The global print publishing industry is seeing challenges like never before. Despite being driven by different revenue models, almost all publishing segments are being threatened by the economic upheaval and the digital revolution. While dwindling subscriptions and ad revenues are posing a survival threat for newspapers and magazines, a decline in government funding amidst the current economic situation is affecting the revenues of STM and educational publishers. Escalating costs of production and print, changing customer preferences, the need to adapt, exploit and invest in new media technology are the key challenges that are forcing publishers to innovate to survive. This has not been an easy task, as the current economic scenario has only aggravated the need to rein in costs in order to sustain profitability.

Some instances of recent steps taken by leading publishers are indicative of the situation:

• Pearson reportedly offered voluntary redundancy and reduction in the work week to its employees. The company’s division, The Financial Times (FT) is set to reduce its staff by 60, with most of the job cuts in the commercial departments.
• Scholastic eliminated about 300 jobs in 2008, and carried out a pay freeze for employees earning over $60,000. The company has eliminated management bonuses and has reiterated its commitment to further reducing costs.
• Reed Elsevier announced plans to reduce more than 1,000 jobs as part of its restructuring plan, with most of the job cuts expected to take place outside of Britain.

While the above examples are merely illustrative, there are signs of a longer state of distress in the publishing industry.

Offshoring trend

Owing to cost pressures, several publishers have intensified their offshoring activities over the last few years. The global STM publishers have been offshoring for over two decades. Therefore, the concept of ‘offshoring’ is not just well-established, but it is a key component of the production process for these publishers. Now, there is a growing trend among publishers in segments like education, magazines, newspaper, trade books, etc. to offshore to service providers in Asia.

The overall publishing offshoring (pre-press) to the Asian countries (India, Philippines, Vietnam, China, Sri Lanka) stands at approximately $780 million in 2008. India’s revenues from publishing offshoring that includes STM/academic, education, legal and other segments (corporate, magazines, etc.) stood at $660 million in 2008. We believe that overall offshoring in publishing services will cross $1.2 billion by 2012.

Services offshored have evolved significantly

Offshore service providers have responded to the influx in demand for publishing services. Service offerings have steadily moved up the value chain to encompass high value services such as testing and assessment, original design, e-learning and new media development and project management.

The chart above illustrates the four service buckets that are offshored, and their relative value positioning. Content services at the lower-end of the value chain have commoditized rapidly and several providers now have the capability to offer a range of high-value services.

With maturity in the service provider landscape and growing comfort amongst offshore buyers, not just ‘better service’ but ‘value addition’ via innovation is creating differentiation for existing service providers. Apart from offering plain vanilla services, providers have managed to reduce turnaround time and rationalize manpower growth, thereby reducing costs, improving efficiency and creating value through technology adoption.

Technology as a differentiator

The Indian publishing offshoring industry has witnessed the permeation of technology - in terms of adoption and service delivery. Adoption of technology amongst buyers has intensified in the last couple for years. This has been catalyzed by publishers increasingly digitizing content to address the digital market. Printed books, journals and magazines are undergoing a digital transition to Web 2.0 platforms, ebooks, audio books, flash based books, online content, etc. In addition to the growth of the digital market, publishers look to digital content as a means of reducing costs - printing and distribution being major costs for any publisher.

The publishing industry is increasingly being driven by technology - from pagination, content, formatting to delivery. Over the years, all offshore vendors - whether small, medium or large - have adopted standard publishing software such as Adobe Suite or Quark, as prescribed by clients. In addition, while capabilities may differ, every vendor has ‘technology’ as a service offering. Such services include tagging, classification and taxonomy, conversion, formatting, coding, indexing, problem resolution and online services and tools. Interestingly, the dependence on technology to handle sensitive data and project material has led to better IT infrastructure and security compliances.

While most providers have access to similar technology, the differentiator has really been the capabilities developed around workflow and innovation. Most providers have incorporated various types of in-house automation (the use of macros, work flows, etc) to reduce costs and turnaround times; some have even developed their own software. Aptara, for example, has developed an online collaborative tool that helps project management and serves as an endto- end work flow manager. Another player, SPi has developed off-the-shelf products for publishing. Such innovations are likely to raise the bar for other providers within the industry and will make the role of technology more important than ever.

The publishing industry has been following a content technology cycle. The industry has developed significant maturity and depth in ‘content’ services. Technology is now enabling the vendors to leverage this maturity by providing new services across varied platforms (new media such as ebooks, online services, etc). While this trend is expected to continue for years to come, today’s technology will become tomorrow’s standard and constant innovation will ultimately differentiate industry leaders.