Tough times, Financial Crisis? (Read on and thoughts please)

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Permalink Reply by Arielle Emmett on October 20, 2008 at 9:01pm

Sachin,

Since I'm a graduate (doctoral) fellow at Univ. of Maryland, I've been shielded from the horrors of this economy. But my overall income is much lower now since Mr. Bush took over in 2001...my business, a successful free lance writing and editing business primarily focused on science, medicine, and technology, tanked in 2001 after many good years. The collapse of dot.coms, a freeze in free lance budgets and advertising after Sept 11 2001 deeply affected me...so much so that I had to sell my house by 2003, and I was raising two kids. I've been teaching since 2001, and doing some free lancing, but not the same as before. I write mostly about journalism and media issues now, for American Journalism Review. I'm not a big fan of outsourcing in publishing. I saw the effects at XLIBRIS when I was trying to finish off my mother's book and had to start dealing with printers and copy people in the Philippines who couldn't read English. But this a complex discuss and it certainly depends on the kinds of business functions being outsourced. I personally like to maintain control and give jobs to local people I can work with you closely, even though many of the overseas people are extremely courteous and talented. Outsourcing technical help to India or Korea doesn't do much for the American economy. Right now I think we need to reinvent our strategies. Best, Arielle Emmett

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Permalink Reply by Shweta S on October 21, 2008 at 1:53am

Hi Sachin,

I work for an outsourcing firm. The financial crisis has affected our industry in a bad way. Business from the United States is slowing down currently. That is setting the scene for retrenchments in the outsourcing industry. Small to Medium businesses are more affected than the large scale enterprises. I also had the experience of being in the United States when the economy was slowing down. Lay-offs and attritrions were common there too. At such times, we need to focus on the "hidden" markets for further job oppurtunities and career growth. From observations and experience, such parts of any country's economy provide for a stable income and career in dark times.

Regards,
Shweta

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Permalink Reply by Julie Bateman on October 21, 2008 at 9:10am

Hi Sachin,

Because the last company that I was part-owner of had such high overhead, my current business model is based on keeping overhead down. I'm a graphic designer in Barrie, Ontario, Canada and work from a home office. I am often hired as part of other peoples marketing teams (much of my work is coming from the United States and Europe right now)... and will hire writers, web programmers, illustrators, etc. (mostly local) when it's my turn to create the team.

This works for me. I've got a lot of flexibility and have been working on a lot of great projects. This year I've already exceeded my financial goal for the year - business is great (knock on wood) and I haven't seen any signs of slowing down yet.

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Permalink Reply by Jim Hill on October 21, 2008 at 10:07am

Very insightful comments here, especially from Arielle, and can very much appreciate the perspective, personal and professional.

I have been in the publishing business all of my life: trade, magazine, custom publishing, professional, with much of it in the high tech business which boomed for many years until the early 2000's when the tech business imploded and has never bounced back. I have a great deal of both editorial, marketing, sales, and business development work, domestic and international, but unfortunately lived in Dallas, not a publishing city, so it was difficult to find a good position after the fall out in the tech sector.

I transformed my career by going into publishing outsourcing in 2005, and the business has been very good. Outsourcing companies love someone with my broad pubishing bakcground and the sales, marketing, and business development eperience that they do not have. My international experience has been very key. Outsourcing is certainly super charged with a great deal of political and personal resistance in the USA for obvious reasons and is certainly understandable considering the current economy. My company has focused primarily on the STM market for journals and books and we are a leader in this space. We are rapidly moving into the magazine market which has a very similar workflow to journals. The business is quite brisk and strong internationally, regardless of the economy, and the majority of international publishers are much more open to working with international vendors, especially India and the Philippines. Domestic publishers are much more reticent to outsourcing, especially in the Midwest and the Southwest, and find that this is very much the case with society and non-profit publishers such as university presses since they are not profit driven. However, with the current economic situation which may last longer than many expect, university presses are now looking more seriously at reducing costs and narrowing their losses since many use tax dollars for support, and those dollars are being cut. I have traveled extensivley to India and the Philippines and there is no question that the skill set there has improved dramatically over the years as publishing outsourcing grows due to the huge cost differential in on-shore editorial and production salaries in the USA and in India and the Philippines. College education overseas has rapidly expanded, too, so there are more and more people who can do the jobs found in the USA. For instance, we employ well over 100 technical professionals in India that have doctorates in technical areas (often from the USA) such as chemistry, physics, and math. Their average salary is probably no more than $10,000 a year at the high end which is a great deal of money in India and the Philippines. These people replace a doctoral professional here often working on the East or West Coast, with salaries approaching $100,000. The ten fold cost differential is very hard for CFO's not to ignore, especially if the quality and customer service are very good. From my perspective, the economy in the USA has fundamentally changed in ways that most of us either do not understand or want to ignore. We are in a global economy now more than ever, and each time the economy dips, like it has in 2008, the issue of overhead costs become a compelling issue for many companies. Another global issue is that many USA companies are being bought by international companies, often in the publishing field, so the outsourcing issue, which is more acceptable there, will probably only increase, especially in markets where outsourcing is small now such as in magazines. This is especially true in the editorial, and even more so in the production side. Many college students in Asia understand the money they can make learning Quark, InDesign, and other page makeup products and have a very good income at $400 a month. Many countries such as Malaysia, China, and even Vietnam are getting into the publishing outsourcing market and more and more students in these countries are going to college and entering the middle class for the first time as we know from the news on international economic events. This is a massive international economic trend outside of the USA similar to what happened here in the 1940's through the 1960's. Much of this is detailed in the Friedman book THE WORLD IS FLAT. And it is getting flatter all the time. Bottom line from a professional perspective, I think, is to avoid too much reliance on repetitive skill sets that can be easily learned in other countries where the pay is 1/10 of what it has to be here in the USA to make a living. I hope that does not sound too dire, but is what I see in my position in the outsourcing market.

