There is nothing apparently similar amongst US-based brother-sister pair Rakesh Gupta and Anita Gupta, founders of TechBooks; 40-year old Manish Modi, CEO of Datamatics BPO; or 37-year old Punit Dhandhania, Head of Book Services Division of SPI Technologies. But there is one thing that’s common to all of them. They sure know how to spot an opportunity when they see one.

They were the earliest pioneers in the offshoring game, long before the business world had spent hours deliberating the pros and cons of offshoring or what processes to offshore.

It was in 1988 that Punit Dhandhania started a small enterprise called PureTech tucked away in far-off Pondicherry. The company was engaged in doing some form of data processing work for publishing houses. Around the same time, Rakesh Gupta along with his sister Anita Gupta and brother Neal Gupta started their venture in US doing odd jobs for publishing houses like printing out-of-print books, typesetting and data processing work. Gradually they built up sufficient relationships to have a steady flow of work which was offshored to Delhi in 1992.

It was in the same year Datamatics Technologies spotted an unusual opportunity in the Iraq war-to convert legal law cases from paper to electronic and HGML format.

Well, these experiments were not exactly the first ones. Even before that the idea of offshoring was in some ways experimented by publishing houses like Macmillan, Oxford University Press and Thomson since the seventies by doing typesetting work in India simply because of lower costs. But the work being done then was purely on the captive mode. Says Punit Dhandhania, “Outsourcing is a modern word for an ancient phenomena, being practiced by publishers for quite sometime.”

Then came the Foreign Exchange Regulation Act of India, 1973 which reduced the foreign equity holding in companies to below 40 percent and thus Indian subsidiaries were set up and the same work began to be exported.

At the same time, FERA also gave import benefits against exports and so other companies, who had nothing to do with services, joined the fray to leverage this opportunity. Although those companies do not exist anymore, it set the stage for companies like Puretech (Dhandhania subsequently set up another company called Kolam Information Services which merged with SPI Tech in 2003), Datamatics and TechBooks to showcase the concept of offshoring to publishing houses and commercialize the process.

The publishers imperative to offshore

Though cliched, it is true that publishers came for cost but stayed for quality. Early experiments were all cost-related but the enterprise and confidence of Indian vendors that they could deliver similar quality at lower costs or better quality at same cost is what persuaded publishers to accept the India option as strategic to their businesses.

Meanwhile publishers themselves were facing tough times what with the global slowdown in the early Nineties and the onslaught of the Internet which created havoc in their business models.

Consequently the industry went through a spate of mergers and acquisitions. The publishing industry which was quite fragmented underwent consolidation throughout the eighties and nineties, creating giant conglomerates in the process. Some of the dominant publishers today include Reed Elsiever, Walter Kluwer, Thomson Learning, McGraw Hill, Houghton Mifflin, John Wiley, Oxford University Press, Cambridge University Press, Taylor & Francis, BBC, Harper Collins, Blackwell, Encyclopedia Britannica, MacMillan, Prentice Hall, Pearson etc.

While a lot of that work is still done onshore by the publishers, third party service providers and free-lancers, a small part is increasingly getting offshored.

At the same time the Internet was maturing and was beginning to impact the bottomlines of publishers. The Internet affected publishers in two ways. On the one hand, it gave rise to online retailers like amazon.com and e-bay which significantly weaned away their traditional customers. While it did exponentially extended their reach to customers, it also created a new menace by creating a community of readers who began to trade in second hand books. Publishers were caught on the wrong foot and yet to figure out a solution. Second, it allowed authors to reach out to readers directly. Although the damage was limited, it is true that publishers were once again caught flat footed.

Realization dawned that instead of fighting the Internet it was time to leverage it. The print media had to be complimented with new media services like multimedia and online versions. Huge amounts of content needed to be re-purposed but there was shortage of technical talent. So where else could publishers turn to but India to find the appropriate talent to do that effectively. Digitization and archiving solutions were already being delivered from India.

Finally, the benefits of offshoring was already being demonstrated in other sectors, shareholders in publishing companies are increasingly putting pressure to leverage on the labor-arbitrage and improved technologies.

However today, the scientific publishing industry is caught in yet another eye of the storm. This is related to the controversy to allow free access to research papers. The basis of the controversy is that the idea of research is to have accumulated knowledge in order to push the frontiers of human understanding. But since reputed publishers corner the best research papers with copyrights over them, the scientific community and libraries have to purchase those journals at high costs. The irony is that most of the research projects are funded by the government and since university libraries are also funded by government it becomes a ridiculous proposition to buy back that research. Although various models are being deliberated on how to make research papers freely available, there is no doubt publishing houses will come under pressure which in turn will make offshoring work even more attractive. However service providers rule out any impact from this controversy because the brand of the publisher will continue to play an important role in the success or failure of any publication.