MPS Ltd


(Mahesh Shah) #446

Yes Hitesh…as told to richdreams also in my last post, don’t take my data points otherwise…these are just the pointers and not to convince anyone regarding any particular side…it is very important to check whether what management is saying is factually right or not and its only for that…for ex., a 58 % YoY topline growth in MPS-NA, doesn’t seem logical atall if we sum up all parts…it was only for that nothing else…rgdg. valuation exercise done, it was just to point that with continued sluggish growth, valuation have derated to come on par with biggies and MPS is still considered and is bundled amongst IT companies in India…even a comparison with Eclerx is made which is more l-t-l Kpo play like MPS albeit in a different industry…have purposefully avoided companies like Firstsource which trade at extremely low multiples but have hazy future…only best companies are compared.

My disclosures regarding selling of shares is because of compulsion otherwise would have loved discussion in absence of disclosures as sometimes disclosure have a convincing effect which actually they should not have as its only because of different viewpoints we have trading in a share otherwise there will be only buyers and only sellers…

This is to reiterate, selling is my personal decision and its only that rather than living in uncertainties perceived by me, I have chosen to take a fresh call post certainty arrives as I can afford to do so.

Rgds.


(richdreamz) #447

Oh my God, Mahesh, you took it to your heart, never have I intended to hurt you. That’s why I was careful to word my sentence too in such a way that the tone is never superfluous. :slightly_smiling:

Actually, I take your data points seriously as there is a lot of work that went into it but due to different perceptions, based on a single data point there can be different views which is currently the case. Portfolio size, opportunity cost, entry price, patience levels, expectations all play a role in arriving at a view.

Anyway, back to discussion on MPS now :slightly_smiling:


(Milan Shah) #448

I think the crux of the matter is the honesty and competence of management. For every situation, things can be argued different ways. Also, my personal feeling is that one should not read too much into small quarterly variations like headcount etc. At this point in time, everything that we have heard about Mr. Arora seems to suggest he is ethical.

There are two ways that the story can turn out - one - it is discovered that Mr. Arora is not completely on the up and up and in this case the price is going to collapse or two - that we investors are in the hands of an extraordinary manager and in that case we will see an unparalleled growth story.

One test will be the March quarter. Mr. Arora has hinted a few times of a good Q4 - if this does not turn out to be true, then belief in Mr. Arora is going to drop rapidly.

Discl; One of the biggest components of my portfolio and continue to hold it.


(Raghav) #449

@Mahesh
Excellent thought process for an investor.
As i read your note, i got reminded of this quote attributed to Keynes
"when the facts change, i change my mind, what do you do sir?"
All the data is laid out & its for each individual to assign his/her own probabilities based on their own margin of safety to arrive at a invest/hold/exit call.
Critical analysis of this kind is a lesson and a reminder to some of us to stay focused on the process - thank you for your detailed notes !


(Vishnu Ch) #450

On Acquisition delay:

As was mentioned in the Mgmt Q&A, an important factor for an acquisition is the blessing from existing (and target) customers.

While a downturn is a positive on a net-net basis for attractive valuations, it can be a double edged sword for customers of the target company which may not want to be adventurous and risk changing vendors during this period of uncertainty.

Given the conservative (/stickiness) nature of customers, one can expect this issue to continue to test our patience, and continue to believe that Nishith Arora is indeed waiting for a fat pitch to strike out of the park. :grinning:

With respect to the nature of acquisitions, i am on the side of doing 1 biggie rather than multiple small ones. 2 reasons:

  1. In terms of decision making, there is a risk of more mistake with multiple small ones rather than doing 1 biggie considering the amount of time and effort being put. (Funnily enough, this is a parallel to the classic debate of concentration v/s diversification)
  2. As the operational management had been handed over to Rahul Arora, it may be too much to handle for him in terms of integrating multiple small ones, when there are still issues with earlier ones.

Disc: Invested.


#451

excellent digging up the details and application of thought! apologies to moderators for one line post.


(Mahesh Shah) #452

TNQ’s FY15 results are out…in FY15, TNQ Books & Journal’s topline has grown by + 31.52 % YoY in INR terms.

