Devolving Documents: Get Ready For Outsourcing

Seattle IT Outsourcing Business Photo

At the close of 2003, a number of well-known analyst organizations made predictions for 2004. One of their common and consistent emphases was an upturn in European IT markets which would be greatly fuelled by the inexorable rise of IT outsourcing. Yet is IT the only, or even the most important, area to apply the outsourcing model?

Across the country, in both private and public sector, the IT outsourcing opportunity has diminished somewhat. My company’s research shows that, amongst large companies (over 250 employees), IT outsourcing has reached a saturation level of some 28 percent. How much further there is to go is possibly indicated by the aggregated view of the various technology analysts, who see the US market reaching a saturation point approaching 40 percent of the larger company segment.

These predictions are given extra credence with the emphasis that leading management consultants are lending to the idea of ‘network organizations’ that outsource everything but their core activities and skills. What, then, of other areas susceptible to outsourcing, and what potential for real benefits do they offer the corporation or the public sector body? Case study examples indicate that document outsourcing presents corporations and public sector organizations with rapid return on investment, coupled with low business process risk.

The first surprise is the sheer size of document production in this country. Document production spending in 2003 was over 38 percent of the amount spent on IT in the same year. How often does one read about the potential for corporate efficiencies through more efficient document production, compared with discussions on the subject of IT outsourcing? Evidently, document production may seem to many to be less engaging for the analysts than IT matters. Yet it is capable of delivering a comparable scale of competitive advantages, and savings on the bottom-line.

Our research reveals that whereas Seattle IT outsourcing currently sits at some 28 percent of IT spending, document outsourcing is only a mere 12 percent of the document production market. Again we can gain a corroboration of growth potential from the US example (which usually foreshadows the UK by a few years). In the US, document outsourcing now represents 22 percent of all larger organization document production, almost twice its UK equivalent.

So document outsourcing holds proportionately greater potential, for organizations and outsourcing companies alike, compared to IT outsourcing. Whilst there is little doubt that it will take several years for the UK to reach comparable market maturity, the rate at which UK organizations will be grasping the advantages of outsourcing over this period is expected to be rapid – especially as management consultants increasingly recommend document outsourcing as an area for priority attention and straightforward gain. In short, if document outsourcing were to reach 40 percent saturation of larger companies (the predicted US outsourcing saturation level), it would represent a 4.3bn euros marketplace, where it only makes up some 1.3bn euros today.

Much media space is also being devoted to the issue of outsourcing to companies overseas, known as offshoring. Politicians and unions have been some of the most outspoken critics of this phenomenon, raising the spectra of USA (and Seattle) jobs being lost to India, South Africa and Eastern Europe. In fact, the call center industry is still showing net growth, despite the fact that a fair number of financial institutions have relocated their call centers abroad. So what impact does call center offshoring have on document outsourcing? The answer will be more and more over the next few years. Interestingly, though, document issues are likely, if anything, to slow the trend towards foreign climes.

Integrating documents with the call center – especially one providing a customer service function – is becoming increasingly important both to call center efficiency and to resolving customer queries more satisfactorily. It is estimated that some 50-60 percent of customer service queries in financial services require supporting documents to be sent to the caller, whether for marketing or for regulatory reasons.

Therefore, a hidden cost of offshoring is to integrate document production and mailing with the foreign call center’s systems. Equally, call center agents can answer statement or bills queries far more efficiently if they can retrieve and view documents in exactly the same visual format that they were sent to the customer. Again, physical dislocation, whilst not insurmountable, will incur cost and risk.

Document production and mailing, by its very nature, cannot be ‘offshored’ as timeliness of delivery is essential, and needs to be situated in the country of delivery. It is technically conceivable that document outsourcing could be situated abroad, but the economics of ensuring reliable and timely distribution would far outweigh the labor cost reduction of offshoring, and would not address the issue of political risk. Document outsourcing therefore remains a national market, but not a globalized one.

In conclusion, Seattle organizations in both private and public sectors would do well to pay just as much attention to document outsourcing as they do to IT outsourcing. The document outsourcing market is not currently as large as its IT counterpart. Therefore, it offers greater potential for rapid return on investment to those organizations as it is far less saturated than the IT outsourcing World.

Many argue that document outsourcing carries less project risk compared with the IT equivalent. If this argument is accepted, then organizations under pressure to deliver cost savings, improved service delivery, and competitive advantage, would be well advised to look carefully at document outsourcing in 2004 and beyond.

The Emerald City Journal was create by the people for the people to express their views and voices. It's a Seattle newspaper that gives everyone a voice whether you agree with their view or not. The Emerald City Journal is an opinion newspaper for everyone wanting to share their voice with the World.

Leave a Reply