• Contracts may need up to 5-10 drafts by conservative estimates
• Contracts may need up to a year to finalize
• Contract values range from USD 10 – 1,000 million
• Hundreds of types of contracts
• Legal team sizes ranging from 6 – 1000+
• More than 40 countries across which contracts are managed by a single firm

These are the kind of numbers that some corporates and law firms have to manage when it comes to contracts. And they are quite candid too when it comes to saying how they do it. Sample these responses –

• “Far too many to categorize”
• “There is no single contract process, it depends on the client and type of contract and industry we have multiple processes and methods. Too detailed to discus.”

This isn’t to say that all corporates and law firms are at sea, many have over the years managed to put in place processes and use technology to streamline; but they all can definitely do with some help. Legal contract outsourcing does just that. There are many companies and law firms that are already outsourcing. Law firms do provide legal services, but they are an expensive option; leading many companies to look for other options such as the LPOs.

The most important input to contract outsourcing is the time spent right at the start of the engagement, so that the buyers and the service providers are on one page about deliverables. As one service provider mentioned, “The biggest challenge is working with the client to understand how they are going to use the information – what they really need and how they are going to use it. That is the hardest part. Most of the energy needs to be spent upfront to identify what is important in terms of information they want coming out of the contacts.”

Considering the service providers’ ability to offer various options to the buyer community, which not only includes a mix of service, but also technology, the complete solution offers faster turnaround, improved quality and lower costs. The service providers understand the importance that companies attach to onshore delivery and subject matter experts’ presence, and are taking steps to ensure that they are able to offer the right mix of resources.

To read more about this subject, look out for our report, “Contract Outsourcing: Do buyers get what they want?” releasing this month.

Since so much of what we do consists of looking at trends, here are some of the top of the hat trends that breezed around and then hung like a fog over the decade.

1. Black-swans and wormhole wizards – And I’m not just referring to the Joe Satriani album, I’m including Taleb and the princess of magic, Ms. Rowling here. I know she made her BIG DEBUT last decade but tell me really, when did you read about wizarding wormholes, actually?

This decade’s real black swan was the GEC (to the uninitiated, global economic crisis, or slowdown, as they like to call it) – What a blimp that was!

Having recently watched Michael Moore’s Capitalism, my understanding of what “they” did is further enriched. I also understand that it was ‘just waiting to happen’. For those in the banking, finance and related sectors or trade, industrial, outsourcing, manufacturing, transport -practically every sector- the impact of this slowdown has been pretty evident. Job markets dried up, pay scales went down or at best remained stagnant, layoffs, and cost cuts- basically we all cleaned up our acts. Perhaps in a way it was a good shake and wake up- for a price naturally.

Outsourcing by and large stayed gung ho – more cost cuts equals more outsourcing, right? Though at peak crisis time the industry did look a little like a wet dog, by now they’ve managed to shake off the excess and emerge clean and shiny-ish.

2. Ice Age: Dawn of the Dinosaurs (and Avatar) – I’m referring to Climate Change here, there everywhere as it seems now. As Carlos Saldhana tried so hard to yell from the rafters – guys, the ice is melting. As a country that provides such a large chunk in the pie of outsourced services, more emissions are being blown out of Indian industrial chimneys. And as yet more natural resources deplete, tipping the balance of yet more natural ecosystems, though the average Indian still doesn’t give a hey about the phenomenon. But excuse me Mr Pandit, your Ganges are turning grey and the ice on the shivlinga black.

Meanwhile countries like UK are happy to have the ‘illusion’ of reduced emissions, though in fact these are more of outsourced emissions. (Sigh), global warming indeed, is an ugly word.

3. Rise of the Asian tiger(s) – More than ever before, China and India have arrived. It is interesting to know just how important a part outsourcing plays in this context. The Indian outsourcing industry which draws annual revenues in excess of USD 11 bn accounts to 40% of global outsourcing market. At the peak of the 2008-2009 financial slowdown, China alone generated a revenue of USD 2.59 billion (for Q1/2009).

