R.R. Donnelley’s acquisition of New York-based offshore BPO firm OfficeTiger, has surely put the spotlight on the hitherto-unnoticed offshoring initiatives of the large printing-services companies. Despite running large offshore projects for a long time, the B2B print-services companies were never in the limelight, because of their comparative low brand recall among the general public, unlike consumer-focused companies like Citibank, Microsoft, Dell or American Express.
The lack of media attention apart, most of the specialist, print-services companies have taken to offshoring in a major way.
Take for instance, financial printing — R.R. Donnelley, Merrill and Bowne & Co., are the top three players in this market in the U.S.A. This domain typically comprises creation and distribution of regulatory and compliance documents such as EDGAR filings, other SEC filings and IPO documents. With revenues of $625 million in 2005, Bowne & Co. leads the market. Specific data on financial printing revenue of R.R. Donnelley is not available, because the company clubs that with some other printing-services revenue. Merrill is a privately held company, and hence does not report its revenue figures.
All the three companies have followed one another in offshoring their business processes to India. While OfficeTiger has been successful in bagging the contracts from both Merrill and R.R. Donnelley, TechBooks, another India-based BPO service provider has got the processing work from Bowne & Co.
One reason why the offshoring initiative of the print-services industry has escaped media attention is that all such projects have been outsourcing arrangements with specialist firms such as OfficeTiger and Techooks, while the mainstream offshore BPO companies have not targeted the business yet. Also, unlike the typical Dell and Microsoft, they have worked with single vendors and over time, have strengthened those relationships. OfficeTiger had formed a separate legal entity — Merrill OfficeTiger in India to serve the client. In fact, the speculations are rife in the industry cirlces on the future of the offshore firm’s relationship with Merrill Corp. The spokesperson for OfficeTiger refused to confirm whether Merrill was a client at all, however, insisted that “nothing would change,” and all the stakeholders were informed about the deal.
Though the exact nature of Bowne’s arrangement with Techbooks is not known, industry sources say it is also an “exclusive” arrangement. In another subsegment of print-services industry, STM (scientific, technical, medical) publishing, one of the top companies, Cadmus Communications, has also followed a similar model with, India-based service provider Datamatics Technologies. It has formed a joint- venture company with its vendor — KnowledgeWorks.
The “publishing” industry that includes book and periodical publishers such as Wiley, Reed Elsevier, Thomson Learning, McGraw Hill, Oxford University Press, Cambridge University Press, Macmillan, Pearson and Blackwell — virtually the who’s who of the publishing world — are not far behind the printing companies in terms of offshoring their proof and typesetting work. But most of them differ from the printing-services companies in their approach to sourcing. While the print-services companies have relationships with single vendors (Donnelley actually pulled out of a few other Indian vendors such as India-based Integra to consolidate at OfficeTiger), the publishers still source their services from multiple vendors.
Of course, there is never a dearth of vendors! . Apart from Techbooks, which is the acknowledged leader, companies like the Philippines-based SPI Technologies and India-based vendors such as Macmillan and Datamatics are also large. Other major companies include Integra, Thomson Press and Ninestar. There are quite a few emerging players such as QPRO Infotech, SR Nova, Q2A and CyberMedia Services (a part of CyberMedia, the co-owner of the company that owns Global Services). With Macmillan acquiring two midsized companies — CharonTec and ICC — some consolidation in the vendor side is being discussed.
This segment, thanks to the absence of any large broad-based IT/BPO company, still does not occupy the mind space though. The Donnelley acquisition may well be the beginning of a new phase.
