Dwindling circulation, decreasing advertising revenues, growth of the Internet and rising newsprint prices have contributed to the downward trend in margins.
ValueNotes Database, a business intelligence and research company, in its research report Offshoring by US Newspaper Publishers : To understand the opportunities for buyers and vendors in the newspaper-publishing sector.
Arun Jethmalani, CEO ValueNotes, Currently, offshoring has been initiated by tier 1 newspaper publishers in the US, and is largely limited to advertising production services.
However, as service providers mature, we believe that tier 2 and 3 publishers will also send work to India. Apart from measures like reducing global coverage, cutting edition sizes, streamlining resources and cutting excess jobs, several leading newspaper companies are evaluating offshoring options.
Over the last couple of years, there has been an increasing trend of US-based newspaper publishers offshoring services to India.
This trend is set to gain traction in the next few years. ValueNotes Outsourcing Practice has estimated Indias share of the market at $35 million in 2008.
The current Indian penetration into this market stands at around 1%. We estimate the revenues to grow to $120 million and manpower to grow to over 5,500 by 2012, said ValueNotes.
Among the various cost overheads of a newspaper publisher, most services can be outsourced.However, offshoring provides maximum leverage for advertising production services since it is easier to provide from India.
Several tier 1 newspaper publishers are already outsourcing some part of their advertising production to India. According to Jethmalani, the offshore vendor landscape is at a nascent stage with only a handful of service providers in India actively focusing on the newspaper segment. Amongst them, Express KCS, Affinity Express, 2AdPro and Mindworks Global are market leaders.
Aradhana Kolhatkar, publishing analyst at ValueNotes, said that traditional publishing BPOs, Indian graphic design firms and newspaper publishers are well poised to grab the opportunity, but they will need to tool themselves with new skill sets to service global newspaper publishers.