When the iconic online auction giant began acting on its global aspirations, it needed a relocation service provider with a comparable reach.
By Andy Teng
Search the word “outsourcing” on eBay and what you get is a couple of web pages’ worth of books that various authors have written on the subject. But if you really want the scoop on outsourcing best practices, put down the laptop and head over to the company’s headquarters in San Jose, CA, where its mobility team has enthusiastically embraced the outsourcing mantra and leveraged its service provider to help eBay’s continuing expansion in global commerce.
By this point in the Internet’s evolution, eBay has become synonymous with online auction. It’s where thousands of cottage industries are spawned each year—an online community where everything from million-dollar Ferraris to gigantic collections of Pez dispensers can be had for the right bid. According to the company, more than $1,900 worth of goods were traded through the site each second in 2007, totaling some $60 billion. But more than just web-based auctions, the company has expanded significantly in its 13 years of existence, broadening its offering to include Internet telephony (it bought Skype in 2005), online currency (PayPal was purchased in 2002), online retailing (shopping.com was another 2005 acquisition), and many other businesses. Recently, its overseas business—which includes presence in 39 markets, including places such as Israel, India, Taiwan, Spain, Sweden, and elsewhere —has been the fastest-growing portion of its portfolio.
So it’s no wonder when eBay took a closer look at its relocation program in 2006, procuring a provider with deep global expertise emerged as an imperative. Like any expanding business being pulled into new corners of the world, the company experienced its share of growing pains, especially as the number of relocations domestically and abroad spiked at the beginning of the decade. Although the company had always worked with an outsourced relocation service provider—its corporate philosophy emphasizes close partnerships with vendors for non-core services—eBay HR leaders discovered that the incumbent provider simply couldn’t keep up with its bulging geographic footprint. That’s when it turned to Graebel to help better administer its program.
“The pain point was that we went from very little mobility to a point in which we were doubling our volume every nine or 10 months. We went from doing a few domestic and almost no international moves to where we were doing several hundreds of each every year,” recalled Eric Halverson, who heads up eBay’s global mobility program. “We were growing so quickly domestically and internationally that we needed to get better processes in place.”
From China to Mexico
For most companies, the number of relocations they conduct has declined sharply since 2007. With the economy not expected to recover until next year at the earliest, many organizations will continue to limit transfers until better times come about. But growth businesses can’t afford to put off their talent needs, especially those in the technology sector, which has seen a kinder side of the recession. That’s the case for eBay, whose revenues topped $8.5 billion in 2008—a hike of 11 percent from the year before. Most importantly, the company is seeing its greatest opportunities abroad, where it has put down roots in all industrialized markets. For instance, its Skype business reported an increase of 61 percent in revenue-producing outbound calls in 2008, buoyed by what the company said was strong adoption of the technology in Asia. Moreover, its PayPal unit made additional inroads in Mexico, Hong Kong, and Singapore with new localized web sites. Also last year, the company acquired several businesses in Denmark to broaden its reach. These are all part of the strategy led by CEO John Donahoe—who replaced Meg Whitman in March of last year—in maintaining the company’s global aspirations.
Focused on Core Services
Of course this push into new markets has also exerted more demands on the company’s relocation program, and Halverson explained that eBay has always outsourced mobility services because the company’s philosophy is to only conduct core businesses in-house; all other services should be outsourced. Even before he joined the company to head up relocation services, the company took a very lean approach, relying on the director of HR systems and shared systems to administer the function. It was only after Halverson came aboard did it truly have a functioning head of mobility.
“We are pretty much conscious of not adding too much headcount and leveraging external providers as much as we can. In situations where we can do it, we tend to leverage as much as we can,” he added.
To that end, the company had relied on its former relocation vendor for years to manage mostly domestic moves. But as the company evolved to become more of a global brand, it realized that it was pushing the provider beyond its capabilities even though it had enjoyed a satisfactory seven-year relationship. Describing the vendor as a pair of jeans that suddenly no longer fit, Halverson said he looked to the marketplace for relief.
“We made the determination that we wanted to have one global provider instead of separate providers,” he recalled, describing the circumstances that led the company to go out for bids as a “perfect storm” of events. It needed not only global relocation expertise but also robust technology, a better on-boarding process, and an executive concierge service to help the company welcome new leaders heading up eBay’s expansion.
Moreover, even though the company enjoyed a strong relationship with its previous vendor, the company wanted to put the contract out for competitive bidding to ensure it was getting the best pricing and service available.
