Publishing BPO Trends: 2008

Pune, India; 15th January 2008

Offshoring of publishing services to India continues to grow, both horizontally and vertically. New “horizontal” niches and opportunities across hitherto untapped segments of publishing are opening up as vendors develop vertical capabilities across the publishing value chain. We expect that the increasing activity witnessed in the publishing outsourcing space will be sustained during 2008. A few of the key trends for the publishing outsourcing industry in 2008, are presented below:

Maturity in STM… towards comprehensive, “managed” projects

The Indian publishing BPO services began with providing services for the STM segment, where significant maturity has been built over the last decade. Having attained strong delivery capabilities, domain knowledge, automation and experience in a range of composition and editorial services, year 2008 will mark greater traction towards offshoring “project management services” in the STM segment. We believe that rising vendor capabilities and existing relationships will drive increasing comfort levels amongst clients, in offshoring these high-value services, which provide tremendous cost-saving potential.

This is coincident with the trend of vendors offering end-to-end services and managing the entire project or projects, as opposed to project management being controlled by the client.

Educational segment opens up new vistas

The offshore opportunity for STM/Academic segment is estimated to be $1.72 billion by 2011 and that for Educational publishing at around $4 billion. While sizeable opportunity in STM still exists, relatively higher penetration and limited scope for content development in this segment has led vendors to look at related markets. Educational publishing segment especially the “Elhi” space has a lot of small publishers (buyers) apart from the big four. This throws up multiple opportunities for innovative multimedia content development in this space. This will open up vistas not just for the existing large publishing vendors, but also for newer players contemplating entry.

New opportunities in Publishing BPO

Apart from diversifying horizontally and adding service lines, vendors will look beyond STM and Educational publishing segments, to facilitate vertical expansion. Legal publishing will emerge as a focus area for some large and established vendors. New entrants as well as existing vendors will tap “other” opportunities in segments like newspapers, yellow pages, magazines and B2B publishing. Servicing pre-media needs of corporates and the advertising segment will also gain traction in 2008. The existing vendors will be driven towards these segments to stretch their existing capabilities, while new entrants will look to service relatively untapped opportunities.

Spreading Global Footprint: Not just for marketing but also for delivery

As US-based BPOs find it difficult to survive offshore competition and Indian vendors look to expand, acquisitions and partnerships between the two will continue to be a strong trend. While acquisitions by Indian vendors are primarily driven by the need to strengthen marketing presence and niche capabilities; in 2008 and beyond we will see vendors spreading not just marketing presence but also offshore delivery beyond India.

Currently, global publishing offshoring is dominated by India. The global delivery model involving multiple offshore destinations to mitigate geographical risks and currency risks is beginning to take shape in the publishing BPO space. Destinations like Vietnam, China, Philippines, Mauritius and Sri Lanka are set to emerge as supplementary destinations for offering publishing services.

Some of the data conversion tasks once handled from India will now increasingly be sourced from these destinations, as Indian offshoring moves up the value chain. SPi is already leading this trend, and this will gain traction as vendors battle the appreciating rupee, rising salaries, attrition and other challenges on the Indian shores.

Consolidation and fragmentation will go hand in hand

The publishing industry is consolidating with several publishing BPOs evoking significant interest from buyers. In the next couple of years, several exits of investors or entrepreneurs, either by way of listing or acquisitions are likely.

However, while the industry consolidates, low barriers to entry in this business means there is a continuous influx of new vendors – typically at the low end, or in emerging niches. There are a large number of small publishers in the US and UK and some of these have just begun experimenting with offshoring, thus keeping the small and new BPOs in business. For every large player, there are an estimated 10-15 small players offering services (primarily conversion) usually at very low billing rates.

While these small vendors compete amongst each other, they serve a useful function in the supply chain as low-cost sub-contractors to large vendors. In addition, niche providers, especially in the “hot” educational publishing space will continue to set up shop and help expand the market.

So even as consolidation picks up pace, and the large vendors get larger, smaller vendors will continue to proliferate. The explosion of new service providers will create further fragmentation, making it an equally strong trend as consolidation.

About ValueNotes
ValueNotes Database is a leading provider of business intelligence and research, with expertise across selected domains and types of customer needs. Working with clients across the globe we have significant understanding of international markets.

About ValueNotes Outsourcing Practice
The ValueNotes Outsourcing Practice is one of the largest information providers on the outsourcing industry. Our Outsourcing Practice uses a comprehensive, analytical framework providing fresh insights into the fast emerging and yet, complex outsourcing space. We extensively track the outsourcing space in-depth through a regular analysis of news and events and continuous primary research and contact with the industry.

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