4. Technology – Technology – Ten years back, cloud was a fuzzy misty condensation in the sky. Social network – meant the weekly meet up with friends and Android was just another robot that featured in many sci-fi Hollywood action flicks.

Through all the technological advancement that is taking shape, ‘borderless outsourcing’ is now easily possible. As a circular effect of the phenomenon, new career avenues are opening up. Social Architect, anyone? And you can prepare yourself at the ‘Social Media Academy’.. well why not , there is also the ‘BPO Certification Institute’ and BPO Management has now become a specialized branch, which means that probably ‘undergrad.with good English’ will not last long.

In all, this has been a good decade for the outsourcing industry! There’s more happening, all over, newer countries, consolidation, specialisation, cost savings, revenues, technology development, breaking down barriers and crossing new frontiers. We can only expect as costs climb higher and resources become scarce – outsourcing will be on the upswing this decade too.

So while skeptics mull the possible  relapse of a mini catastrophe like the global economic crisis, outsourcing will increase either way ! And as Asian economies progress, their potential to outsource (although internal) also increases, which is good news for the industry. Besides, the more we advance in technology, things will only get simpler for the outsourcing industry as a border-less office makes for increased cross service outsourcing.

The need to change and develop is something that cannot be stressed enough. For an industry as young as the LPO, and with the potential that it offers, the mantra is going beyond understanding customer needs. LPOs must stay ahead of the articulated needs. With most companies looking at outsourcing as a strategic move, they want it to contribute to their overall business performance. Outsourcing by and large has moved beyond the cost and labor arbitrage, and the same stands true for LPO industry. The idea is to move away from the tag of service providers to partners. Here we discuss just some of the many initiatives that LPOs need to take to start thinking and taking on the role of partners. 

‘Quality’ is the buzz word

Defining quality is no mean task. Considering the industry players are trying to move beyond the tag of vendors and processes and are looking to add value to their client’s business objectives, quality has to move beyond producing error free work. Certifications, facilities with certain attributes in terms of employees, technology, and risk management should now be treated as a pre-requisite. Quality in the prevalent scenario would encompass state of the art technology, process innovation, scalability, end-to-end services, and a complete solution. Vendors must assume complete responsibility for quality. Once that is achieved is when buyers will be ready to hand on the mantle and let them participate more with inputs that ask for opinion and views. 

Outsourcing responsibility, not just the process

That’s the level of confidence that a vendor needs to build. While complete confidence can only be developed with experience, it is important that the vendors build upon their differentiators in terms of capabilities and skills. The confidence and comfort that a client experiences with regard to vendor capabilities will be paramount and help the vendors eventually clinch the deal. Competitive pricing is after all just ‘add on’. The capability matrix will help the client measure the vendor better and will result in outsourcing of responsibility along with the processes. 

An extension to the client team

The other important factor is the involvement of the client – at what stage and how much? Vendors need to assert the value of client time and effort before the kick-off, and the initial stage, rather than the client staying involved at every step of the entire process. This will enhance the possibility of the vendor team to work more as an extension of the client team, rather than just a support function. For this it is imperative that the vendor not only understands current processes, the output needed, but also the ultimate use of the output. That will help in improving overall quality, and in turn initiate innovation and better solutions. 

Service providers are no more just that, they need to move up the ‘value chain’ and become partners – to profits, to losses, to innovation, to improvement, to client experience, to performance. 

More thoughts on partnerships from vendors and buyers are welcome.

Changing the ‘format’ of content

The publishing industry has progressively been going digital. While selling digital content is recent, publishers have used digital production techniques/processes that are reliable, stable and efficient. Such processes, however, ended mostly in the creation of PDFs – that doubled as print ready files and/or a product that was to be sold digitally.

