Outsourcing market expansion work on the rise

At a time when outsourcing businesses are increasing, a growing number of companies, especially those in emerging economies, are willing to outsource market expansion work to professional service providers, according to a report recently released by global strategy consultancy company Roland Berger and Zurich-based market expansion service provider DKSH.

The aggregated growth rate of market expansion business in the Asian market will reach 8.3 percent between 2012 and 2017 while the global growth rate is around 7.5 percent, the report estimated.

"Different from other outsourcing businesses such as information technology outsourcing or business process outsourcing, the ultimate goal of a market expansion service is not to reduce cost, but rather to help companies and brands to grow bigger," said John Woo, head of country management of DKSH China.

The value of market expansion services in the Asia Pacific region was as much as $632 billion by the end of 2012 while the figure for the European market was about $646 billion. Driven by rising domestic consumption demand and Western companies further exploring overseas markets, it is expected the Asia Pacific region will far overtake Europe by 2017 in terms of the volume of market expansion services.

Once focused solely on fiscal numbers, emerging market players now reorient to their customers' needs, attaching greater importance to customers' demands and companies' image and reputation, the report stated.

"Market expansion services mean the company outsources the part of its business it does not excel at," said Ye Jun, partner and vice president for Roland Berger in Greater China.

Ye stressed that exports, which he said are a conservative business plan usually adopted by emerging market players, would eventually be screened out by market expansion services.

"Too much reliance on export will lead to a loss of an in-depth understanding of the local market," Ye said.

It seems to emerging market players now that setting up affiliates as well as mergers and acquisitions are better ways to reach into overseas markets in terms of risk control and seeking profits, Ye added.