Hence, now we have official FY15 topline figures of all reasonable Indian peers of MPS.

If we look at closely then four companies viz., MPS, SPS, Newgen Knowledgeworks & TNQ Books & Journals have almost identical offerings and are part of the same industry and cater to similar verticals/clients. Hence, it is logical to assume that same business dynamics should play out on each of the company with respect to pricing pressures and volume/value growth. For a true and fair assessment what I did is arrived at constant currency (USD) value growth achieved by each of these companies from FY12 till FY15 – the time from which MPS came under new management’s control. Let’s first have a look at figures :

– From FY12 till FY14, MPS underperformed all its three peers despite one acquisition that of Element worth ~11 % of its FY13 $ scale whose financials were consolidated for 9 months in FY14.

– In FY15, MPS, on a consolidated basis, outperformed SPS and Newgen but underperformed TNQ – this is after two acquisitions, one – EPS worth ~ 7 % of its FY14 consolidated $ scale whose financials were consoldiated for 6 months in FY15 and TSI whose financials were not consolidated atall in FY15. In addition, Element’s financials were consolidated for complete 12 months in FY15.


MPS has already so far, over last 3 years, acquired revenues worth 23 % of its existing scale (via Element, EPS & TSI)…Even after resorting to inorganic route to acquire 23 % of its existing scale, organic growth is not coming atall and at the same time we are facing haircuts on acquired entities. Forget TSI for the moment for which completing 1 complete year under MPS is still one quarter away, Element (8 % of its existing FY15 scale when acquired) is already 2.5 years old, EPS (7 % of its existing scale when acquired) is already 1.25 years old and still organic growth is not visible at all (+2,37 % YoY cc organic growth in 9MFY16)… why this is happening ??

??
Is it that US-based acquisitions are difficult to turnaround as compared to India-based acquisitions. Even MPS under Macmillan failed only post US-based acquisitions like ICC and Compset. All the three acquisitions done by MPS so far are US-based, and all have failed to live upto expectation atleast uptill now.

??
Or is it that industry itself is facing such a severe downturn that growth is not coming atall. To assess this I looked at Aptara & Innodata’s numbers (pertaining to respective l-t-l business divisions w.r.t. MPS business). It is to be noted that it is these peers with which MPS wants to close the scale-gap…

– From data enlisted in above two tables, one thing is pretty clear that whereas in FY12 & FY13, all companies except MPS grew more or less in double digits, its starting FY14 that two largest players in the industry viz., Aptara & Innodata started facing pressure on topline growth which became worse over time till date. In contrast, Indian players, except TNQ, have only started to feel pressure in FY15.
(It is to be noted that over last two years and till Sep’2015 in FY16, two largest players in the industry, Aptara & Innodata have struggled to grow their topline not only because of education-related business but also because of XBRL business.)


An answer to this organic growth puzzle is very important as based on this we might be able to approximately assess the long term value addition the likely big acquisition(s) will do to MPS…


Vishnu pointed one very important thing regarding ‘Client Blessed’ acquisitions…so far all three acquisitions are ‘Client Blessed’…but, shouldn’t such client blessed acquisition come with volume/contract assurances from clients or is it that as Jim Hill has pointed out in his article, because one of your service provider is in trouble, one other healthy service provider you are working with acquires it and bails it out so that you face a smooth transition ??

If US-based acquisition are difficult to turnaround and extract value, then the delay in acquisition might be because management might be looking for an Indian acquisition which is having low-cost destination ready as also contract arrangements inplace with clients. But, whether its an Indian acquisition or healthy profit making US acquisition, such acquisitions don’t come cheap as evenif you are not growing topline and still working at 10-15 % EBITDA margin without much debt on your books, why you will sell out cheap ??

At one point organic growth has to start as otherwise a business model based on only inorganic growth will have its limitation upto a particular scale as cool_aksh has rightly pointed out.


Note – This is not a Buy/Sell/Hold recommendation of any kind and is only part of a general dscussion. Here, key questions arising out of available statistical facts and figures are enlisted only with a purpose of finding answers and not for drawing any conclusion out of that.