But, the rise of the digital market (especially in the context of reading devices) has led to the increase in the number of formats – consumers were spoiled for choice. Each reading device had its own proprietary format and publishers underwent a period of packaging content in every possible format – a period that led to immense pressure on the resources and  the workflow of a publisher.

What is happening now?

Our survey on ‘The Current State of Digital Content’ suggests that there is a shift in how publishers are addressing varying digital formats. Initially, publishers had adopted an all inclusive format policy – one that increased workload, decreased quality and led to dampening of consumer expectations. As the digital market becomes more mature (and it is still a long way from becoming a mature market), publishers have started formulating digital format strategies.

Source: ValueNotes Research, The Current State of Digital Content, 2010

Please note: This was a multiple-response question

Most publishers we surveyed have indicated that universal accessibility is a driving factor while choosing formats. The increase in popularity of e-book reading devices and mobile devices (smart phones, tablets, touch screen PCs, etc.) has led to publishers consciously identifying formats that are easily supported. Formats such as PDF have emerged as a universal and standard format for the industry. Publishers are also supporting formats that are popular with their respective consumer base, and are actively incorporating such formats. For example, with the introduction of Apple’s iPad, several leading publishers have created content that is specific to the iPad. This content, rich in multimedia, is optimized for the device.

This is not to say that publishers aren’t considering proprietary formats. Such formats (often bundled with reading devices or standalone software) are part of publishers’ digital offerings – the ratio may vary. While some publishers have indicated issues with creating content in proprietary formats, the biggest concern remains creating a unified user experience. Content in one format often does not provide the same experience in another.

Will device-specific formats die?

While there is a move by publishers to produce content in universally supported formats (such as PDF), publishers will still provide content that is device specific or proprietary. Creating multiple formats is not a challenge – almost all publishers we surveyed having indicated as much.

Source: ValueNotes Research, The Current State of Digital Content, 2010

Creating content in multiple formats is manageable for close to 3 out of 5 publishers – challenges of scale, resources and infrastructure being very much under control. The issues and challenges do not lie in the isolated task of conversion, but in the workflow and processes that lead to it.

So, will device specific or properietary formats die out? Unlikely.

Will they be easier to create and manage? Definitely.

• Participating in our online survey by following this LINK.
• Participating in our telephonic survey. Do send me a mail – vivek [at] valuenotes [dot] com
• We would love to know more about what you think. Do leave us a comment.

As always, we are appreciative of any insights we get and as a token of our gratitude we will share our research with anyone and everyone who is part of the publishing industry.

]]> http://www.sourcingnotes.com/blog/device-specific-formats-are-horrible-to-support-and-i-hope-they-die/feed 1 http://www.sourcingnotes.com/blog/how-much-will-seth-godin-earn-by-self-publishing http://www.sourcingnotes.com/blog/how-much-will-seth-godin-earn-by-self-publishing#comments Wed, 01 Sep 2010 11:36:13 +0000 Vivek http://www.sourcingnotes.com/blog/?p=555 A few days ago,  Seth Godin, marketing guru and best selling author, decided to part ways with his publisher, Portfolio, to self-publish. So, why did Seth decide to self-publish? And more importantly, how much money does he stand to make?

So, why did Seth decide to self-publish?

Seth Godin had an agreement with Portfolio (an imprint of Pearson’s Penguin Group USA). The agreement entailed Portfolio bearing costs of printing and promoting the books, while Seth got advances and royalties on his titles. His flagship title ‘Linchpin’ sold 50,000 copies (according to Neilsen Bookscan).

Image credits: KarlSakas.com, Amazon.com

In spite of the successful partnership with Portfolio, Seth decided to move onto self-publishing. His plans include:

• Releasing titles using various digital channels and print on demand
• Leveraging the community (his blog), which is 438,000 member strong
• Using a ‘good quality’ editor

Publishers offer authors quality editing, the ability to bear costs, and leveraging their distribution and marketing channels to promote the book. Seth had outgrown his publisher.

