Outsourcing Research by ValueNotes - Magazine Publishers Outsource to Stay Competitive!

Magazine Publishers Outsource to Stay Competitive!

Wednesday, 19 September 2007

With the growing popularity of the Internet, publishers in the US and Europe, both large and small took the lead in offshoring certain activities. Estimates indicate that the current global publishing market size is a mammoth $263 billion. The New Yorker decided to transform its 80 years of magazines into DVDs and they required the 4,109 issues to be fully searchable on the Web. In order to do this, they had to capture the data stored on around 1.5 million index cards. The company asked Innodata Isogen (NasdaqGM: INOD), a publishing BPO to offer a solution. This helped the magazine publisher digitize the data in an extremely cost effective and time efficient manner.

PFP Publishing is a property magazine publisher in London. This is a free magazine that reaches over 300,000 households. Thus revenues are primarily from advertising. While the primary driver for the publisher is capacity enhancement, by offshoring to Express KCS, they have also seen around 25% cost savings.

With the growing popularity of the Internet, publishers in the US and Europe, both large and small took the lead in offshoring certain activities. Estimates indicate that the current global publishing market size is a mammoth $263 billion. This includes magazines, newspapers, STM (Scientific, Technical and Medical), Academic and educational publishing. Currently, the level of offshoring to India from magazine and newspaper publishers is relatively low (approx $8-9 million in 2006) as compared to STM and educational publishers.

While there are a considerable number of vendors in the publishing space, including Aptara, Apex Co-Vantage, Innodata Isogen, Knowledgeworks Global and Express KCS, most of them largely cater to STM and educational publishers.

Magazine Publishers: Offshoring Drivers

Cost, time and quality are the three key factors that drive every magazine title. While cost still drives outsourcing to a great extent, increasing competition and the need to meet consumer demand is forcing more publishers to explore the outsource/offshore option.

Cost Benefits : Publishers have been offshoring for a long time in order to benefit from the savings on personnel and overhead. Every single dollar saved on pre-press, publishing, printing, and distribution is profit for the publisher.

Qualified Indian workers are available at a much lower rate than their Western counterparts. Typical rates for outsourced layout and production within the US range between $80 to $125 per page of output, depending on the volume and complexity of the task. Despite the fact that other operational costs like power and telecom are higher in India compared to the US and UK, the 5-10 times labor arbitrage and real estate costs translates into 30 to 60% cost savings for clients, depending on the complexity of project and turn around time required.

Quick Turnaround Time : Depending on the time of year, India is 4.5 to 5.5 hours ahead of UK and 9.5 to 10.5 hours ahead of New York (EST). This time difference provides the option of extended hours, especially crucial on quick turnaround assignments. With deadlines, co-ordination with the authors and advertisers and print schedules, offshoring certain components of the production, eases the burden on the publisher.

Proliferation of Technology : With growth of the Internet, offshoring components of the production process and communication with offshore vendors have become easier for publishers. Many Indian companies, including smaller players have adopted and mastered data conversion techniques rapidly, and have attained globally competitive standards. Further, proliferation of technology has opened up opportunities for the publishers by way of online revenues. Archiving of digitized magazine content has emerged as an attractive revenue stream for publishers, through advertising as well as subscription access.

The Opportunity

The offshoreable services include composition, design, layout, content sub-editing, artwork, page layout and XML data conversion, copy-editing among other services. However, currently most of the work done is in the design, composition and digitization space. With the number of titles increasing every day and increasing potential of digital magazines, offshoring will not only help the publisher gain efficiencies, but also help grow the business.

For the magazine market, trends in advertising and proliferation of electronic media play an important role. Business 2.0, a Time Warner magazine has already tested Indian offshoring capabilities with its recent issue. The opportunity to provide services to the magazine publishers is still an emerging segment and is yet to be tapped. Going forward, we believe several more magazine publishers will increase their offshoring activities as they leverage offshore capabilities and costs.

Related Items:

< Prev		Next >

[ Back ]