Discl. - Negligible holding but company under active & close watch.


(Milan Shah) #453

Thanks Mahesh for the detailed analysis. On your point of lack of organic growth, in the AR, it has been mentioned that volumes with large customers have grown considerably but this has happened with a quid pro quo of price reduction. Hence the organic growth is not visible in revenue value terms. We must not forget that this is a conscious strategy being followed by Mr. Arora. This is a business which is very different from other businesses, in that this business has a handful of large global clients. The only way to increase traction with these global majors is to first get them to be your customers even at the cost of price reduction. Then the idea is to slowly increase business with them. In my humble opinion this is what Mr. Arora seems to be doing. He has mentioned that Q4 will be good when US acquisitions will start delivering. Let’s see if that is true.
Discl; Significant portion of portfolio in MPS


(Mahesh Shah) #454

@milan_j_shah

To reiterate my old observation, “Severe” pricing pressures such as they have a pretty significant impact on value growth seem to be missing if we analyse sector as a whole. Let’s do a reverse engineering by believing the existence of such severe pricing pressure and calculate volume growth of each of the reasonable Indian player by applying the same pricing cuts on each of them :

You will notice from above, we have assumed conservative double digit volume growth for MPS each year and derived pricing cuts out of that.

By applying the same pricing cuts to other players, we have derived volume growth for each one of them.

Now, few questions arise if this theory is indeed true :

– We have Mr. Nishith Arora on record saying that in FY13 their largest client Elsevier committed to double its volumes –

now, if we assume that Elsevier being the largest client must be contributing more tan 10 % of then FY12 revenue (revenue from Top 5 clients in FY12 = 47 %). But, in the same FY13 we have seen MPS deliver a cc negative -(7.09) % value growth. We have believed that pricing cuts were so severe that this happened and so have assumed a modest 10 % volume growth with a ~15 % price-cut which led to such a negative value growth. Now, when the same pricing cuts are applied to other players, we have each player growing its volume at healthy 35 % + YoY in FY13.

One important thing to think deeply here is – was the publishing industry so healthy in FY13 to give away such a tremendous volume of work to each of the player which were in Top 10 at that time (and are even today). Here we have ignored the healthy 15 % + value growth delivered by top 2 players in the industry viz., Aptara & Innodata in FY13 since they catered to segments other than Education also.

There could be two things to it – severe pricing pressures were specific to MPS alone because :
either -
Macmillan was charging unreasonably high prices before Mr. Arora acquired MPS.
or -
it could be that Mr. Arora intentionally lowered the prices and gave significant discounts to attract the customers.

Now, if its the later then by having such a price disparity i.e. MPS alone doing work at such a low cost, logically customers should give away heavy volumes to MPS as MPS was not constrained by capacity and was working at only 40-50 % utlisation level (with underutilised Dehradun facility). But, if we see FY14 and again apply the same dynamics to other players then we find that other Indian players outperformed MPS in volume growth quite handsomely by growing their volumes at double the rate of MPS.

In FY15 again, MPS seems to have outperformed SPS and seems to have grown at par with Newgen and underperformed TNQ in volume terms if the same derived pricing cuts are applied. So, we don’t see major outperformance in FY15 too.

Another thing to ponder is, if this theory is correct and players have to cut prices in double digit % every year to acquire volume, how long can margins sustain ?? Based on the assumed pricing cuts, for a product pricing per unit 100 which was charged in FY11, in FY15 charge has come down to 62.13 per unit.

To conclude, I don’t think severe pricing pressure theory is correct and logical and I feel its that MPS was underperforming its Indian peers till FY14 and is now performing inline starting FY15.

I stress the point that all these is not discussed here with an aim to convince anyone regarding any one side of the story but is only discussed with valid data points so that certain important confusing puzzles can be solved.

Rgds.


(richdreamz) #455

All said and done, Nishith Arora has turned out to be master at valuing the businesses keeping ‘aside’ the noise of boom and bust. For a mere me, all I wanted was “Nishith, make that damn acquisition”! - because in short term as a shareholder I gain from stock price increase. While Nishith wanted to create long term shareholder value.

