SFN report: Outsourcing and offshoring part of publishers' plans to save in the future

Posted by Erina Lin on July 12, 2010 at 4:10 PM

Newspaper publishers have found that onetime cost cuts are not enough to streamline their businesses for the future. Instead, lowering costs must be done as part of a long-term business strategy; and for many companies, part of that strategy includes outsourcing, SFN's Million Dollar Strategies for Newspaper Companies reported.

Saving money through outsourcing and/or offshoring has grown in popularity because it is not a one-time fix to help numbers on a current earnings report, but rather it is part of a plan for the future.

According to the 2010 World Newspaper Future & Change Study, 17 percent of the 500 newspaper executive respondents said they plan to outsource functions in their newspaper company to achieve greater efficiency and cost savings in the next year.

Research group ValueNotes, located in Pune, India, the heart of the world's offshoring operations, has taken a look at what it calls news publishers' "two pronged" dilemma: publishers must increase revenues or decrease costs in order to survive (and most need to do both). To find out how outsourcing fit into the plans of the publishing industry, ValueNotes conducted a survey of management, publishers, journalists, consultants, freelancers, publishing service providers, analysts, industry trackers, and more.

Most respondents indicated that they believe outsourcing is a good concept that may work sometimes, and just 8 percent of management from newspaper and magazine publishing companies do not support outsourcing.

According to the survey, 45 percent of publishers said they have seen cost savings of 15 percent to 25 percent while outsourcing. Meanwhile, the wide range in cost savings shows that smaller publishers - those with less than US$15 million in revenues - are currently experimenting with outsourcing.

"Scale benefits large buyers tremendously. One out of four publishers with revenues [of] more than $500 million are capable of achieving more than 40 percent in cost savings," ValueNotes pointed out. "These cost savings also reflect a variance in the kind of work outsourced. Complex tasks and higher value functions tend to affect cost savings for the buyer. These publishers have expended appropriate amount of time and effort to increase productivity and efficiency of outsourced work. Although restricted to a small group, 'no cost savings' have been experienced by some publishers!" according to the report, Million Dollar Strategies for Newspaper Companies, released by SFN and the World Association of Newspapers and News Publishers.