Based in Malaysia, GTS is an in-sourcing initiative, focused on providing flexible and cost-efficient technology services to IPG business units worldwide.
The company will be led by Dene Schonknecht as senior vice-president, who will add the new role to his current post as chief information officer, IPG Mediabrands Asia-Pacific.
GTS' launch purpose is to help drive and create economies of scale within IPG. "We had two people hired to develop something in Copenhagen, 10 in San Francisco to work on MAP [Mediabrands Audience Platform], there were no economies of scale," Schonknecht told Campaign Asia-Pacific yesterday during a visit to Hong Kong. "You know you're spending, but you haven't got a handle on where it's all happening."
The establishment of GTS, however, does not equate to layoffs in the Mediabrands IT department. "We deliberately aimed to skill sets that weren't already available in the organisation," he said. "The only change may be that we reduce hiring in this area elsewhere."
Although the hub is based in Malaysia, its startup team of 12 is currently servicing IPG businesses in New York, San Francisco, and Copenhagen. GTS is also servicing the recently won Johnson & Johnson regional client work for Asia-Pacific and Latin America. The office will be headed by director of application development, David Voo, who has joined GTS from iProperty. Voo will report to Schonknecht.
Malaysia was selected due to strong government incentives and a pool of ready talent, particularly in the area of software development.
"In San Francisco, our business has to compete with the likes of Microsoft, Google and Apple, but in Malaysia it's fairly easy to find talent," commented Schonknecht, adding that as he is based in Singapore, having GTS nearby makes sense. "Although more specific skill sets such as Salesforce technology or Ruby on Rails, is more tricky."
Moving forward, Schonknecht can see hubs potentially being launched in Vietnam and India. "Wherever the clustering makes sense, we'll have hubs."
By next year, Schonknecht aims to grow the team in Kuala Lumpur to around 20 to 30 members.
By establishing its own technology centre, Mediabrands aims to build a unique offering for its clients as well as potentially generate an additional revenue stream through product development and services down the line.
"At the moment, we're focusing on IPG and its clients, but there's no reason why we can't eventually be agency agnostic and offer our services outside the group," Schonknecht said. "The work we're doing as part of client servicing may be funded by either the agencies or the clients."
While there are no heavy profitability or margin goals imposed on GTS, as the numbers work from an efficiency and savings standpoint, it would "be nice" for it to eventually have its own revenue stream, he added.
Another reason for establishing its own technology service centre is the specialist nature of its work and the proprietary work involved with building MAP. "We will still work with tech partners such as Adobe, IBM or Microsoft however, if they have a solution GTS can weave together for clients," he added.
Dr Hagen Wenzek, IPG Mediabrands' global CTO, noted in a statement that by building capabilities in-house that allow the network to compete on innovation and price at the same time, Mediabrands greatly increases its edge in the market.
In the long run, Schonknecht is confident that the establishment of GTS will lead to human capital and intellectual property that will increase the network's competitive advantage. "Already, we are seeing benefits to IPG Mediabrands business units around the world that are now able to tap into this centralised pool of technology skills."