Over the last 20 years in this trade I’ve seen and heard of more and more companies trying to conjure up magic numbers that maintain their clients illusions that they are getting a bargain. In fact some companies will take hit on the operational cost of producing the work just to have the client under their belt.
And what about cases where a potential client promises high spends that never materialise? Sales guys that expect the company to make investments in time, people and resource for a client that isn’t worth it’s value. I know your thinking that “any financial controller worth his/her salt wouldn’t allow this to happen” – yet it does, and will continue to do so.
These are all examples of how the life is being sucked out of what it actually costs to do the work. That and the high salaries of senior members of the companies that are nothing but a drain on resources – great if their bring in work, but what a dead weight if they don’t!
Anyway, thinking lets consider for example the Publishing industry; someone somewhere must have got some big bonuses for driving the cost per page down to near nothing, but the cost was at the industry’s detriment. It’s all well and good reducing the costs to the client so much that it keeps everyone else from getting a look in, then offshoring it all to India or China, but at some point something breaks! The client’s expectations of how much ‘stuff’ costs to produce are so high (i.e. they expect it at such a low cost) that companies can’t or don’t have the money to invest in the infrastructure needed to service them in the manner that they expect. OK, some companies do get deals on who pays for staff or what the kick backs are of different parts of the supply chain, but on the whole it is now a zero numbers game. Hard work and dedication just isn’t part of the equation anymore and reputation means diddly squat nowadays – in fact requtation could actually be a ‘worst enemy’.
Under such circumstances, is it any surprise that so much work is making it’s way out to India and China. Many moons ago it would have been eastern block countries until their cost of living went up and subsequently the cost of outsourcing rose with it forcing companies to find cheaper solutions – will we see the same with India and China? If so, where to next?
It confuses me slightly why clients source UK companies who outsource their work? Is that again something for them to save money on? I mean if I were a client and I discovered my pre-media operation outsourced I’d be pretty annoyed if they hadn’t told me. If I was in the position as a customer of course one part of me would say “why should I care because I’m getting a great price” but another part of me would say “I could just source an offshore company to work for me anyway”. After all most of them have representitives in my country anyway so what do I gain by having a ‘piggy in the middle’ -surely that ‘piggy’ is just getting fat for doing, er, well not much at all really!?
Well, maybe not that fat! I am sure that you have all been watching the media news recently where a number of ‘piggies’ (or middle men) have been going under. A sign of the times me thinks, where the bacon has been sliced too thin for them to survive off. We can of course stand on the side lines and opine at the fate of these middle men and their companies who clearly “had it coming”. However, at the end of the day these are people’s livelihoods that we are watching disappear down the pan – livelihoods that in some cases have been treated with total disregard and I am not just talking about their own employees, as there is a whole supply chain affected by such sad and sorry stories of mismanagement!
Of course, under such business circumstances something eventually has got to give! And I really do think that it is going to take one of the ‘big players’ to fall for the industry to realise that greed is not good for our business.
Author: Gary George
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Cartoon credit for Corporate Profits to Clay Bennett