More and more, Gartner clients have been asking about outsourcing their document workflows every year for the last three years. We find that enterprises and government agencies are increasingly engaging strategic document outsourcing (SDO) providers as a means to cut their fixed and overhead costs, avoid capital expenditures, improve business processes, ensure compliance with complex regulations and enhance customer communications. I'd like to share with you a high-level view of our recent SDO forecast for North America. While every company is different, I know from experience that both providers and users benefit from understanding whether a market is growing and why. Gartner defines business process outsourcing (BPO) as the delegation of an IT-enabled business process to a third party that owns, administers and manages the process. SDO cuts across BPO segments, such as enterprise services, customer management, supply management and operations segments. SDO focuses on the printed and electronic publication of customer communications, including content creation, incoming document processing, multi-media presentation and archiving. Typically, the outsourced documents are generated by ERP systems, CRM and content management databases, publishing systems used to create print and electronic output, and inbound communications from customers, prospective customers and vendors. The purpose of these communications may be marketing, sales, informational or transactional. Gartner's SDO forecast covers the four document life cycle categories: inbound services, in-process management services, outbound services and repository services. We project revenue growth in the North American market will grow at a 4% compound annual growth rate (CAGR) from 2010 through 2015. Overall revenue grew from $16.8 billion in 2009 to $17.2 billion in 2010 and is projected to grow to $20.8 billion by 2015. No doubt, you are not alone in considering document outsourcing. Clients frequently ask about "inbound services," the segment often known as "scan, capture and extract." We project this segment will experience strong growth over the forecast period, beginning with a 5% revenue increase from 2010 to 2011 and averaging 6.5% revenue growth through 2015. This growth is spurred on by end users' need for completely automated workflows, competitive price pressures over the longer term and the SDO providers' ability to supplement inbound services revenue with other value-added SDO services. In-process management services will experience a 2.9% increase in 2011. Growth in this segment is driven by print supply chain management, which will grow mainly because large organizations have lost the expertise necessary to purchase marketing materials and other printed matter and not because organizations are printing more. One of the "traditional" document outsourcing categories, "outbound services" will be essentially flat with only a 1.9% revenue increase in 2011. Transaction publishing, which is primarily paper-based invoices, statements, checks, policies and other similar items, remains a drag on the category with a flat 1.6% CAGR through 2015. Transaction documents are migrating from higher revenue paper documents to electronic presentation, reducing their revenue, albeit at a slow pace. Interestingly, our research found that providers have been able to sustain and even grow revenue (in one case, by more than 30% from 2009) by bringing on new customers that formerly insourced document printing and mailing. Altogether, the new mail volume basically offsets the amount lost to electronic communications and householding and other techniques that buyers are using to cut the number of mailings and the associated (and growing) postage costs. SDO providers see the multi-media publishing segment as having significant revenue potential. Multi-media publishing incorporates all of the marketing materials and related campaigns, whether in print or electronic form, or, ideally, in both. Archiving services involve storing end users' documents and other materials in physical and/or electronic format, as well as subsequent retrieval when needed. Cost containment, reduction of primary on-site storage capacity associated with archiving and e-discovery are the primary drivers for outsourcing the archive function. This segment is forecast to grow 2% in 2011 and 4% in 2012. Given the fact economic conditions on the whole are not improving substantially, companies like yours continually look for ways to cut costs and improve document workflows. As you can see from the forecast, the strategic document outsourcing market is a buyer's market. Now is the time for cost-conscious buyer to engage providers with document process improvement expertise, especially outsourcing of the internal scanning and high-volume transaction printing processes that are not one of your true core competencies.
PETE BASILIERE is the research director at Gartner in the Technology and Service Provider organization, providing research and advice on production printing systems and applications, strategic document outsourcing (SDO) and 3D printing, including best practices, market strategies and technology trends. For the full report, visit www.gartner.com.
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