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Going Global: Agents Find New Revenue Selling International Services to MNCs

As the nation’s economy has faltered, many U.S. companies have started looking overseas both to cut costs (e.g., offshoring) and to increase growth (e.g., tap new markets). While the downturn has had an impact beyond our borders, surveys of U.S.-based multinationals indicate only a slowing of the meteoric pace of globalization that has characterized this decade to date. In other words, their overseas expansion continues in earnest. For telecom agents feeling the squeeze on domestic business, helping more U.S. companies go global or improve their global operations by supporting their telecommunications infrastructure requirements may be an opportunity they can no longer afford to ignore.

David Gardner and Steve Rome, managing partners for Advantage Communications Group LLC, an agency based in Roslyn Heights, N.Y., decided to take the plunge back in 2007. Like most telecom agencies, Advantage Communications referred its customer’s international business back to the carrier. Gardner recalled one client starting up its first operations overseas and wanted the agency to advise them with multicarrier proposals in other countries as it had done domestically.

“We fudged our way through,” said Gardner, noting it wasn’t an easy process. By answering client requests one country at a time, Advantage Communications has built up its international expertise over the past two years. Its international revenue has grown from zero in 2007 to about 15 percent in mid-2009.

Gardner said the increase Advantage Communications has seen in demand for international quotes may or may not be the result of an increase in globalization, but he’s sure that, in part, it’s because the agency is providing a resource to fill a void. “The value of agents is on steroids for the international market,” he said.

Agent Michael Murphy, CEO of NEF Inc., based in Framingham, Mass., agreed. “Each carrier positions its service in the best possible light and casts fear, uncertainty and doubt on other carriers,” Murphy said. In contrast, agents have access to network maps and performance metrics for multiple carriers and, on top of that, can negotiate the deal for its multinational customers. Murphy said his agency, which started selling international concertedly about six months ago, will derive 20 percent of its revenue from international services by the end of the year.

The noteworthy growth rates are due to some simple math: The average international circuit is $3,000 while a domestic one is $500 to $700, so the commission potential is four to six times as great, explained Robert Anderson, a channel manager for Telstra International.

Selling International Services

Amassing the expertise to play in the international market is no easy task. To put it into perspective, agents have described it like replicating the knowledge base they have about the U.S. market for multiple countries.

“Selling international services is more difficult to master,” said Gardner, noting that it’s a huge marketplace with numerous providers, language, cultural, regulatory and technological differences. “It’s a geometric increase in complexity.”

He offered this example of sourcing circuits in London. “I know Colt can get me a voice circuit in London. Then, you need to know that in London it’s not called a T1, it’s called an ISDN 30. And, it doesn’t have 24 channels, it has 30 channels. You might need to know that a data circuit is an E1 and it’s 2mbps, not 1.5mbps. You also need to know it’s five hours ahead; eight hours ahead if you are on the West coast. … And, then there are holidays. The first Monday in May is Early May, a bank holiday, so a circuit is not going to be installed until Tuesday.”

This example, he noted, is one of the easier ones because it’s turning up service in an English-speaking area. In other cases, a translator may need to be involved. Translators can be hired or sometimes the carrier representative provides the service.

Customers are buying a lot of private line and MPLS networks, agents and carriers he said.

International Numbers

  • There were nearly 2,300 U.S.-based multinationals with more than 25,000 foreign affiliates in 2006.
  • Worldwide employment by U.S. MNCs increased 2.9 percent in 2007 to 32 million workers.
  • Worldwide capital expenditures by U.S. MNCs increased 8 percent in 2007 to $645.6 billion.

Source: U.S. Department of Commerce Bureau of Economic Analysis

Working With International Carriers

The opportunity for agents is to provide a best-of-breed solution for their customers, said Mike Jerich, vice president of channel sales for Global Crossing Ltd. “They need to become an expert. If they are only chasing commissions, they won’t be successful. MNCs are looking for advisers.”

To do this, Jerich said agents need to not only understand the needs of the clients but take the time to develop the relationships with the carriers, understand their footprints, the nuances of their network and of doing business with them.

