Vendor Consolidation Will Prompt Revision Of Client Mix

The Indian publishing BPO landscape has evolved in terms of technology, service depth, maturity and service capability. The industry has also witnessed the percolation of technology – both, in terms of adoption and delivery. With many acquisitions overseas, publishing BPOs now have the capacity and capability to address almost every publisher’s need. However, the industry is undergoing vendor consolidation and this has resulted in changes in the client mix.
 
Buyers are consolidating their respective offshore/onshore service provider base to streamline workflow, to get better pricing and to ensure stability in service delivery. Traditionally, buyers in the publishing industry source work from multiple vendors depending on the specific publication, pricing and the degree of skill and capability for a particular need.
 
These were some of the points discussed at the executive briefing of the report 'Offshoring in the Publishing Vertical - 2009' published by ValueNotes. The event, held in Chennai on 26 June, was represented by executives from companies such as HOV Services, PreMedia Global, TexTech International, 2AdPro, Amnet, Virtual Paper among others.
 
The event began with a presentation by ValueNotes on the key findings and trends in the publishing offshoring industry. This was followed by a panel discussion centred on the future outlook of the industry. The discussion brought to light significant issues and challenges faced by service providers, particularly the ongoing vendor consolidation and price re-negotiations.
 
Delegates debated issues such as the current business climate, buyer expectations, leveraging onshore presence and shrinking margins.
 
Speaking about vendor consolidation, Prema Ramalingam, COO, TexTech International, said, “Operations of scale, niche and those of end-to-end services remain safe. The biggest publishers have consolidated their vendor base. This is not to say that the publishing offshoring industry will see many players shutting shop. They can still continue their operations by including smaller or medium scale publishers in their client mix.”
 
Added Nandakumar Ramchandran, VP Business Development, S4Carlisle, “Publishers are essentially giving the same work to the same vendor. What has changed is the number of vendors servicing the big publishers – there are now around 15 companies that service these publishers. Marketing is one aspect that needs to be stressed on. Ensuring visibility of service offerings will ensure survival.”
 
With over 140 service providers in the industry, the publishing offshoring industry will go beyond the traditional outsourcers of publishing work. New segments such as magazines and newspapers will open up to outsourcing, and these will represent significant opportunities to service providers. Some service providers have already branched off into peripheral industries such as IT services and products. Looking beyond traditional markets such as the US and the UK, providers have also started addressing English speaking, non native and non-English markets.
 
However, with an industry that is fast changing, management and leadership is one aspect that was mentioned repeatedly during the event. Neeraj Malhotra, VP India Operations, PreMedia Global, said “It’s not only vendor consolidation that is taking place, there is also publishing consolidation. Sustainability is becoming a problem and across the industry profit margins have shrunk. Leadership is crucial – knowing when to maintain a status quo, to invest or to get funding is critical.”
 
While there has been a trend wherein service providers have acquired publishing BPOs to increase their market presence in the US and UK, Ashish Agarwal, CEO, Amnet Systems, said “This is the right time for companies to merge – capitalise on synergies. But doing so requires tremendous vision from the management. Having the right vision helps integrate companies and leverages their capabilities and value faster.”
 
Despite the current economic condition, the publishing BPO industry is set to grow. India continues to hold the largest share of offshored publishing services, contributing $660 million to the total $780 million worth of total offshoring revenues from Asian countries (India, Philippines, Sri Lanka, Vietnam and China). STM/Academic, educational and legal publishing form the bulk of offshoring to India, with traction in other segments such as magazines, corporate/B2B publishing, etc.
 
The publishing offshoring industry is following a high growth path – to be driven mostly by new segments such as magazines, newspapers and the need to digitise. However, there are still issues that service providers need to address. In light of the ongoing vendor consolidation, service providers need to go beyond traditional outsourcers and include more publishers in their client mix. There will be a strong demand to innovate, define processes and productize offerings. Ensuring sustained growth will require a focus on marketing to enable entry into new segments, services and markets. Most importantly, there needs to be an increased emphasis on management and leadership – a clear vision to drive the industry to new heights.