The funny thing about bidding out HRO services is that unlike other sourced products and services, much more domain expertise and understanding of the marketplace are required in the vetting process to ensure the right choice. Buyers must go into the process with not only a thorough comprehension of service scope and delivery metrics, but they also need to carefully vet the vendor. Because organizations have more aggressively clamped down on spending these days, procurement departments often play a central role in the decision making, and that could further cause bottlenecks in the selection process because they are mostly not well-informed about HR service delivery. So when Halverson went to market seeking a new relocation services vendor, one of his first priorities was to educate procurement colleagues on the nuances of employing outsourced mobility and the differences among vendors.
“I give them kudos for understanding that the cheapest [solution] is not always the best. They were happy to be educated about what relocation service was all about,” he said.
Aside from educating eBay’s procurement team, Halverson himself needed to prioritize his own needs, realizing that the new vendor would have to help eBay address its own upward global trajectory. To do that, he reached out to not just HR colleagues but also stakeholders throughout the organization, including other back-office professionals as well as front-line people who could better voice their requirements for relocation services. Some clear mandates emerged as a result. An outstanding executive program was a must, as was a relocation technology platform that could integrate well with eBay’s own HRIS. (Being a tech company at heart, eBay requires all of its vendors to have the ability to deliver robust technology solutions.) Moreover, the company wanted platform flexibility that could grow and morph as its needs changed. Upon reflection, Halverson said, he sought out a provider with a footprint global enough for its needs but not so monolithic that it couldn’t “work outside the box.”
Surprisingly, one consideration that did not emerge as a driving factor was pricing. Halverson said that while the company was careful about its spend on relocation services, it was more important to find a trusted vendor that could meet all these mandates and fit well with eBay’s culture.
Although they eventually chose Graebel, eBay’s vetting team initially saw the provider as a dark horse in the race, which included bids by five other vendors. In fact, the vendor wasn’t even originally included in the vetting process and was only invited to the dance after a sales executive with whom Halverson had previously worked joined Graebel. Halverson said the acquaintance made a strong business case for giving his company an opportunity to bid. Eventually, what Graebel presented as its proposal won over the opinions of eBay’s selection team.
Every opportunity comes with challenges, and for Graebel the chance to win over a blue-chip brand such as eBay was not without perils and challenges. With so many businesses around the world and possibly more new markets in the future, eBay certainly pushes any vendor’s reach. Also, because it has made many acquisitions in recent years, each new business the auctioneering company takes on requires Graebel to diplomatically acclimate those organizations to established relocation processes without ruffling too many feathers. For instance, if an acquired business was accustomed with a particular supplier such as a van line, the mobility provider needed to make sure it could continue that relationship or demonstrate why another vendor could provide better or more cost-effective service. Don Watson, president of Graebel Relocation Services Worldwide, said it was all part of the “soft-touch” service that growing companies need from time to time.
“They’ve made so many changes and have gone into so many new markets that if there is a lesson learned, it’s that we needed to treat each other like partners” during transitional times, Watson said. Graebel has also had to grow its staff specifically to address eBay’s needs and move more extensively into growing markets such as China.
Today, with the relationship now in its third year, Graebel provides end-to-end relocation services to eBay, everything from consulting on home sales, tracking household goods, managing group moves, determining the best suppliers for a particular job, benchmarking performance, and reporting. Supporting all of this is a robust technology platform that offers managers and assignees the ability to track the progress of their relocation
Although the vendor is responsible for mostly tactical services, it is also counted on for strategic, consultative advice, and even preemptive process upgrades, Halverson said.
“We want them to be in a place where they say to us, ‘Are you aware this is happening in the market?’ Any company can respond to a question but not many can give you the answers before you ask the question,” he said.
It’s also no surprise that one technology company would truly appreciate the technology of another company. In this case, Halverson praised the vendor for providing a web portal that resolved several previous pain points:
Numerous managers can now initiate moves using the site, whereas previously only a small group was allowed to do so, causing bottlenecks in the processing; also, the portal allows domestic and international transferees to check the status of expense reimbursement, progress of moves, and other important information. In Halverson’s eye, these were significant issues for which technology provided an easy fix.
Beyond service and technology, eBay’s choice of vendor also hinged on the fact that Graebel has unique relationships with moving suppliers that do not pose conflict-of-interest issues. While some providers use suppliers that pay them a fee, Graebel relies on an “alliance” of vendors here and abroad that do not receive fees. Halverson said this approach assured him that eBay would only get the best and most cost-effective vendors for a particular move.
