Expertise Marketplace - Professional Service Firm Marketing Blog

Professional services offshoring: Friend or foe?

I had lunch recently with one of my mentors, a retired Booz Allen & Hamilton partner. One of the things I like best about this man is his very direct encouragement of me, always delivered with respect and affection. In this case, his query occurred about five minutes after we'd greeted each other and exchanged news about each other's families. 

"So," he said, "how come you haven't written on your blog yet about the impact of offshoring on professional service firms?"  My immediate reaction was gratitude, for he clearly reads what I write, and also for the absolutely right-on nudge to deal with this strategically important issue.  My second reaction was "Hmmm, why have I not seen this topic being significantly discussed elsewhere?  (And it's not because I haven't been watching...)." 

First, some clarification about terms:  outsourcing (NOT what I will address here, but a topic I have addressed in previous blogs) is what a professional service firm does when it takes a piece of a non-core competency and hires outside for it.  Marketers know a good example of outsourcing is when the media relations function is implemented by an outside PR firm.  A common understanding of outsourcing also includes when a function is implemented from a remote location, such as IT services being delivered from India.  In this case, though, my friend referred to the hiring and retention of a firm's core functions to an off-shore professional. 

My friend fears that as more professional firms use this model, mostly to enhance their own profit margins, they will inevitably undermine the very core of their economic foundation, ultimately to their own detriment.  He intimated that the practice of offshoring was addictive, and that professional firms will find it impossible to go back to hiring their domestically based mainstay talent for the high prices they have paid heretofore. 

I have not heard any of my clients saying theyr're worried about offshoring.  Should they be worried?  If so, why aren't they?

I asked a few of my connections.  One friend suggested that offshoring was a big concern for professional service firm executives five years ago, but not now, because firms' initial thrall with offshoring proved not to be so workable after all, and they collectively decided not to get too far in. 

My mind is buzzing about this and other globalization trends in the professional services arena.  Is offshoring a model used a little, or a lot?  How was the decision to offshore made, and how was offshoring's impact evaluated? 

Where is your firm going with this model of implementing business?  What changes are being undertaken in order to embrace offshoring?  Does the practice of offshoring vary by industry? 

What is YOUR firm's experience with offshoring? 

Ford Harding’s advice on growing books of business with clients

Here’s the final post of my four-part Q&A with Ford Harding about professional service firm cross-selling and increasing a firm’s revenues from strategically appropriate clients

Lowe: What’s your best advice to professional service firms and their rainmakers about how to grow their firm’s book of business with their clients? 

Harding: My first advice is personal change rather than institutional change:  “treat the cross market like any other market.” You need to provide just as much service, just as much attentiveness to the people in your organization, as you would to someone on the outside. Leave it to the management of the firm to make the other people want to do it more. But from your perspective, treat them like any other market.

There is a tendency to feel that because you are part of my company, you should do this for me and I shouldn’t have to work at making you do it.  That is a misguided approach, and won’t get you the results you want.

Lowe: We should think of all our colleagues as our clients?

Harding: From the management point of view, you want to create an environment in which people are encouraged to cross-sell, and grow the firm’s overall book of business with clients, and there is some incentive for doing it. But it is very tricky to try and force somebody to do it.

How to overcome cross-selling hurdles – inside, and those that clients erect

Here’s the 3rd post of my four-part Q&A with Ford Harding about professional service firm cross-selling and increasing a firm’s revenues from strategically appropriate clients

Lowe: What advice would you give a firm that is approaching selling –- even selling “solution sets” -- from a fragmented perspective?  Think of global corporations that sell in silos. 

Harding: Somebody has to be responsible for it and it has got to be a short rope. It has to be very clear who is responsible and there is not a lot of room for deflecting off onto other people.

Lowe: What about simply setting up account teams and using an account management approach?

Harding: That is part of the solution, but you also have to set up some processes for teams.  For example, “What do we communicate to each other? Who has ownership for meetings? Who can call whom? What are our strategic goals for this client over the coming year, 5 years?”

Lowe: One of the things that I have heard from clients of professional firms is that they want to resist putting all of their dollars into the bucket of one firm. One of these clients actually said to me, “I am not allowed to spend more than X percent of our annual budget on one particular provider, because of conflict of interest concerns. Our parent company tells us we have to break it up.”  How does that impede the professional firm from doing a good job of cross-selling?

Harding: If you have the right relationship with the CEO that is all irrelevant. He or she can change the rules.

Lowe: Are the clients of professional service firms drifting towards the purchaser model, increasingly using a procurement mentality?  What are your thoughts about clients becoming too fragmented to articulate their own spending levels or perhaps too centralized using a procurement model?

Harding: My prediction is that it will go in cycles in any given firm.  I can think of a particular pharmaceutical firm which has supported practically three-quarters of my clients over the past 5 years. They are buying huge amounts of professional services, particularly consulting (and other things as well). It is a very decentralized, very fragmented organization. At some point, somebody is going to look at what all is being sold and say, “Let’s put a lid on it.”

Next time:  Harding’s advice on growing books of business with clients

How Professional Service Firms Can Think Strategically about Selling

Here’s the 2nd post of my four-part Q&A with Ford Harding about professional service firm cross-selling and increasing a firm’s revenues from strategically appropriate clients

Lowe: Regarding the idea of “thinking strategically about selling solutions,” is “cross-selling” a simple way to get at the gist of the issues?

