Outsourcing the paperwork

Companies are turning over back-office functions to third party providers.

No matter what your industry or size, gaining control over documents is crucial to every organisation. Ever-expanding government regulations such as Sarbanes-Oxley (SOX) and Health Insurance Portability and Accountability Act (HIPAA) demand an effective and auditable control systems for all documents and communications "" both paper and electronic.

International Data Corporation estimates that office workers produce around 7.5 billion documents a year with executives spending close to 45 per cent of their time working with documents. It's no surprise that competitive pressures require organisations to become more efficient and responsive in order to survive and thrive.

Within the broad spectrum of outsourcing, document process outsourcing (DPO) is around $45 billion market and growing at a compounded annual growth rate of 35 per cent.

This is not surprising, because an average mid-sized to large organisation (with 500 to 2,000 employees) spends more than $3.5 million annually in printing and print-related services.

Research indicates that documents consume about 50 per cent of the domestic IT budgets, with companies spending almost 10 per cent of their revenues on document production management and distribution alone.

For Ravi Venkatraman, director, Xerox Global Services, Xerox India, this is a colossal wastage of resources. "Companies with document intensive work, which includes banks and financial institutions, telecom majors, retail outlets, manufacturers, must leverage the value proposition offered by document management outsourcing vendors," he says.

One of XGS's offerings, Document Outsourcing and Communication Services (DOCS), explains Venkatraman, provides a comprehensive suite of services from design through delivery enabling an enterprise to manage costs and increase ROI by an average of 20 per cent.

"Designed indigenously by Xerox to improve customer acquisition and loyalty while optimising the cost, DOCS aims to provide 40 per cent increase in productivity levels of an enterprise," he adds.

With an aim to acquire 30 new clients in India in 2006 (with an average revenue realisation between $9-12 million per client), XGS now plans to hire 500 additional people to expand its operations.

Xerox's aim is to consolidate its offerings platform through selective enterprise focus across BFSI, manufacturing, healthcare and telecom verticals. XGS aims to cater to more than 55 per cent of the document needs of these verticals.

Puneet Chadha, country manager (commercial sales, imaging and printing group), HP India, agrees that turning over back-office and other internal functions to third party providers is fast catching the fancy of Indian CIOs.

HP, backed by dominant share in the printer market, is confident of making it big in 2007 with its "managed print services" for the enterprise segment. "Verticals like healthcare, manufacturing, insurance and even the government promise a great market for outsourced document management services," he says.

HP's software tool called Web Jetadmin 8.1 helps organisations understand their printing deficiencies, claims the company. Chadha reasons that managing documents is non-core to most companies and should be outsourced to professionals, who have specialist software, a central repository of live files, and trained people to manage the process.

He adds, "HP Web Jetadmin 8.1 can help enterprises as well as medium to large organisations decrease IT time spent managing their printing and imaging environment with new features such as links to HP Instant Support and assisted supplies ordering."

A spokesperson of Lexmark, a $5.2 billion printing and imaging company says, "This kind of outsourcing occurs frequently in a wide cross-section of non-core functional areas, from software development and web design to information technology management and help desk, to human resources and accounting, to copy centers and mailrooms."

Spiralling printing and copying costs, complexities of complying with new legislation, document security and leveraging the growing number of new colour and multifunctional technologies, have only helped the case of vendors like Xerox, HP, Canon and Lexmark.