In Tight Economy, Insourcing Is In Vogue
<B> In Tight Economy, Insourcing Is In Vogue</B>
By Chris Davis
From the two-sides-to-every-story department: In a new Meetings Today survey, almost 85 percent of corporate meeting planners said they don't believe their companies will outsource more meetings in 1999. But the same poll shows that nearly 75 percent of planners don't think there will be less outsourcing next year, either.
That's because 60 percent of the 213 corporate meeting planners surveyed said their companies will outsource meeting planning functions to independent firms next year at about the same frequency as in 1998. However, that figure very likely represents firms that didn't outsource any planning functions and don't plan to next year.
Still, the trend in a tight ecomony is to pull meetings in-house. Almost a fourth of respondents said they will be outsourcing less, with 13.5 percent planning much less outsourcing next year and 11.4 percent planning somewhat less. On the other hand, 11.9 percent said there will be somewhat more outsourcing at their companies, and 3.2 percent said there would be much more.
The uncertainty over the course of the American economy seems to be growing, and a downturn certainly would cause companies to focus more intently on their bottom lines. That could result in an even higher percentage of meetings being handled internally.
Still, Joan Eisenstodt, president of conference consulting and management firm Eisenstodt Associates of Washington D.C., cast a wary eye on the industry's future, and warned that outsourcing is anything but a dead issue.
"I don't think outsourcing is the great trend that it was in the past, but there are a lot of services that corporations don't want to pay for and are having other people do," Eisenstodt said. "I think there's still going to be a great amount of outsourcing because companies don't want to want to pay for the level of expertise that they can get from the outside."
Despite the sense of vulnerability in the industry, Eisenstodt said, the potential economic downturn might lead to increased planner layoffs--and therefore to more outsourcing. "The people who have been polled may be doing some wishful thinking," she said.
According to the poll, the meeting-planning function outsourced most often is event planning itself, a category selected by about 19 percent of respondents. The other most commonly outsourced services, in descending order, are housing and registration, onsite staff, site selection and budgeting and reports.
About 44 percent of respondents whose companies plan to outsource less said that's because they have hired the necessary in-house planning staff. Other responses, again in descending order of frequency, include budget cuts, an increased workload for existing company planners, fewer difficult or high-end meetings and dissatisfaction with independent firms' performance.
Patricia Bauer, manager of corporate travel and meetings for Avco Financial Services of Irvine, Calif., said there's been less outsourcing over the last few years there, too. "In the past, we used to outsource our annual convention and our annual incentive trip, but the convention has fallen by the wayside over the last few years and I did the incentive trip myself this year," she said. "It was a lot of work, but I saved a lot of money and the trip turned out very well."
Bringing outsourced meetings in-house can pay off, but such a move is not without perils. "You can save a lot of money, as we did, but you have to have the resources in-house to do it, and that could end up costing more," she noted.
The predominant reason for increased outsourcing, cited by about 29 percent of respondents who did so, is that companies are holding more meetings than in the past, and internal staff cannot handle the crunch. Other reasons offered, in descending order of frequency, are a smaller internal staff, positive experiences with independent firms, a company-wide outsourcing strategy and more foreign, high-end or difficult meetings.
Some think that the current financial climate--with the economy still strong but businesses becoming a bit jittery about the future--is conducive to an increase in outsourcing. The business climate still includes many companies seeing financial growth as well as several high-level mergers and acquisitions, and an increased emphasis on globalization--all of which leads to more corporate meetings staged. But with an eye to a future potentially rife with cost-cutting, some companies may look outside their own meeting-planning staff in an attempt to save some money.
Many companies, though, keep all planning in-house. Philadelphia-based Towers Perrin, for example, never outsources any part of its meetings.
"Our staff does everything, soup to nuts, and I don't think that will change next year," said Martha Gorman, meeting planner for the the management consulting firm.
While keeping meeting planning in-house, in the hands of planners who are familiar with the company's goals and corporate culture, is quite common, industry players emphasized that the planner who involves herself in the most facets of meetings--including content--is less likely to see functions outsourced.