Agencies and ITO companies working for startups and digital native companies are growing much faster than those targeting Fortune 500’s.
This has been a recurring thought in my mind for some time, now. Which strategy is the most performant for an agency or outsourcing company? Chasing small, fast-growing innovation engines or the Gigantosaurus company pretending to evolve?
It actually took me only a few minutes, a Linkedin premium account & a quick look at Glassdoor to get my answer.
First, I decided to consider that majors don’t chase startups (question of DNA). As listed firms, their activity is pretty public, anyway. Organically, all of them see between 1 to 4% growth YoY. Then, I took a look at the 2nd and 3rd tier suppliers. (Companies with a headcount of over 1,000 and below 10,000.)
Two noteworthy observations:
All companies working with startups and scale-ups are indeed in tier 2, 3 and 4. Many of them are headquartered or have strong origins in nearshore and offshore zones.
I decided to base my comparison off companies with headquarters or/and delivery centers in Eastern Europe, where I got to know almost all the players. Go check it out on your own! It takes 15 minutes. (I don’t want to name drop or be accused of having bad intentions.)
Long story short, the firms not working for startups or other digital native companies are experiencing much lower growth than those who have already introduced some drops of startup speed in their syringe. Some of them are even declining in headcount. This is particularly the case for companies with business roots in the German and Continental Europe “vintage” economy.
Glassdoor only supports my opinion. After looking at the rank of these companies and reading the preceding comments, the trend remains the same. People are less happy there than in companies targeting rocket customers and the reasons are clearly identified in the comments.
Less agility. Less empowerment. Less cutting edge technologies & finally, less fun! Less money too – just saying.
Positive collateral damage of a startup/scale up strategy
Funny thing is that big sharks are chasing smaller fish. Your startup customer just might reel in a Fortune 500 for you soon. He might already be in the monsters’ mouth when coming to you. It’s called MNA and it might affect your portfolio of customers.
I remember a client in 2005 being acquired several times in a row by bluechips in less than 5 years. All of them are still our customers today for one reason or another.
Also, don’t forget that some of the old monsters are not as stupid as the (“evolving”, but not really) Gigantosaurus and might take a gander at new suppliers. Agile by DNA – not Powerpoint. Two weeks ago a German top of mind brand came to us, with a €2M contract at origin. We beat our giant competitors using one single strength.
Our real and global agility.
Good thing innovation and risk pay off in services. And, good thing agility is now recognized and adopted. Figures and KPI’s don’t lie.