Outsourcing pros and cons
Publishers look offshore to cut production costs, but quality issues remain a concern
By Mark J. Miller
As publishers continue to suffer through the downturn, many are turning toward outsourcing production and manufacturing operations to save precious dollars. But how does a media company protect itself in the global marketplace as businesses spring up to meet the rising demand?
Some production executives believe there are a limited number of responsibilities that can be outsourced. “I don't see how you could outsource the true production or manufacturing functions,” said Keith Hammerbeck, corporate director of media operations at Advanstar Communications. He sees the conversion of files to XML, formatting of e-newsletters, image manipulation and page layout as prime candidates for outsourcing.
Others see more significant opportunities. Reed Business Information, for example, has been working with companies in different countries for more than five years and continues to ramp up its outsourcing.
John Blanchard, VP-manufacturing at Reed, said the company started small, running different pilots on similar titles and creating scorecards to measure the results. It also made it clear from the beginning that it wasn't committed to anything beyond a pilot in order to stave off any pressure from vendors.
Blanchard noted that in the early stages, all communication was done via e-mail. “So we had a written track record of the negotiations and the conversations,” he said. He added that working with a vendor that has some publishing background has been a great help.
Roger Burg, VP-operations at Canon Communications, said it is important to work with an organization that isn't using you as a beta test. He encourages production executives to “walk through the work flow in excruciating detail” and to “approach the transition very slowly.”
Reena Russell, CEO of Potion Media, which provides offshore media production services, suggested asking a few questions before signing on with an offshore company:
“What are the provider's credentials? Do they have experience with the same type of work that you will be outsourcing? Do they handle all work in-house with their own staff, or do they further outsource work to other companies or freelancers?
“How does the provider handle project management: Do they have some sort of system or do they rely on e-mail, phones, etc.? Does the provider have a U.S. office? How secure and robust are the provider's facilities? What hardware and software does the provider use? What volume of work does the provider do each day/week/month? Will they provide dedicated staff?”
Dedra Smith, president of magazine production consultancy Printmark West, said that while large savings can be attained through outsourcing internationally, a publisher needs to be careful about any decrease in quality and the potential effect on advertisers. If the work is not handled properly, she said, U.S. workers may have to spend a great deal of time fixing problems.
Smith said one of her clients lost 25% of its business due to advertisers not wanting to deal with offshore vendors, being unhappy with the quality of the work or feeling the practice was un-American. That loss of business, though, was still worth it, she said, because the company enjoyed cost savings of 50%.
Blanchard said Reed has not received any comments to the effect that offshoring is anti-American other than the “odd phone call about a telemarketing call,” he said. Language barriers are dealt with by relying mainly on the written word, he said.
Reed also handles all customer contact, so advertisers never have to deal directly with outside vendors. “We like to maintain material collection, and customer contact and internal business representation,” Blanchard said.