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Permalink Reply by Richard Michem on October 23, 2008 at 2:12pm

The NYT, did a story last week about how law firms, are using outsourcing , to research law. So you could end up, paying a lawyers, to do legal research for you a contracts for doing outsourcing> The person, doing that legal outsourcing researching overseas. Could end up becoming, the person who also does the outsourcing art director,for your mag. What upsets me about outsourcing, would be, suppose a country like India, had some kind of inter trouble, and could stop outsourcing. Then what would you do as a publisher?

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Permalink Reply by Jim Hill on October 29, 2008 at 10:54am

Richard, you are absolutely right about law firms which is an interesting observation. Law firms, in reality, are mainly content developers when you think hard about the legal process. What is surpirsing is that the law here in the USA is very similar to the law taught in law schools in the Philippines, much more so than in India. A great deal of legal outsourcing is underway there now. On a totally other note, but similar vein, a great deal of radiology is outsourced, although we are not aware of that. We get an X Ray here, but it is reviewed overseas and the detail is sent to the radiologist overnight. I think the global issue here is that standardized tasks are easily outsourced whether it is radiology, legal work, or publishing production work with InDesign or InCopy since they are the same regardless of the geography. It is a sobering thought, but a global economic issue.

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Permalink Reply by Kenneth Tan on November 24, 2008 at 7:10am

I being in the publishing for the past 18 years, do you belief that going in to a out sourcing biz is a good career move? Appreciate if you can send me an email directly kentanblp@gmail.com
thanks

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Permalink Reply by Kerry Smith on November 27, 2008 at 9:32am

Outsourcing will continue to be an interesting option for many publishing companies looking to reduce costs. In the past, outsourcing has focused on data input and telemarketing. In the past year or so, we're seeing companies begin to outsource their entire circulation function to companies that specialize in all aspects of circulation marketing. Some companies are outsourcing graphic design and editorial design to companies in India and South America (same general time zone as U.S. is an advantage).

Since people are the biggest cost center for publishing companies, any back office functions that can be reliably outsourced to a third party and enable the company to reduce headcount and associated taxes and benefits will be considered. However, what tends to hold back these decisions are language issues where the outsourced personnel will be interacting with the magazine's customers (a big issue), time zones and their impact on communication during business hours), cost and reliability.

There are tons of companies providing outsourcing services, but my experience has been that the costs, while often lower than having staff people perform the function, the spread isn't big enough to overcome the challenges mentioned above. It's almost as if the outsourcing companies have figure out our staff costs and they come in 10% below. For 10% I'll keep my staff people and not have to worry about language and time barriers.

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Permalink Reply by David Willson on December 2, 2008 at 11:02am

It's true that publishing of any type is facing economic pressures. But in a corporate publishing environment, as Julie intimated, how much of that is due to management overhead that doesn't contribute to the publishing venture. This is what killed the last magazine that I worked on.

Given the option, corporate management will always choose to outsource what they view as a manufacturing process over their own departmental budget or the corporate expenses to cut the bottom line. They'll also "creatively" allocate legal, accounting and T&E expenses against the operating budget, even on an issue to issue basis.

Kind of a cynical point of view, I know. Here's another one. I walk by the magazine rack these days and, for the life of me, I can't find a single magazine that I want to pick up and read. Not one that titillates me with a fresh perspective, unique approach or scintillating design. Well, maybe once or twice a year. But the attrition in applied creativity has been remarkable in the last five to seven years.

As someone who has been hands-on involved with every single aspect of producing magazines, it's my opinion that the people who work on them have to be constantly engaged in brainstorming throughout the every aspect of the process. Down to the press run. Like harmonics in music, most of this creative thought is not directly discernible, but it has to be there for a publication to reach it's full potential. It's art. It's craftsmanship. And it's not manufacturing ... that is if you want anyone to read it.

I'm sure there are some wonderful examples of creative publishing in India and the Philippines for their own audiences, but they are not familiar with the North American culture to the degree that they can add to the process creatively. In fact, under the outsourcing model, they probably are discouraged from it.

For me, this discussion should be about how we bring the glory days back to publishing, how we become compelling again, And how we should rethink the business structure of our industry to support that. Not how we serve the bottom line ... even in tough times.

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