Harding: Cross-selling means selling multiple services to the same firm, in multiple geographies or multiple functional areas.  There are ways to that that are strategic, and ways to do it that are very tactical and not very effective.  It is like networking – you can do networking that gets you nowhere, or you can do networking that gets you something.

Lowe: My own focus is to help professional firms do a better job of pursuing a bigger “end-game” in the marketplace.  In order to do a better job, professional firms must ask questions like, “how can we ascertain the client’s available spending levels?” or “How can we get past the client’s fragmented way of spending money?”  What are the characteristics and processes of the firm that does think strategically about cross-selling? 

Harding: At one end is what some people call “clean-sheet of paper” selling.  You go into the client and you hear what the client needs and you design, from scratch, a solution to the client’s problem, and you package it and sell it to them.  At the other end are professionals who practically say, “I sell nails, and if you don’t need nails, I can’t help you.” But to go from being very functionally focused on “I sell X” to the clean sheet of paper selling – is an impossible step in one leap. From habit, you have a lot of people who have grown up in a silo and understand how to sell something small. Now we tell them they are going to integrate and cross-sell, and they are at a loss at what to do.

There is a half-step in between the clean-sheet-of-paper sale and the single service sale and it can be very effective for a firm, which is what I call selling solutions sets.  A solution set is where you take all of your services that relate to a particular client need, say an acquisition or merger, and when the merger takes place, everybody is affected within the client organization. The CEO – s/he needs certain things; the head of HR needs certain things, the CFO needs certain things and you can package a solution from the various parts you have and you sell somewhat of a different mix of things to different people.

But you sell the total solution to the CEO: “we are going to help you solve the merger integration, and we are going to put a package together that will take care of all these areas with “one-stop-shopping.” This solves one of the big problems of fragmented strategy implementation, and helps avoid a lot of finger pointing.  If you sell solution sets, there’s no finger pointing.  Much of what I’ve just described is in the new edition of my book Creating Rainmakers.

Next time:  How to overcome cross-selling hurdles – inside, and those that clients erect

“Cross selling: more than selling from Point A to Point B”

The June newsletter issue of The Marketplace Master™ featured a look at how individual professional service firm leaders can creatively encourage colleagues to “do things differently” in building their firm’s book of business with clients.  I’m grateful to Ford Harding, president and founder of Harding & Co., for helping me touch base with a number of professional firm leaders who are making good progress in increasing their firm’s revenues with strategically appropriate clients.

In gratitude for his help, and for his newest contribution to professional service firms’ thinking about selling and cross-selling (the reissue of Harding’s influential book, Creating Rainmakers), here’s a transcript of my 4-part Q&A with Ford Harding.

Lowe: In our 2006 research study, “Increasing Marketing Effectiveness at Professional Firms,” respondents ranked “increasing the firm’s revenues with strategically important clients” LAST among their five most highly ranked strategic marketing goals.  Is this true just for our respondent base last year, or are you seeing this too?   

Harding: I think that is highly variable.  I can think of one of the big four accounting firms, and they are very actively working to increase their share with specific clients.  In fact, I’d say they are over-resourcing this process.  Frankly, the big accounting firms have been more effective at cross-selling services than a lot of other service firms.  Too successful, if you agree with Mssrs. Sarbanes and Oxley.  The head of strategy at one of the big HR firms told me that they are already working with the majority of the accounts they most want to work with, so growth must come from expanding those relationships.

Lowe: Professional service firms are typically structured into service lines or practice areas, which are often matrixed with geographical, functional and industry groups.  No wonder cross-selling is perceived to be so challenging!  Is there a better way?

Harding: The traditional thought is that you sell Service A, and as you finish A , then you sell Service B, then C – that is very hard to do for a variety of reasons.  Instead, the skilled Rainmakers sell a small portal service that gets them in the door.  This is usually some form of diagnostic.  That gets them working with the client management team, where they can build momentum for a larger sale.  So, during this diagnostic they sell a vision of a total solution complete with a business case.  This solution envisioned requires several of their services and maybe other firms’ services, too.

Lowe: Doesn’t that then require some fairly strategic thinking about the service portfolio that that firm has to offer?

Harding: Yes, and how to use several of the firm’s services in a building block method that allows them to construct solutions to different client needs.

Lowe: Are the good firms thinking about cross-selling from this service portfolio perspective, and the others are not?

Harding: The good rainmakers are; I don’t know that many firms are.

Next time:  How professional service firms can think strategically about selling

Just Say No to limited CMO jobs

Yesterday I got a call from a recruiter from one of the Top 5 retained executive search firms.  She wanted to tell me about their Chief Marketing Officer search for a top tier management consulting firm.  It's a newly created position, she said, with eight pages describing the role and its scope.   

I asked her to summarize the position.  I heard some very good words:  "executive level," "strategic."  But sure enough, I heard one other phrase that still revealed the myopia of the hiring firm.  When I asked about the main focus of the role, she said "awareness building."  Damn, I thought.  This job is mostly about public relations and communications. 

I admit I spouted a bit about the critical importance of CMO roles that are TRULY strategic, that is, actually integrating the entire range of strategic marketing functions with the business development and sales functions to which they must connect in order for real competitive effectiveness to occur.

I think I even said "I'll be gad glad to review your client's CMO position spec, but I sure hope it's going to be deeper and more integrated with business development (and other internal functions of the firm) than what you've described to me."  I remember thinking,"Tell your client to re-do this job specification, or else they're wasting their money."  I don't think I said it but I may have strongly implied it.   

She hasn't replied.