Yahoo! Invigorates Its Brand and Reach by Outsourcing to a Brazilian Supplier | Article

map of South AmericaIn order to remain competitive, search engine provider Yahoo! needed to strengthen and expand its presence in Latin American markets in late 2006.

The company, which supplies search information, product data, and niche client marketing services to virtually every Internet-connected country on the planet, needed a development partner to help create hotsites (a unique Web site that promotes a marketing campaign and/or partner’s content) to support the growth and maintenance of Yahoo!’s and its partners’ platform products.

Such hotsites and other Yahoo! Web services require quick turnaround in a manner of days, sometimes even hours. If Yahoo! doesn’t launch these pages on time, the information becomes stale even before it’s uploaded and its customers don’t achieve the new page click-through objectives they want.

In addition to speed, Yahoo! needed agility since it must launch new sites using new tools. These pages must be free of unforeseen usability bugs or other challenges since a large amount of users will visit them.

Today, Web providers like Yahoo! are meeting those deadlines using an outsourcing provider. Yahoo! wanted a partner qualified in LAMP technology, which it uses in developing dynamic Web sites and application servers. Cost effectiveness and scalability were important as well as an ability to quickly incorporate its processes into Yahoo!’s methodology and culture.

From vendor to outsourcer

Over the years, Yahoo! has tapped many companies to help keep its Web portals user-friendly, responsive, and content compliant within the countries it serves. However, many of them are strictly vendors, working with direction from Yahoo!, but with no real stake in the engagement other than fees.

A few have morphed into outsourcing partners. One is Brazilian-based Ci&T, a consulting and technology outsourcing services company and CMMI Level 5 independent software developer (ISV). Ci&T provides consulting and technology services, including customized applications, SAP, business intelligence, business process management, IT governance, digital marketing, and Web 2.0 applications.

“We are starting to see models where suppliers are leveraging other companies with local expertise and market knowledge,” according to Anand Ramesh, research director for the Everest Group.

Yahoo! initially engaged Ci&T to address Yahoo!’s presences in the South and Central American markets and its North American Spanish-speaking portals. Engineering director CJ Singh, who manages these initiatives in Yahoo’s American regions, says it didn’t take long for Ci&T to transition from vendor to outsourcing partner.

“In the beginning, Ci&T was an overflow software developer to augment our efforts,” he says. “But over time, we needed a consistent relationship with an ISV that displays state-of-the-art engineering practices found in a CMMI Level 5.” Those competencies, coupled with provider understanding of the Yahoo! brand in the many different Hispanic nations in which it has a presence, instilled confidence in Yahoo! to begin outsourcing complete projects to Ci&T, according to Singh.

Through this partnership, Yahoo! works with Ci&T’s team to leverage the newest and best technologies for Web development. This allows Yahoo! to meet the needs of its portals, which over 350 million people worldwide use daily.

“We know that innovation is very important, particularly for Yahoo!,” says Leonardo Mattiazzi, vice president of international business for Ci&T. “It’s about bringing new products to the market in the most usable fashion. It’s also a part of their culture we’ve grown accustomed to quickly.”

Yahoo! has extended its presence in Latin America and delivers sponsored sites as soon as three days from the definition of layout to market. Prior to this, such sophisticated Web development could take as long as two weeks.

“They have access to great talent in the Latin America region and that has produced the results we anticipated,” says Singh. “They engage good young engineers and it shows in the quality of the work they do for us.”

Successful hotsites

The initial challenge, according to Mattiazzi, was simply coping with the amount of work and on-time, quality delivery. “During the vetting process in 2007, Yahoo! told us they needed a company with similar values: a lean and agile structure and young, talented, and flexible minds that displayed an appetite for innovation.”

Peter Allen, managing director for Global Practices with TPI, suggests, “Outsourcing’s benefit for labor arbitrage is just about gone. Productivity and outcome-based value, not just effort-based services or cash savings alone determine success.”

The initial hotsite engagements were a tremendous success throughout Latin America and especially in the U.S. Hispanic market. One of them, a beauty contest, allowed visitors to upload, vote, and comment on contestant pictures. It registered more then two million page views and over 9,000 contestants uploaded pictures during the two-month campaign.

Another involved Yahoo! partner The Brazilian Sports Authority after reformulation of its national soccer league. That site registered 10 million page views from three million unique visitors in a single month.

Ultimately, Ci&T continued to reduce defect-free hotsite launch times from two months to three weeks, and sometimes less.

Such successes inspired a broadening of the engagement. Today Ci&T provides engineering, product, and search marketing services to Yahoo! and interacts with more of its divisions, such as development frameworks and content management. The Ci&T executive says he can feel “palpable excitement” when he’s around the teams as they work on their projects.

Buyer dividends now include quicker ramp-up times and greater efficiency within a broader sphere of Yahoo! properties. In addition, Ci&T is also slowly branching into some of Yahoo!’s Far Eastern enterprises.

Both Singh and Mattiazzi agree that the Yahoo! value proposition doesn’t stop with just the services it retains from its provider. “They are a techie icon,” Mattiazzi says. “We are learning more about this technology together. They’ve always been in the cutting edge of the Web. In a sense, we are peers. It’s a true collaboration.”

“Ci&T shows great responsiveness through its developer innovation skills,” according to Singh. “Our internal processes and methodologies can’t help but improve because of this association. It’s a large reason why Ci&T moved from simply a vendor to trusted outsourcing provider.”

Lessons from the Outsourcing Journal:

  • When penetrating new geographic regions, successful outsourcing buyers look for best-in-class providers based in those regions.
  • Successful outsourcing providers often can assimilate buyer culture. These characteristics can often produce capable collaborators rather than simply task-performing suppliers.
  • With growing frequency, productivity and outcome-based value rather than just labor arbitrage determine the success of outsourcing engagements.

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