The State of Sourcing

“Rio Tinto legal chief quits for a new role at CPA Global”, read today’s headline. This does come as a surprise but surely great news for CPA Global and the LPO industry.

Leah Cooper is the managing attorney at the mining giant Rio Tinto. She is responsible for the overall management of Rio Tinto’s multinational legal department (comprised of over 100 lawyers). Leah was the driving force behind the Rio Tinto-CPA Global deal. In May 2009, Rio Tinto awarded a contract to CPA Global. Rio Tinto offshored contract review and drafting, legal research and document review to CPA Global. When I spoke to Leah two weeks back, she sounded quite upbeat about the LPO industry. Talking about the outsourceability of the services, Leah said “Initially, the work undertaken by CPA Global included contract review and drafting, legal research, and document review. However, the scope of work is expected to expand to cover other routine legal services work.”

Cost control has become a pertinent issue across businesses. Corporate counsels have been worried about managing their external counsels and are building cost effective systems to handle their ad-hoc legal needs. Corporations are increasingly exploring alternatives such as contract attorneys and offshore service providers (LPOs), especially for certain services that require junior associates. Said Leah, “Cost was an issue but not the only issue to consider offshoring. We contracted CPA in May 2009. Since then, we have saved US$13.9 million. However, the main reason to offshore was the increasing work load. There was a point when the in-house lawyers were inundated with work and we thought that contracting an offshore service provider will help them reduce their workload.”

Continue reading ‘Winds of change?’ »

US President Barack Obama announced his decision to end tax breaks to American firms that ship out jobs abroad. In his first State of Union address, he said “To encourage… businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America.”

Since this announcement, there have been speculations about the impact of this move on the offshore service providers (especially the Indian IT and ITES industry) and the future of the outsourcing industry.

Continue reading ‘End of tax breaks! – Can outsourcing be wished away in this era?’ »

The newspaper and magazine segments are the largest contributors in revenues to the global publishing industry – contributing close to 52% of global publishing revenues. It would therefore be safe to assume that of all the challenges faced by the industry, none would be as altering (in terms of revenues) as the challenges faced by these two segments. The newspaper and magazine segments have already lost considerable revenues on account of dip in ad revenues. This is directly attributable to the global economic slowdown, which has led to decrease in consumer and corporate spending.

Continue reading ‘Magazines: Ad-ing up the losses’ »

With the publishing industry facing cost pressures, change in consumption patterns and struggling to sustain its revenues, it only seemed logical that the industry as a whole would outsource more. To truly understand how the industry value chain perceived outsourcing, we at ValueNotes Sourcing Practice decided to conduct a publishing survey.

To gain clarity on where the industry is heading, we needed to understand: Continue reading ‘Publishing Survey: Disparity in cost savings continues’ »

The newspaper and magazine segments are the largest contributors in revenues to the global publishing industry – contributing close to 52% of global publishing revenues. It would therefore be safe to assume that of all the challenges faced by the industry, none would be as altering (in terms of revenues) as the challenges faced by these two segments. The newspaper and magazine segments have already lost considerable revenues on account of dip in ad revenues. This is directly attributable to the global economic slowdown, which has led to decrease in consumer and corporate spending.

Does a drop in revenues merit a need to re-invent the business model? How are publishers coping with the dip in revenues? Will the digital market provide a strong revenue source? Will this mean more outsourcing/offshoring?  Over two posts, I will answer these questions, starting with the newspaper segment.

Continue reading ‘Newspapers: Stop the presses?’ »

e-learning has been a service oriented industry since its inception. Indian e-learning service providers have also traditionally taken on offshored custom services from clients, on an ongoing basis or through annual contracts. According to a ValueNotes report, the revenues from this offshoring market are estimated at $341 million for the calendar year 2008. Trends in the industry now suggest that while the offshore services framework may serve as a good strategy for companies in the short term, future growth for Indian e-learning companies will be sustained by a diversification/upgrading of service offerings.

Productizing for alternate revenue streams
ValueNotes research suggests that e-learning providers will most likely go into the learning products business in the future, for domestic as well as international client markets. This is because scalability is achievable to a high degree with such offerings, and providers are able to target specific new audiences with their products (such as B2C products for English language, primary school children; B2B products for sales training, soft skills). For example, Zeus Learning, an e-learning services company, recently launched its product ‘TestFunda.com’, an online/CD ROM based learning courseware delivery platform for CAT aspirants. Companies looking to diversify from their offshoring services model are concentrating more on developing such offerings in the next year.

Continue reading ‘Productization and SaaS as a Strategy for e-learning’ »

The publishing industry has been undergoing a transition. Starting with increasing costs of production and print, the industry is struggling to address the increasing demand of digital content as opposed to print. In the midst of this transition, the global economic slowdown prompted lesser spending by consumers and corporate spenders.  Over the past few months, we have seen publishers try a variety of approaches – going digital, reducing print publishing, and cutting costs.

In spite of these measures, one thing comes across very strongly – the industry is yet to find that one formula/method that addresses all their problems. The lack of such a formula forced us to ask the question – will publishers outsource? Sure, some publishers already outsource certain aspects of their operations. But will they outsource more? Will they end up offshoring? And if they do want to outsource/offshore, what are the primary reasons for doing so? Are they hoping outsourcing will  be the ‘X’ factor while re-defining their business model?

Continue reading ‘Will publishers outsource?’ »

As you may be aware, following the release of the ValueNotes e-learning offshoring report, we held an executive briefing to discuss the key findings with members of the industry, and also to facilitate Indian e-learning buyer-vendor interactions. The result was phenomenal, as Deepali blogged about earlier.

What we didn’t expect was the great response to the ValueNotes industry presentation, an integral part of the event. Since we’re still getting requests, we thought we should share a few of the slides with interested parties in the Indian e-learning space. And what better place to do so than our blog!

Continue reading ‘e-learning outsourcing 2009: Advantage India’ »

It’s easy to dismiss technological alternatives to established time-tested tools as fads… And easier still, to get carried away by the sweeping power of technological innovation!  Well, in this case I am referring to the Kindle, Sony reader and the ever-evolving e-reader clan and the writing off of paper and print. Critics across generational divides have strong opinions supporting both sides. Technology drove the music industry’s evolution and the fade-out of non-adapters. Will this be replicated in the publishing industry, evolving rapidly in a digital era?

Almost everyone in the industry is trying to make sense of what lies ahead… Which technology will emerge stronger and which one will bite the dust?  Will e-readers replace print books entirely? Where will the industry head to if it doesn’t toe the line?

Continue reading ‘The content-technology tussle’ »

Over the last few years, there has been a trend among Indian service providers to build complementary capabilities by acquiring smaller publishing service companies in the US. Naturally, the all-time-low valuations have helped seal deals faster for service providers, who are looking to complete the missing piece of ‘high-value content’ in the end-to-end service provider puzzle.

Some of the recent acquisitions include: Continue reading ‘Small and niche – make a good fit’ »