Gardner agreed, saying Advantage Communications has had to learn how to leverage the resources carriers can provide. Today, Advantage Communications works with more than a dozen international carriers, such as Global Crossing, TATA Communications Ltd., euNetworks, PacNet, China Telecom Americas Corp., tinet International Network and PCCW Global.

Part of the reason for the learning curve is that many non-U.S. carriers don’t have mature indirect sales agency programs, and some have none at all. “The carriers are open to it, but many don’t have agency programs,” said NEF’s Murphy, noting they may have a referral program or a resale program. NEF in May announced an agreement with euNetworks, for which it took more than four months to develop a contract that more closely resembled what is common with U.S. carriers.

In addition, Murphy said many of the non-U.S. carriers prefer to offer a wholesale buy rate rather than a commission. Where there are commission schedules, they are lower than for domestic services at 10 percent to 12 percent, he said, noting some have been as low as 5 percent, but they are increasing.

Besides euNetworks, NEF represents Level 3 Communications Inc., Global Crossing, Hibernia Atlantic and, for Asia-Pacific, rides contracts from Global Communication Networks, an international agent and fellow member of the Colo Consortium.

Murphy said working with foreign providers takes some getting used to. Those that have offices in the United States are helpful in bridging time zones and language barriers and understanding U.S. customers. But, he said, in all cases the time frames for a response to quote requests are much slower than for domestic; two weeks is typical. Installations, too, usually take longer. In addition, he said, the carriers expect to be much more involved, requiring daily or weekly feedback on status of quotes in the funnel.

Gardner agreed, adding there is not much tolerance for a low quote-to-close ratio.

Gardner also said because international agency programs are in their infancies, they have less in the way of resources, and what they do have in terms of processes are manual. “There is little standardization across pricing, provisioning and terms,” he said. “There are no rack rates to pull down into a spreadsheet.”

Telstra’s Anderson added that some international carriers’ channel programs are simply quoting machines. In contrast, others like Telstra provide engineers to help agents close the business, doing as much as 90 percent of the work.

Both Murphy and Gardner said that at the same time they are learning the international business, they have been educating the operators on building their channel programs to mirror best practices in the United States.

It is worth noting, however, that the global carriers based in the United States have programs that run similarly or are indistinguishable from their domestic ones.

Becoming an International Agent

Clearly, becoming an international agent requires a significant commitment. Communications Management Services, a master agency in San Diego, began looking at building that expertise two years ago. The company had been selling international services solely through Sprint Nextel Corp. for more than a decade and CMS President and CEO Gene Foster said he saw the opportunity to expand the portfolio. He calculated the move would require developing direct relationships with more than a dozen carriers, including foreign PTTs; committing to volumes and training or certifications; and adding personnel to manage those relationships across time zones and language differences. The task of scaling his international business was daunting and he put it on the shelf until a fortuitous encounter with Gardner.

When Advantage Communications became a member of the Agent Alliance, a buying consortium to which CMS also belongs, Foster learned that Advantage Communications had developed the international platform that he had been planning. The two companies forged an agreement whereby CMS in May become a master agent for Advantage Communications’s services, which have since been branded as Global Gateway, or G2.

G2 includes access to the agency’s international providers, solutions quoting, dedicated project management and consulting services. The platform was productized when Gardner and Rome realized Advantage Communications had developed a unique domain expertise and platform that could benefit other agents and master agents. G2 launched formally July 1.

At the end of July, Gardner said 10 subagents were quoting through G2. In addition, CMS already had signed half a dozen new agents in the first two months since offering G2 access. Foster said CMS’ weekly quote volume for international services had doubled.

Murphy said NEF also is going to be actively recruiting subagents beginning this fall. He said becoming a subagent can be cost-effective particularly for those agents who expect less than 10 percent of their business will be international. The commissions will be lower, but the costs of building and maintaining the platform are avoided.

Looking for More?
Learn more about selling international services to U.S.-based MNCs in the International Workshop at the Fall 2009 Channel Partners Conference & Expo, Sept. 23-25, in Miami. For more info, visit www.channelpartnersconference.com.


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