All along he has been saying in quarterly shareholder meetings that valuations were high & valuations were high and companies are available but people wanted more money to part with the company. Accordingly market topped out in March and has ever since been in downward channel.

If any logic has survived within me, any company he wanted to acquire would be available for at least 20-30% lower now compared to July-August of 2015. After a prolonged down trend in valuations in stock market, final leg is when promoters looking to sellout will temper their expectations.

My guess is as good as yours - Will he make that acquisition now? Whatever be that, my faith in the management has only increased because not only this time around, he showed his shrewd business acumen while acquiring Macmillan!

Fingers are no more crossed, a bit relaxed. Time will tell!


(Rohit Ojha) #456

The target company may or may not be a listed entity. If it is listed, it would be a great direct advantage because of the depressed market conditions. If it is not, then the valuations may not be lowered to the same extent. But definitely the deal would be valued relative to some of the listed peers. Im also patiently waiting.
Meanwhile if there is a final dividend of 8rs, the company has a yield of close to 5%


(Mahesh Shah) #457

True…this is the best time for acquisitions as all the factors are in favour and company has an upper hand because of cash it has (although I still maintain that continuing with an extremely generous dividend payout policy while at the same time raising qip funds ahead of time raises questions and will severely hamper future fund raising unless acquisition is a great success like Macmillan).

I would prefer India based acquisitions as it will again throw open the scope for margin improvement. US based acquisitions might be difficult to create significant value in the long run. Most preferable will be acquisition in platform space if it’s indeed a US based acquisition.

Two things are notable – macros are deteriorating every passing day and second, good peers like Newgen, SPS , TNQ are also robust cash generating companies so in case of compelling opportunities they might also be the suitors along with MPS.

@pikrohit There are not many players in listed space so acquisition is bound to be in unlisted space. However in unlisted space too valuation will get depressed because of deteriorating macros reducing future business visibility.

Unless profile of future acquisition is known, dividend yield might be only notional as temporarily it might get curtailed.

I am also eagerly awaiting acquisitions and hope it happens atleast in March2016 (if not now then when :slightly_smiling:).


(Vishal Bharti) #458

If waiting for acquisition is the main logic to stick to this, why not consider Torrent Pharma(who also seems to be one that may do some acquisition) - further, it has been showing good growth too!


(Milan Shah) #459

I think the acquisition delay has been frustrating. However, as Richdreamz mentioned, this only shows what mettle Nishith has - inspite of increasing pressure on him, he has stuck to his guns to go for only value accretive acquisitions. Also it shows his long term focus. I think the QIP has worked well for small investors in one way - we need not worry about MPS management being up to some hanky panky stuff because now they have two huge houses in HDFC and Goldman to answer to, so I think we can rest at ease. In the last concall, they alluded to a good Q4 - if that does not happen, then we would have real reason to worry because for the first time I would wonder if the management knows what they are talking about…


(Sreekanth) #460

@Mahesh

In hindsight the way how MPS management raised money through QIP route from anchor investors rather than taking the PE route as some of the notable peers (eg: American Capital for Aptara, Cinven for SPS, Carlyle for Newgen etc) also reflects the conservatism of the management of not aggressively following growth opportunities (maybe that could also explain why peers would have grown aggressively with PE money)

Secondly I was doing some digging and found that Coral Hub Ltd (Earlier known as Vishal Information Technologies Ltd; a listed player now has got suspended; http://www.idbicapital.com/pdf/VishalInformationTechnologies_DRHP.pdf) was also into similar business as MPS (could you extract more possible information on this? Maybe would also be a potential candidate for takeover :slight_smile: )

Regards

Disclosures: 5% of holdings in MPS; Not traded over past 30 days.


