What market expansion services (MES) is:
Once seen as a means of saving costs for back-end services, such as IT or call centers, a new category of outsourcing services has emerged as a result of globalization and high growth rates, particularly in emerging markets: these are market expansion services (MES) that support companies to grow in new and existing markets.
As increasing numbers of companies seek such expansion potential, demand for MES has exploded. Today, this outsourcing sub-sector has become one of the most promising areas within the outsourcing industry.
Second Global Market Expansion Services Report
Market Expansion Services (MES) remains a highly promising sector in the outsourcing industry with an annual growth rate of 7.1% and 8% for Asia alone. To stay ahead of the competitive curve in this fast growing industry, it is of utmost importance to differentiate one’s services – and the way to do this is service innovation.
This is the key conclusion of the second MES report, jointly released by DKSH and Roland Berger Strategy Consultants.
Recently launched by DKSH and Roland Berger Strategy Consultants, the report is based on contributions from 350 online survey responses from market and industry experts, executives, and thought leaders.
In addition, Roland Berger conducted more than 25 interviews with industry leaders, experts and academics. The interview participants were executives of (potential) clients for MES providers, evenly spread across industries, geographic regions, and company size.
MES industry to grow 8% per annum
The report predicted the MES industry would grow by 8% per annum in Asia from 2010 to 2015 – with Asia Pacific excluding Japan expected to have a market size of USD 853 billion in 2015, and growing faster than Europe (4.3%) or North America (2.9%).
“The growth of the MES industry is driven by the rapid growth of Asia, the rising middle class, inner-Asia growth, and companies shifting to focus on their core competencies,” said Chris Mummery, Head of Country Management and Managing Director, Business Unit Consumer Goods, DKSH Singapore.
“With growing prosperity, we are seeing a strong increase in consumption of consumer, healthcare, as well as luxury and lifestyle products. This in turn drives demand and growth for industrial and technological products to manufacture such products and to build the needed infrastructures.
"Consequently, we are seeing strong inner-Asian growth in the domestic markets. In addition, many companies are focusing on what they do best while outsourcing all non-core activities to MES providers.”
The report identified that consumer goods accounts for the largest proportion of global MES transaction value worth USD 1,387 billion, followed by healthcare (USD 529 billion), engineered products (USD 259 billion) and specialty chemicals (USD 41 billion).
“As more companies are looking to enter and/or expand in emerging markets, particularly a region marked by high diversity and potential such as Asia, it is advisable to choose an MES provider who not only has proven expertise and know-how, a comprehensive range of services, and an extensive network, but is also capable of creating value through trust, resources and efficiency,” said Chandan Joshi, Partner, Roland Berger Strategy Consultants.
MES providers in demand
The report pointed out that companies are engaging MES providers to help them not just to understand local practices, market specifics, local regulations, legal issues, and cultural differences but also to execute more efficiently on the ground. As companies face the increasing urge to fast-track internationalization, MES providers are in demand as companies seek for assistance to overcome language barriers, gain access to local customers, and obtain insider market knowledge.
The report also highlighted the importance of service innovation as a critical factor for gaining and maintaining the superior competitive position and long-term success of MES providers and their clients and customers. MES providers need to provide not only innovative services but also tailor these services according to their clients and customers’ industry, manager type, and service sophistication levels in their countries. There is simply no “one-size-fits-all” solution to service innovation.
“With rising service expectations in Asia, it is not surprising that the report concluded that clients want and are most willing to pay for services that can provide them with valuable insights to the needs and wants of their customers,” added Chris Mummery. “And to enable us to offer the most relevant and needed services, we collaborate very closely with our clients on the ground in developing innovative services that support their top line growth and/or gain efficiency.”
In the report, Japan, Singapore, and Taiwan emerged as the top three countries in Asia Pacific offering the most sophisticated service innovation levels.
“Apart from close collaboration in defining service innovation with clients and customers, the report has identified three success factors – platform, exposure, and relationships. Full-service, cross-industry international MES providers such as DKSH are best positioned to realize the potential of service innovation in Asia by providing regional market coverage, in-depth market knowledge, a reliable IT backbone, as well as exposure and networks across industries and geographies,” added Chandan Joshi.
For the full report, which is available free of charge, click www.marketexpansion.com