The US Newspaper industry has been battling growing margin pressures since the last few years. Dwindling circulation, drop in advertising revenues, growth of the internet and rising newsprint prices have contributed to the downward trend in margins. Amongst measures like reducing global coverage, cutting edition sizes, streamlining resources and cutting excess jobs, several leading newspaper companies are evaluating offshoring. Over the last couple of years, there has been an increasing trend of US-based newspaper publishers offshoring to India. This trend is set to gain traction in the next few years.

Amongst all cost heads of a newspaper publisher, almost all services are outsourceable; however, offshoring provides maximum leverage for ad production services since this is easier to provide from India. Several Tier 1 newspaper publishers are already outsourcing some part of their ad production to India. According to Arun Jethmalani, CEO ValueNotes, “Currently offshoring has been initiated by Tier 1 newspaper publishers in the US, and is largely limited to ad production services. However, as offshoring matures, the Tier 2 and Tier 3 publishers will offshore a wider range of services to India.”

Currently, the offshore vendor market is at a nascent stage with only a handful of vendors in India actively focusing on the newspaper segment. The total offshore manpower employed in the newspaper outsourcing industry was approximately 2300, as of July 2008. The overall revenues of the industry offering services to the newspaper segment (including to the US and the UK) are estimated at $35 m in 2008. Affinity Express, Express KCS, 2AdPro and Mindworks Global are the industry frontrunners. Given the current lacuna of ‘end-to-end’ service capability amongst vendors, we expect the early entrants to grab this slot. Vendors are expected to build complementary capabilities to achieve this objective. Says Jaslene Bawa, analyst ValueNotes, “We expect Indian offshore revenues from the global newspaper market to reach $120 m by 2012. However the vendors need to build client confidence in terms of delivering consistently good quality of output and quick turnaround.”

The offshore opportunity from newspaper publishers is estimated to be approximately $3.5 b. The estimated Indian offshoring to the newspaper publishers at $35 m in 2008 highlights the huge untapped potential. Significant opportunity exists across the service chain for existing vendors as well as new entrants. According to Aradhana Kolhatkar, analyst ValueNotes, “Traditional publishing BPOs, Indian graphic design firms and Indian newspaper publishers are well poised to grab the opportunity; however they will need to tool themselves with new skill sets to service the global newspaper publishers”.

The ValueNotes report, “Offshoring by US Newspaper Publishers” provides information and analysis of the US newspaper Industry and a detailed analysis of the Indian service provider landscape. The report is designed to help:
  • American and European Newspaper Publishers looking to offshore
  •  Publishing BPOs to assess the opportunity and competitive environment
  • Outsourcing consultants evaluate and compare the offerings of Indian vendors
  • Researchers and others looking for detailed information
The report is based on secondary data as well as extensive interviews with key people at various outsourcing companies in India and industry experts in the US.

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Table Of Contents

1. Executive Summary
2. The US Newspaper Industry
2.1 US Newspaper Industry: Shrinking Market Share
2.2 The US Newspaper Industry Structure
2.2.1 Dropping Revenues and Margins
2.3 Key Trends
2.3.1 Dwindling Ad Revenues
3. The Offshoring Imperative
3.1 Response to Rising Pressures
3.2 Current Outsourcing Moves
3.3 Offshore Proclivity by Type of Newspaper
3.4 Outsourcing Drivers
3.4.1 Saving Potential by Cost Heads
3.4.2 Salary Comparison: India vs. US Newspaper jobs
3.5 Key Services Outsourced by Newspaper Publishers
3.5.1Offshore Potential by Sub-service
4. The Service Provider Landscape
4.1 The Service Provider Landscape
4.2 US is The Primary Market
4.3 Manpower and Revenue Estimates
4.4 Service Capability Matrix
4.5 Estimated Billing Rates
4.6 Vendor Positioning and Strategies
4.7 Market Leaders
5. Trends and Insights
5.1 Offshore Opportunity and Current Supply
5.2 Future Growth Estimates
5.3 Key Opportunity Areas
5.4 Offshoring to Spread to Tier 2 US Newspaper Companies
5.5 Buyer Concerns
5.6 Lack of End-to-end Service Capability
5.7 STM vs. Newspaper – Different Nature of Services
6. Annexure
7. Research Methodology
7.1 Data Collection
7.2 Data Analysis
8. About ValueNotes
8.1 Research Publications
8.2 Recent Custom Projects


Table Of Exhibits

Exhibit 1: The Global Newspaper Publishing Market: Share by Geography
Exhibit 2: The US Newspaper Industry: Market Structure
Exhibit 3: Revenues Trends Among Top Newspaper Publishers
Exhibit 4: Declining Gross Profit Margins of Newspaper Publishers
Exhibit 5: Trends in Advertising Revenues of Newspapers
Exhibit 6: Trends in the Newsprint Costs
Exhibit 7: Job Cuts Announced in the US Newspaper Industry
Exhibit 8: Survival Strategies of Tier 1 Newspapers
Exhibit 9: Offshore Buyers of Newspaper Publishing Services
Exhibit 10: Characteristics by Type of Newspapers
Exhibit 11: Offshoring Trend Amongst Newspapers
Exhibit 12: Approx. Cost Saving Potential By Functions
Exhibit 13: Employee Salary Comparison – US and India
Exhibit 14: Offshored Services in Newspaper Publishing
Exhibit 15: Offshored Services in the Newspaper Industry
Exhibit 16: Comparison – Offshoring Production vs. Archival Services
Exhibit 17: Vendors in Newspaper Publishing Outsourcing
Exhibit 18: Delivery Centers and Clients
Exhibit 19: Manpower Break-down in Newspaper offshoring
Exhibit 20: Vendor Service Capability Matrix
Exhibit 21: Estimated Billing Rates across services
Exhibit 22: Market Leaders
Exhibit 23: Offshore Opportunity and Current Supply
Exhibit 24: Estimated Revenue Growth by 2012
Exhibit 25: Future Offshore Potential Across Service Areas
Exhibit 26: Offshoring Trends Across The Three Tiers
Exhibit 27: Servicing STM and Newspaper Segment:  Comparison
Exhibit 28: Revenues of Leading Newspaper Publishers

Vendor Profiles

1. 2AdPro
2. Affinity Express
3. Express KCS
4. Mindworks Global
5. Apex CoVantage
6. Nine Stars

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