather call it "in-sourced" work. His company has had offices abroad for over five years and done marketing work in India for foreign brands all this time.
His company is now doing a lot of social media monitoring and responses for global brands, in addition to the search and display advertising that it has been doing so far.
His company is just a case in point. "Customers talk in real-time on the net and foreign companies realise the suite of online monitoring tools are not enough. You can have programs search for conversations. But you will still need people to manually look for context. Social media data are not structured. Automated programs are not intelligent enough to understand sarcasm on the net, for instance. We need human beings to extract juice out of a conversation,"
notes Hareesh Tibrewala, social media strategist and Joint CEO at SocialWavelength.
Cost arbitrage is the primary reason that foreign companies, especially those from the US and UK, would want to outsource work to India.
"By outsourcing social media activities (in part or full), a brand can cut its social media spend by 25 per cent and still achieve the same, if not better, results," asserts Adhvith Dhuddu, chief executive officer of AliveNow, a social media agency based in Bangalore.
Other agency players like Tibrewala concur. For instance, an online monitoring project which could cost around $40,000 abroad would cost just around $15,000 if done in India. "These are ballpark figures," says Tibrewala who has three US clients.
"This will be a focus area for us next year. We hope to crack more deals."
His optimism is shared by the likes of Rajiv Dingra, CEO & founder, WATConsult and Moksh Juneja, CEO of Avignyata.
"We have seen interest from foreign companies since 2008 but now the momentum is picking up," says Dingra. Juneja concurs he has been seeing interest even from companies in Malaysia.
However, unlike IT outsourcing, social media outsourcing poses many challenges in the form of price undercutting, cultural differences and skilled manpower, rather than just wage arbitrage.
Mahesh Murthy, founder of Mumbai-based social media company Pinstorm, prefers not to call it outsourced.