| STM Offshoring and Beyond |
| Monday, 11 August 2008 | |
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The global publishing market in the English language stands at approximately $250 b in 2007. This market consists of various segments including: professional (STM, Academic) educational, newspapers, magazines, directories and trade publishing. STM (Scientific, Technical, Medical) publishers were amongst the first to explore offshoring to India more than two decades ago. Today the challenges faced by STM publishers have intensified due to rising costs of wages, paper, printing, decreasing library budgets, growth of Open Access, increasingly complex supply chain and emerging alternatives to traditional publishing. Higher costs of editorial and typesetting drive offshoring Editorial and Typesetting services constitute almost one-third of the total cost for the STM publisher, and has been offshored significantly over the last two decades. Apart from being the largest cost component, almost all the services under this head are "offshoreable". These services range from composition, proofreading, copyediting, image redrawing to project management. The costs for providing Editorial and Typesetting services are approximately 40% cheaper in a destination like India. These have gained momentum as they involve non-physical transfer of data and account for a significant cost head for the publisher. While many of the "outsourceable" process-based offerings are being offshored to a great extent, some of the high-skill and high-value services still have untapped offshore potential. These include project management, original design and photography. We believe that over the next 2-4 years these services will rapidly gain offshore maturity as several vendors are gearing up to build the requisite capabilities. Interestingly, with increasing competition amongst Indian vendors, margins in this business are shrinking rapidly. Rising maturity in STM publishing has driven down the prices, with the vendors unable to offer differentiated offerings. In an era of dropping margins, some steps taken by STM focused vendors to protect margins include:
Beyond STM Publishing offshoring to India has over time turned into a buyers market. Numerous undifferentiated vendors have contributed towards commoditization and pricing pressures. Some of the relatively untapped upcoming opportunities in other publishing segments include:
STM/Academic (professional) publishing accounts for approximately 6% of the total global publishing industry. Indian offshoring service providers have so far successfully exploited only this small slice of the entire publishing pie. Despite varying cost structures and process offshoreability across publishing segments, the offshore opportunity still lies anywhere between $10-15 b. With current revenues of Indian publishing offshoring at about half a billion dollars, there is potential to grow at least twenty times. With an enormous opportunity waiting to be tapped, is the Indian publishing BPO industry ready to face the challenges of new skills and capabilities, rising competition and scalability? |
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