The provider also holds an annual alliance meeting at which he can personally interact with current and potential vendors. This system of direct invoicing offers Halverson both transparency and cost savings on eBay’s moves. In fact, he said, the company has been able to cut costs by six to 10 percent on domestic moves, and about the same amount on international forwarding. He said that by not being charged a fee by Graebel, suppliers tend to pass those savings onto eBay. Although savings aren’t the primary reason why eBay chose Graebel, it has become a noteworthy benefit in these austere times.
Most importantly, however, Graebel’s global expertise has been the key benefit of switching providers, Halverson noted. He said the value of using a globally knowledgeable provider was on full display when the company recently relocated a number of employees from Germany to the U.K.
“The global relocation provider does have to have a local working relationships to make that work and they have to be flexible,” Halverson added.
A Long-term View
Although the relationship with Graebel has experienced its share of rocky moments, Halverson said he always takes a long-term view, knowing that there are always peaks and valleys in any partnership. What’s important, he noted, is that a vendor is willing to acknowledge its shortcomings and be willing to address them promptly. In addition, because eBay does lean heavily on its outsourced service providers, they must also make continuous improvements.
“We’re a very open, frank, and honest team, and that’s what we expect with our partners,” he added. “I can say, ‘This is not working, and how do we solve this?’ Communication is absolutely the key.”
It’s a philosophy that can be universally applied to all outsourcing relationships, regardless if service is payroll, benefits administration, or relocation. Vendor flexibility and subject matter expertise are key elements to making the engagement successful. In Halverson’s eyes, a satisfying and effective outsourced mobility program may not touch every employee like payroll, but it does set first impressions for many new workers. And in eBay’s competitive market, that could go a long ways for helping to retain important talent.
“There is a great challenge to finding talent, and your mobility program and immigration services are your first taste of what a company is like. From a staffing and recruiting perspective, we obviously have a big impact,” Halverson concluded.
Indeed, that’s really the key mission of mobility programs—to help employees quickly and effortlessly settle into their new assignments. Although outsourced relocation service providers have always taken on clients’ tactical and administrative burdens as a way of supporting this effort, these days they are increasingly playing a strategic role much in the way Graebel has. Anticipating a client’s future needs, identifying potential process improvements, and providing critical analytical tools are all part of the value that an outsourced relationship can offer employers. In eBay’s case, its solution also included the executive program it required, a global reach capable of addressing existing and new markets, and a flexible technology platform scalable to the company’s growth trajectory.
With eBay happy so far with its choice of a global relocation provider, Halverson is indeed having an impact and helping to deliver the services that his business clients requires from the mobility program. For a company that’s constantly expanding its worldwide footprint, making sure new executives are on-boarded without traditional moving headaches will help the auctioneering giant continue to be on the move because new talent is sure to become productive out of the gate. It’s the kind of partnership that eBay—and just about all employers—are seeking these days.
When Selecting a Vendor: Proper Vetting and Avoiding Conflicts of Interest Brings Peace of to eBay
When eBay set out to choose a global provider for relocation services, it took careful steps to ensure that the company would end up with the best candidate and that it would use the best suppliers for its moves around the world. To achieve this goal, Eric Halverson, who heads up the mobility program, said the company kept these critical points in mind:
Be clear about your needs. When it outgrew its former provider, eBay realized that its new vendor had to be able to handle its growth on the global front. That meant picking a company with a robust network of suppliers that can cater to everything from finding real estate to managing home sales to packing and shipping household goods. Moreover, it needed the provider to offer a high-touch, executive concierge service, a technology platform that integrates well with its own HRIS, and a mechanism for ensuring that the company identifies continuous improvement opportunities. According to Halverson, once it defined its must-haves, eBay was able to match up with the appropriate vendor.
Be careful about potential conflicts of interest. One of the reasons why eBay chose its provider, Graebel, was because of its policy of not charging suppliers a referal fee. By allowing suppliers to directly bill clients, Graebel ensures that it has no conflict of interest and that vendors are picked based on service quality and price—and not based on how much revenues Graebel receives from a vendor. As a result, eBay was able to save substantial costs in its mobility program.
Make sure the provider has solid thought leadership. Halverson said the company early on wanted a provider that had deep domain knowledge and significant thought leadership that would help identify cutting-edge market trends that could affect eBay’s mobility program. This would require yearly benchmarking of policy as well as analytical tools that can help the client identify potential problems and implement current best practices.
eBay on the Move
When the iconic online auction giant began acting on its global aspirations, it needed a relocation service provider with a comparable reach.