In a bid to slash overhead, the North American operations of several WPP network agencies are planning to outsource numerous finance-related jobs to India, Ad Age has learned.
So far, the shops embarking on this outsourcing plan -- which WPP suggested isn't a mandate from the top but a decision on behalf of senior finance executives at the network agency level -- include Ogilvy & Mather, JWT, Grey , Y&R and Wunderman. All told, more than 100 positions will be eliminated in the coming months.
The agencies "have decided to seek greater efficiencies in their companies and presently plan to have 'non-client' facing services delivered from an offshore specialist center in India," a WPP spokesman said in an email. "In most cases, the positions impacted are in New York, but depending on the agency, finance department staff in other North American offices may also be impacted. The total number of jobs under consideration represent less than one percent of overall staff (including associates) and the job transfer will happen over the coming months."
As of May, WPP, the largest advertising holding company in the world by revenue, reported having 146,000 employees, including associates, who work in 2,400 offices in 107 countries.
The cuts will be deepest at Ogilvy, which plans to eliminate 85 jobs during the next 18 months. John Seifert, chairman of Ogilvy & Mather North America, notified staff of the moves as part of a recent town hall meeting last week.
"Following a thorough review of the company's finance operations, Ogilvy & Mather North America has decided to outsource a number of its transactional finance processes," Ogilvy & Mather Worldwide Chief Marketing Officer Eleanor Mascheroni explained. "This action will reduce overhead costs while maintaining the quality and level of support we provide to our clients and partners. We have entered into an agreement with a top-tier business process outsourcing-services provider specializing in this kind of service delivery at lower costs to handle the processes. Many of our clients have been working with this model for many years."
The India-based billings service provider will be Genpact, according to a number of executives. Though WPP referred to the outsourcing plan as a way the agencies themselves want to find efficiencies, some executives close to the situation told Ad Age there has been pressure from the holding company, which works with consultant KPMG, to cut costs.
Grey said it could potentially lay off as many as 30 people beginning in mid-2012. "We are in the earliest stage of looking at outsourcing some financial positions at Grey Group headquarters," a Grey spokesman said. "No layoffs would take place until the middle of next year."
JWT said the move likely will affect 16 people or fewer. Cuts at Y&R will also affect direct-marketing agency Wunderman; a small percentage of two dozen people in a shared billings department would be cut, spokespeople for the agencies said.