The Hindu Business Line : Newspaper publishing outsourcing industry on growth mode

Mumbai, Sept. 5 Shrinking profits and across-the-board cost cutting by newspaper organisations globally are acting as a propeller for the nascent newspaper publishing outsourcing industry in India.

Revenue opportunity for companies that offer offshoring services to newspapers abroad will more than treble by 2012 to $120 million (Rs 528 crore) from Rs $35 million (Rs 154 crore) currently, according to a study by Pune-based research firm ValueNotes.

Contrary to what is happening in the Indian newspaper industry, newspaper firms abroad — especially in the US and some parts of Europe — have been battling growing pressures on margins in the last few years.

Circulation dip

“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,” ValueNotes said. In the US alone, circulation revenue has declined steadily since 2003, and there has been a two per cent year on year falls in the number of copies sold.

Which is why offshoring has become important. Depending on the nature of the function offshored, outsourcing enables cost reduction in the 40-60 per cent range, Ms Aradhana Kolhatkar, lead publishing analyst at ValueNotes, told Business Line.

The most commonly offshored editorial services include composition, layout, graphic services, data collection and archival services. Currently, most of the offshoring work is done in the space of ad design, ad production and composition, said Ms Kolhatkar.

Manpower cuts

Majority newspaper firms in the US and Europe have resorted to huge manpower cuts. More than 6,500 job cuts have been reported in the first six months of calendar 2008 alone, ValueNotes said. Alternatively, this will result in creation of more jobs (in this sector) in low cost destinations such as India and the Philippines.

In India alone, this outsourcing opportunity will result in employing more than 5,500 people by 2012, as against 2,300 people as on July 2008, said ValueNotes. Affinity Express, Express KCS, 2AdPro and Mindworks Global are some of the companies that are active in this space. According to some reports, Chicago Tribune, Independent Newspapers and Los Angeles Times are currently offshoring their circulation-related services to Indian providers.

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