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”.
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