(Mahesh Shah) #461

@srnarayan

For any growing company with a long term vision, inviting a good PE player as a strategic investor is the greatest asset to have as they immensely assist the management in achieving the stated objectives in the most proper way. Agreed, with a PE investor there comes immense pressure to perform but in a way it benefits the shareholders as the goal of a PE player is to do value addition and exit it’s investment at a decent return within a stipulated timeframe. However, no PE player would have taken stake in MPS at the valuations at which the stake was placed to funds (21x Ttm EV/ebitda, 30+ Ttm p/e). Hence, I feel it’s the valuations at which the funds were raised that may have acted as a dampener to any PE player entry.

Regarding digging into possible acquisition targets, let first actual target be known after that it will be proper to channelise our energies on digging for it as there are numerous targets out there.

Rgds.


(Milan Shah) #462

Sorry Mahesh this is not a direct reply but I don’t know how to put a fresh post without ‘Reply’. As the announcement of the restricted period prior to results for Q4 shows, MPS will be declaring results as usual in April. This means that there is no scope of an acquisition to be announced before Mar 31 else the consolidation of the subsidiary would not be possible so quickly. So it looks like the acquisition falls into the next year an incredible one year after the QIP…


(Mahesh Shah) #463

@milan_j_shah

In any case, now few days remaining to end the fiscal, no company will like to announce an acquisition unless it is absolutely necessary…however, MPS has not joined dividend frenzy post budget so it could in a way mean an acquisition soon, most probably in April month…lets see…acquisition profile will be very important so will be Q4’ results.

Rgds.

Discl. - No Holding.


(Mahesh Shah) #464

Publishing Outsourcing: Blood on the Floor 2016

Apr 5, 2016
by Jim Hill
Publishing Outsourcing Consulting



Publishing outsourcing is seeing a lot of blood on the floor early in 2016.

And, I suspect, that there will be even more blood flowing by the end of the year.

You almost get the sense that offshore providers need to arrange for ambulance services, tourniquets, and large supplies of blood transfusion equipment. And, for those few that remain standing, at least knee high rubber, wading boots might be a healthy choice. Surgical gloves, too.

If you have not seen the HfS report on outsourcing in general relative to “the race to the bottom” and their market analysis, you may want to check it here: http://www.horsesforsources.com/race-to-bottom_122415. I find this report a very objective, transparent, and objective view of outsourcing challenges in 2016.

I have taken some time off the last six months to do a thorough review of the publishing outsourcing market. Insightful to stand back and see the playing field unfold from a distance. During that time I have published a number of articles on LinkedIn about general market conditions, and some of the critical challenges not only for providers, but for publishers as well. This article provides more detail to my previous article “Publishing Outsourcing: Is Your Offshore Provider in Trouble?”

Unfortunately, I continue to see the same challenges and issues with providers that I noted almost twelve months ago, although general market conditions seem to have worsened considerably for many providers over the last six months. The market continues to consolidate and mature, and more providers are for sale, but, unfortunately, few if any buyers.

One very recent market observation:

Senior, talented sales people leaving the industry.

One particular, negative market condition that has accelerated in frequency recently is the departure of some of the most senior level sales people in the industry. They are not just leaving a provider: they are leaving the industry, which is very telling. And, most that I have personally spoken with have breathed a sigh of relief that they got out. Sorry for the analogy, but speaking with these sales people is almost like talking with someone in Brussels or in Paris who narrowly missed an Isis terror attack by five minutes. I will not mention specific providers, but have seen this trend now with about 20+ key sales people with large, medium, and small providers, all of which have well over 15 years of sales experience, often with very strong sales records with previous providers. Another telling part of this sales issue is that these sales people often do not list their most recent provider-employer on their LinkedIn profile. As if they never worked there. It is almost as if the sales person wants to publicly hide the fact that they worked for a particular offshore provider. This strikes me as very ugly.

What is the critical takeaway from this market condition?

My personal view from here is that the lack of top line sales is not a sales person issue at all in 95% of the cases, but much more about thoughtful and strategic preparation by the provider in a mature and highly consolidated market that simply has far too many providers for the size of the industry.

What follows are some of the key issues that I have noted before about challenges in this industry.

However, I have provided some additional detail and insight that might be of help to providers, publishers, and especially sales people for implementing more innovative and strategic change management to improve performance.

