Domestic outsourcing

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In June of last year, Questex Media implemented the dreaded “O” word: outsourcing. But when the publisher of American Salon and Travel Agent outsourced its production department, it didn't send the jobs to India. It kept them in Minnesota. Questex Media inked an agreement to have Superior Media Solutions take over all of its production responsibilities, which were based in Duluth, Minn., for the Newton, Mass.-based company. With the deal, Superior Media Solutions brought 15 production staffers from Questex on board to continue producing Questex products. “We had a unique situation where SMS was able to bring over our key employees, which made the transition very seamless, relative to people and customer interaction,” said Tony D'Avino, exec VP at Questex. Bill Walker, the CEO of SMS, said the number of employees his company would hire on from any new client would depend “a lot on the size of the new customer and if they are outsourcing the execution as well as the technology.” D'Avino and Walker agreed that the transition from Questex to SMS had some bumps along the way. “Our editors and designers are learning new tools and workflow and that had led to some level of frustration early on,” D'Avino said. Weekly open discussions between Questex team members and SMS management has helped ease concerns, he said. “We have had our bumps, but now that we are through the transition we have achieved what we set out to achieve, and Questex personnel are big advocates as we talk to prospects,” said Walker who estimated that SMS is saving Questex 20% “or more” over its previous production expenditures. “Comparing our previous cost structure, which primarily included employees and benefits, enabling technologies, support, training and facilities, to our new cost structure—flexible cost structure (that is) solely based on pages produced—we are seeing significant cost savings,” D'Avino said. “I think 20% is pretty close to where we'll be when we are able to look at full-year comparisons.” Still, even with SMS helping to cut Questex's costs, Walker said that the company remained SMS's only client as this magazine went to press. “We are in deep discussions with quite a few potential customers and look forward to announcing them shortly,” he said. While the cost savings SMS can potentially provide is attractive, production executives said that the loss of control may be one reason why no other company has signed on just yet. “When you "outsource,' you have to fall in line and get with the outsource company's program,” said one production executive, who spoke on condition of anonymity. That perceived lack of control might curtail changes that a publisher would make otherwise if the production department were still in-house. For example, instead of wandering over to a production editor's desk to make a change onscreen, the production executive pointed out, a person would have to go through a much more cumbersome process and likely be charged a fee of one sort or another. “Conforming to another protocol and system can be difficult for some companies to do, and there are likely some that are resistant to do such a thing,” another production executive said. “SMS is a very impressive outfit, but even people who want to save money sometimes value that control over the lower costs. Companies are doing more with less, and switching up the workflow is often not of interest.” A third production executive said that SMS is smart to be picking up on the fact that when financial cuts need to be made, production is often the target rather than executive salaries or consultant fees. “The top layer is always the most expensive, but the action is always to cut the lowest level and then cut back on production quality while making everybody else work a little harder,” he said. “It's a slippery slope, but it appears that SMS is providing a quality way to deal with that—if a publisher is OK giving up some controls.”
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