So, how much does Seth Godin stand to earn?

The figures here are purely illustrative and offer an insight into the potential of self-publishing. The calculations are based on a  few assumptions :

• All calculations are made for the title ‘Linchpin’
• Print and Kindle prices for the title are from Amazon.com as on 01 September 2010 (Print – $ 17.13, Kindle – $ 11.99)
• Value of print and Kindle are calculated on 100% basis for number of units sold (For example, what is the value of 50,000 units sold in  print version or e-book version)
• The size of Seth’s community is a constant at 438,000. % refers to units sold as a percentage of community members. This is an assumption of the scope that his community has to offer
• The first calculation is based on actual sales of the title

(Of course, 40% of the community buying Seth’s titles might be a tad bit unrealistic. However, as his community grows, a 10% conversion rate will mean that many more units in the absolute value.)

Considering the title will be released mostly in digital form and with the option for POD, there will be fewer expenses to contend with. So, how much money will Seth Godin earn by self-publishing? A lot.

Are you an author or writer?

If you are, we would like to know your opinions on self-publishing. Please take a few minutes to answer our survey. As always, we will share a copy of our findings.

The company has been trying to digitize books through its Google Books initiative for a few years now, so it is surprising that they didn’t answer this question at the outset.

How did they do it?

There were four classification systems that Google looked at. Each had their own set of shortcomings.

(The following infographics are based on this post by Google)

Identifying various limitations with other classification systems, Google Books decided to use metadata and compile a list of only unique books. The metadata that Google used was provided by more than 150 providers.

The weeding out of duplicates and exclusion of non-books left Google with a list of approximately 130 million books – a number I feel is definitely going to rise.

Google’s vision with its Google Books project is highly ambitious, to say the least. And considering it plans to digitize all possible books, it is a mammoth task! On the other hand, if there is one company that can do it, it is Google…

An interesting side note:

Last week I wrote a post on reCAPTCHA, a tool that prevents spam and digitizes books. While I am still in the process of getting someone to from the reCAPTCHA team to talk to me, I found that Google has bought reCAPTCHA and is using it to enhance its digitizing process.

So, how has reCAPTCHA worked for Google?

Estimates by the reCAPTCHA team suggest there are 200 million CAPTCHAs solved around the world every day and it takes 150,000 man hours to solve them.  If a book has 100,000 words in it (average size of a novel), it would take  little more than a minute to digitize.

If each page in a book had 250 words, Google would need to scan 400 pages of said average sized novel. Considering the company is capable of scanning 15 pages per minute (~1000 pages/hour), it would take a little more than 25 minutes to scan the book. Add to it the minute or so required to digitize the content using reCAPTCHA, and Google can create a digital copy in a little less than half an hour.  This does not factor in time for loading the book, manual intervention or that the 100,000 words inputed using reCAPTCHA would not be happening simultaneously. However, these are impressive numbers nonetheless.

So, if Google does manage to digitize a book in half an hour, how long would 130 million take? A little more than 7400 years…

I don’t expect Google to wait that long

]]> http://www.sourcingnotes.com/blog/google-this-number-of-books-in-the-world/feed 2 http://www.sourcingnotes.com/blog/coming-together-to-discuss-the-state-of-sourcing http://www.sourcingnotes.com/blog/coming-together-to-discuss-the-state-of-sourcing#comments Wed, 23 Jun 2010 04:56:59 +0000 Reetika http://www.sourcingnotes.com/blog/?p=305 Dear reader,

Firstly, thank you for visiting the ValueNotes Sourcing Practice blog. It’s your contributions and vibrant discussions that keep us going, and help us understand the state of sourcing today!

If you’ve been a regular on our blogs, you would have noticed the many changes to our navigation and content. Until last week, we had separate blogs focusing on e-learning, publishing, research & analytics and legal services outsourcing. As time moved on (it’s been a year now!), we realized the value in cross-linkages, and in communicating with our audiences together.