Many USA sales people do not trust their offshore provider-employer. Painfully sad, but profoundly true.

When I speak privately to many sales people in the USA who work for an offshore provider, the most noticeable issue is that they just do not have much trust in their provider to use sound business judgment. Clearly, many providers have a long way to go to learn how to work collaboratively with US sales people.

Equally important, the churn rate with sales people with some providers is very high, and often unpredictable. My take from here, that I have witnessed many times myself, is that providers just do not want to listen to constructive criticism unless you are telling them exactly what they want to hear. A candid, personal experience: I told a senior VP for over six months that our conversion service was at high risk with our number one account. He never listened. After six months, the publisher cut revenue with us by almost $1M US a year. Ouch. Also, I know another key sales person in the USA with a large provider who landed a major account with over $10M in sales, but was never paid the bonus for his effort. Probably a loss of more than $200,000 US. The truth does not get any more bloody than this. Political correctness on this sales issue is a nuclear disaster. Consequently, providers need to wake up from a delusional stupor and learn how to work in an adult, collaborative relationship with their sales people if they expect positive results.

With US sales people, word travels, and it travels fast, long, and wide.

If there are a series of rapes in your neighborhood over an extended period of time, most people anywhere become acutely aware of the frightening risk. Obviously, word travels very quickly. Same with offshore providers who seem to take advantage of sales people with very tactical, short term approaches to the sales function. This is a very small industry, and such issues are as viral as ebola.

C- level executives with multiple graduate degrees who have no clue that market conditions have changed dramatically.

This is like showing up in Afghanistan with a slingshot when you are facing a highly trained and armed Isis military with automatic weapons and IEDs. High double digit sales growth has largely gone by the wayside, but I continue to see providers hire new sales people with a sales forecast of $1-2M in the first year. I personally interviewed with one provider recently who had a forecast of $5M US in two years. This is way beyond just being delusional. Most MBA graduates have heard of the sales cycle, and that in mature and consolidating markets, the cycle lengthens–a lot. It does not shrink. This is an emotional intelligence issue, not business. The need for immediate results appears as an act of emotional desperation. And, this is not astrophysics.

Lack of effective marketing.

Many providers still seem to be very confused with the rudimentary differences in “features” and “benefits” with marketing collateral as a sales support tool. Often, little or no compelling testimonials about current clients, no case studies, and no innovative differentiation statements with current services. I have spoken with at least 40 providers in the last 8 months, and I always ask them: “tell me what differentiates your services from other providers?” 99% of the time, they simply pause . . . and there is a long stutter–with no answer. If a provider can not articulate a company positioning statement in 60 seconds, that is a pulsating red, neon sign.

Over reliance on very primitive email as a primary sales lead generator.

Using email exclusively as a lead generation tool is like waking up every morning, being hungry, and no food, and no restaurants or grocery stores. You have to go out and hunt for food with your bare hands every day in order to eat. It can work, but it sure is difficult, and if you do not catch anything: you go hungry. Does it get any more primitive than this? No compelling marketing content about current services in the email. I see dozens of these emails a week from offshore providers. “We do it cheaper, better and faster, and have the best price. Don’t you want to buy some from us?” Argh. This strikes me as a quick path to starvation.

Lack of thought leadership and use of social media.

I highlighted this in another article in great detail, but, again, I see many providers who have little or no social media presence, especially LinkedIn, other than an occasional press release or blatant sales oriented content once a month that shouts in the first sentence: “please buy this now.” Most of this type of content is lucky to get 50 views in a month. Another critical issue is that I see key sales people, and especially C level executives and CEOs, who have little or no compelling LinkedIn profiles. One CEO, who will remain anonymous, has the title of “Chief Energy Officer.” What in God’s name does that mean? Publishing services is not the oil and gas industry. Also, the profiles often read like resumes from the 1980’s with an exclusive focus on job descriptions, and no quantification of accomplishments. And, no personal branding. Social media and content marketing are not cutting edge anymore. Time to ease into the 21st century. Now, do not go too fast on this.

Over reliance on highly commoditized services.

