One of the faster growing areas in BPO, which has received little attention in the media to date, is that of document management BPO. Document management BPO, which relates to the transfer of responsibility for a document-related process to a third-party, segments into three areas:
- Document infrastructure management, covering reprographics and fleet copier management and distributed printer fleet management
- Inbound document capture, verification and distribution, covering data capture, processing and distribution; document storage & retrieval; and mailroom operations
- Outbound document management services, which is further divided into:
- Transactional mail: the printing & distribution (both physical and electronic) of transactional mail such as invoices and statements
- Print management: including the print sourcing and procurement, warehousing and distribution of marketing materials and corporate documentation.
NelsonHall research indicates that, overall, document management services account for 20% of the U.K. BPO market and are predicted to grow at 10% CAAGR for the next 4 years. Recent interviews with 160 buy-side organizations in the U.K., split evenly between public and private sector organizations, reveal that one third of U.K. organizations are expect to or are seriously considering outsourcing some aspect of document management in the next 12 months. NelsonHall plans to conduct a similar U.S.-specific study in Fall 2006 in order to compare and contrast results across the markets.
Historically, outsourcing of processes around inbound document capture, verification and distribution has largely happened within wider scope BPO services. For example, in its 10-year contract with National Savings & Investments (NS&I), Siemens Business Services is responsible for all the administrative and operational processes around NS&I’s products and services, including process modernization.
In recent years, there has been increasing demand for standalone services, such as for document archiving or for the print and mail of transactional documents. An example of a standalone inbound document management contract is a 7-year, £70m document management services contract awarded to Capita by the DWP in March 2004 in which Capita manages the Department's records storage service, reengineering the processes involved in the access, retrieval and tracking of approximately 60 million social security and disability benefit claims forms and associated files. (Capita and Xerox Global Services are currently at the shortlist stage of another major DWP outsource).
What has been emerging more recently is a strong demand for multi-service document management BPO, in which an external services provider provides bundled services. NelsonHall research indicates that contract activity for multi-service document management is expected to grow at 26% CAAGR over the next 4 years.
Early significant multi-service document management contract awards included a 10-year £140m contract awarded to Williams Lea by Prudential in May 2004; this deal has involved the transfer of over 150 FTEs and 100+ temp staff to manage document-related administrative functions across Prudential's U.K. & European operations and in November 2004 Williams Lea opened a document processing center in Stirling to support this contract. Williams Lea has a similar contract with Norwich Union.
Another early example is Barclays: Astron provides a range of services encompassing print and mail, EBPP, report print and distribution, CD production, microfiche, digital archive, marketing campaign management and secure print to Barclays and Barclaycard under a single contract inherited from Edotech.
Astron and Williams Lea are both focusing on this multi-service space. Communisis also has multi-service capabilities. The U.K. financial services sector has led the way, with demand also beginning to come out of Europe and the public sector: recent awards include those by ING Bank and Imprimerie Nationale (both to Astron). Further major contract signings are anticipated in 2006.
Document management services remain an important component of wider BPO services, and nearly half of all organizations questioned by NelsonHall stated that in future they expect to purchase document management services as part of a wider BPO offering. In response to this trend, partnerships between specialist document management services vendors and the leading BPO vendors are likely, particularly to target opportunities in the public sector, and some BPO vendors are evaluating whether or not to develop or acquire their own multi-service document management services capability.
Overall, it is evident that strong sector-specific capabilities are essential for success in document management services, as elsewhere in the BPO market. For example, particular emphases required by the financial services sector include previous experience in banking sector and experience in document security.
There are four main strands in vendor positioning within the document management services market:
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The development by some services providers of comprehensive multi-service document management services capabilities to meet the demand discussed above
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An increasing emphasis by some services providers on targeting major print management contracts. With print management, many print companies are primarily acting as print manufacturers or as print managers: firms that can effectively blend the two without appearing to favor their own printing operations are, arguably, at an advantage. There is some evidence that multi-national companies are looking for vendors who can provide print management services across a number of European countries. TPF’s contract with Shell Retail Europe indicates that best of breed smaller service providers can compete successfully for this type of contract. This increasing demand for multi-country print management services requires a local point of presence and experience of having managed the provision of printed materials sourced from lower cost regions in Eastern Europe
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The development of capabilities by some vendors to assist organizations in optimizing their transactional mail management capabilities to combine statements with marketing messages, and shift service delivery from physical mailings to online self-service access. Communisis, who has established a near monopoly in checkbook printing in the U.K., has also moved in statement print and mail through a 10-year £250m statement printing contract with HSBC awarded in January 2006 involving the transfer of HSBC's U.K. bank statement production business and c. 250 employees to Communisis
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An increased emphasis on inbound document management services to assist organizations in moving to electronic handling of documents: the “digital mailroom”, with some vendors, for example Pitney Bowes Management Services, also emphasizing their mail screening services
Other services providers looking to expand their portfolio of document service offerings include:
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Output device manufacturers and resellers, such as Xerox Global Services and IKON
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Some of the second tier print management companies, such as TPF Group and Triple Arc
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Services providers offering document creation services. TSO has dominance in developing and producing information and official documents for the central government sector and also has extensive distribution capabilities. TSO is likely to emerge as a major player in the market. A separate category of document creation services relates to technical and operational documents: Capgemini and Xerox Global Services have capabilities in this niche area.
There has been significant M&A activity in this space, including:
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RR Donnelley’s acquisition of Astron in June 2005 for £520m, and of Office Tiger in April 2006.
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The acquisition in March 2006 of a major (not majority) shareholding in Williams Lea by Deutsche Post World Net
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Cendris (a subsidiary of Royal TPG Post) changing its name to TNT Document Services in September 2005 following TNT’s acquisition of Dutch print and mailing house Euro Mail through Cendris.
Now that the U.K. postal services market is open to competition, there is strong interest by postal organizations in benefiting from volume mailings, and discounted postal charges are a major feature of high volume print and mail services. Further acquisitions of organizations offering direct and/or transactional print and mail services are likely.
About NelsonHall
NelsonHall is the leading Business Process Outsourcing (BPO) analyst firm. The company provides buy-side and sell-side organizations with deep and independent subject matter expertise in all the major BPO disciplines, including finance & accounting, human resources, procurement, and customer management services. The company is also unique in its in-depth coverage and subject matter expertise in industry-specific processes specifically covering sectors such as banking, insurance, and government, and in its evidence-based tracking of worldwide and regional BPO activity. For more information on NelsonHall, please contact Paul Connolly at +44 (0)870 770 5967 or email paul.connolly@nelson-hall.com. |