So while once we were four, we are now on one platform, bringing you, our peers in the outsourcing sector, a consolidated view of the many industry sub-segments. We believe this move will add more value to our discussions, and enable a dynamic cross-industry representation among our readers. To illustrate, while on one end publishers could discuss how e-books can change the market, members from the new media and e-learning segments can also add to the subject and give a more comprehensive view.

I would also like to take this opportunity to introduce Jui Narendran, our Practice head, as the newest blogger on The State of Sourcing. She will focus on outsourcing, BPO and IT research, among other segments. We wish her the best for a long and fruitful blogging activity.

We look forward to your continued patronage, and hope to make this blog the number one source for sourcing discussions!

Thank you once again.

Warm regards,

Reetika

But of all the news items, what I found most interesting has been the announcement of AmazonCrossing. AmazonCrossing will use customer feedback and data from other Amazon sites to identify non-English best sellers. Once identified, Amazon will acquire and translate the book for consumption by the global English-speaking audience. The move leverages Amazon’s existing distribution networks that contain multiple channels, formats, stores and partnerships with independent book sellers.

For Amazon, this has been a step ahead of the rest (Google and Apple). Leveraging its distribution presence in other countries to identify content worth converting is inspired. However, the mechanism (and its success) remains to be seen.

So how will Amazon translate these books?

This article from the Wall Street Journal suggests that a 60,000 word novel could cost anywhere between USD 6,000 to USD 8,000 to translate in the US. While the company has not indicated how it will get books translated (or how much it will pay), there exist opportunities for translation service companies. Amazon might not be looking at high volumes to begin with, but the success of AmazonCrossing’s pilot with Monénembo’s “The King of Kahel” will surely mean there is an opportunity in translating content.

Law firms and corporations have mostly restricted their outsourcing contracts to smaller and short-term contracts/assignments. However, lately the legal offshore market is witnessing a gradual change in terms of the size and tenure of contracts.

Established service providers such as Integreon, CPA Global, Pangea3, and UnitedLex have reported longer-term contracts in the last six to eight months. British Telecom shifted work from its captive legal services center (located in India) to UnitedLex. Microsoft signed a contract with Integreon for legal support services. Integreon will provide contract review and offshore document review services to the software giant from its India and Fargo centers. Integreon won a seven year contract worth £50 million from UK based law firm Osborne Clarke. Rio Tinto, a leading international mining group based in the UK awarded a contract to CPA Global.

While contracts in this segment are not largely publicized, there is a visible shift towards recurring and longer-term contracts in the LPO industry.

One might argue that some of the larger contracts do not fall under the definition of LPO. Services offshored are a blend of legal and support services such as document review, legal research, litigation support, accounting and IT services. Of course, currently the contract is tilted more towards support services. And this is benefiting larger service providers with multiple service offerings!!

LPOs backed by law firms have the advantage of domain expertise from their parent company. These service providers are not only eyeing the international clientele (of their law firm), but also looking to leverage on the domain knowledge of their parent firm to serve the domestic (India) market.

Practicing law is the core business of law firms. Understandably, the billing rates of lawyers practicing law are higher as compared to those of LPOs. This raises an interesting question on the motivating factors for these firms to turn their attention towards LPO business.

India is one of the emerging economies, which is seeing continuous investments by global multinationals every year. The growth in the number of foreign companies entering India offers a chance for the Indian law firms to capitalize on their relationships with the multinational companies. Alternately, law firms are increasingly looking to set up teams of 10 to 15 members serving the international market with a view to establishing global presence. Given that international law firms cannot practice in India, many of them have partnerships with Indian law firms to service international business. Indian law firms will leverage their relationships to offer offshored services. Are Indian law firms approaching this venture as a means to build relationships with international law firms? Possibly! But these companies are surely adding to the competition in the LPO industry.