This is especially true with ebook services, general conversion, and composition. They were great once, but the greatness ended about five years ago, if not longer. The competition for these services now is absolutely overwhelming, and most publishers cannot differentiate one provider from another. Also, per page price declines for these services has to be close to 50% in the last five years. Almost like buying automobile tires or white rice.

Introducing new services.

Most providers continue to stick with what worked yesterday assuming that the past is a logical extension of the future. Nicolas Taleb in The Black Swan has called this illogical reasoning a “narrative fallacy.” The past rarely resembles the future in business, although at times in history and politics. Classic examples are the Blackberry RIM in the cell phone market before smart phones, and CPM as an operating system until MS DOS was introduced. Worked great yesterday, but not in the future. Thinking strategically is very difficult for most people. We all often have a deep-seated emotional need to cling to the past even when it stops working. It is very comforting, and seems predictable. New services allow providers to show publishers they are innovative and adding value, and thinking strategically, and that often builds respect and admiration. Henry Ford once said: “if I asked customers what they wanted, they would say a faster horse.” Faster horses can not compete with automobiles.

Six Sigma and process improvement. Really?

I am totally bewildered by these concepts in outsourcing. Both of these terms seem to require sound, critical thinking skills based on quantifiable facts. “We did this today and yesterday, but we can make this better if we do that tomorrow.” Candidly, I see very little of this in action beyond technical, XML workflow processes, especially with the sales and marketing function in the USA. Just the same old, very tired approach day in and day out, year after year, with declining results. One gets the sense that providers are so trapped in a deep, wide hole, they just cannot figure out who to climb out of the darkness.

Editorial quality in customer facing content.

The fact that you can review many providers’ web sites and sales collateral in 2016 and see profuse subject verb agreement, bewildering punctuation, awkward sentence construction, ugly pronoun references, grossly misspelled words, and, often, a mind numbing lack of meaning remains a profound mystery to me. Quality editorial is more than just editorial: quality editorial is a reflection of quality thinking. I just saw a post on LinkedIn a week ago from a publishing consultant, and the title had the word “publocations.” I was thinking: is this a computer game to find where publishers are located? No, he meant to say “publications.” Providers are often selling to highly educated publishers, not construction workers with a high school degree. Proofreading is not complicated. And, it is very cheap. Why run the risk of making a very negative first impression with a potential, new client? And, then, providers complain why it is so difficult to land a new client with large, first year sales? This sounds like a Franz Kafka short story. The adjective is called “kafkaesque” which means that it is a surreal nightmare. Educated professionals cannot possibly figure this shit out without drugs and alcohol.

Communication skills - again, and again, and again.

How many outsourcing sales people have been on conference calls and demos in person with new clients with a highly technical person offshore as the presenter? And you have absolutely no idea what the presenter is presenting? And worse, yet, when in person, you look at the client and they are shaking their head and rolling their eyes in utter confusion? For me, probably several thousand times. Candidly, a heartbreaking, personal experience: a highly technical woman with a doctorate in biochemistry is doing a presentation about genetics research. But, the presentation? Could not understand 5% of what she said due to her ineffective English and an extraordinarily heavy accent. Providers should be absolutely certain that they have technical presenters doing presentations to new clients who understand English very well, and can articulate clearly and concisely.

Disruptive change is often a painful process.

This seems especially true when we work very hard, build a profitable business over an extended period, but then the market dynamics change rapidly and negatively, and we find ourselves lost and wondering what direction to take. Albert Einstein seemed to understand this very well with his famous quote: “Insanity: doing the same thing over and over again and expecting different results.”


(P Sharma) #465

I think a number of people are aware of the challenges that the publishing outsourcing industry faces. This article paints a picture as if the whole industry is going to collapse very soon.

The truth always lies somewhere in the middle. A lot of the same stuff was also true for the IT outsourcing industry in the early 2000’s. Sure enough a number of companies shut down or never grew beyond a certain point. However, a handful went on to become really huge in size.

Likewise the consolidating industry will throw up a number of opportunities for well managed companies. Whether MPS would be one of them remains to be seen.

Invested