EUROPEAN BUSINESS SPENDING €55 BILLION ON OUTSOURCED DOCUMENT SERVICES

Use of multiple third-party suppliers amplifying organisational document cost, as report identifies multi-billion market opportunity for Xerox Global Services

Uxbridge, UK, 20 December 2004 – Major European organisations are spending circa three per cent of their annual revenue on the outsourcing of creative development, production, distribution and storage of documents, according to an RS Consulting research report commissioned by Xerox Global Services. However, while organisations are spending such a considerable sum on outsourcing these business functions, the spending is at a tactical rather than strategic level. The research results suggest that European businesses would reap much greater efficiency and cost savings if they were to outsource more of their document activity, but to a lesser quantity of external suppliers.

The report is based on more than 600 one-to-one interviews conducted with senior management in more than 250 leading businesses in Belgium, Czech Republic, France, Germany, Hungary, Italy, the Netherlands, Spain, Sweden, Switzerland and the UK. The report found that an example company with annual sales revenues of €145m is likely to spend €4.35m on outsourced document services, but 90 per cent of businesses are sub-contracting only splintered parts of their document activity to third party suppliers.

“The research highlights two critical issues,” explains Shaun Pantling, director and general manager, Xerox Global Services, Xerox Europe. “Firstly, less than one in five organisations within that 90 per cent outsource to one or a few, select suppliers. This means that the organisation as a whole is failing to reap economies of scale across the business. Secondly, because outsourcing decisions are being taken at a tactical i.e. departmental level, senior management within that organisation may be unaware of the true cost to the entire organisation of document management and outsourcing.”

Pantling continues: “Both we and RS Consulting suspect that few European businesses are currently aware of this issue. RS made the results of this first round of research available to us in the first quarter of 2004, and we believe it is still the only in-depth research into this issue in Europe. We are monitoring it at regular intervals because we believe that, at the moment, it is still going unchecked.”

However, RS Consulting also found that there are additional savings to be made by European businesses by actually outsourcing more of their document-intensive processes.

Bryan Atkin, managing director, RS Consulting comments: “Put simply, organisations are spending money on document outsourcing, but not necessarily in the right way. In most companies there is little evidence of strategic management of spending on document related services. Tactical decision making and budget responsibility operating at functional department level has led to services being provided under multiple contracts by many vendors with no overall view, let alone control, of total outsourcing spend. There is an opportunity here for senior company management to audit where and with whom the company is spending money on outsourcing, in order to develop a solution that is best for all. Until companies start to do this in all European countries, then one must conclude that the European market for outsourced document services is still in its infancy.”

Detailed report findings are in use by Xerox Global Services now to help Xerox refine its offerings to European organisations who seek to reduce costs, increase the value provided by every document in the organisation, and reduce the time-to-market of new products and services by ensuring that accompanying product information is delivered as rapidly as possible to new markets.

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About Xerox
Xerox markets a comprehensive range of digital document solutions and services, as well as associated supplies and software. Its offerings are focused on three main areas: offices from small to large, production print and graphic arts environments, and services that include consulting, systems design and management, and document outsourcing.

Xerox also has manufacturing and logistics operations in Ireland, the UK and Holland and a research and development facility (Xerox Research Centre Europe) in Grenoble, France. For more information, visit www.xerox.com or www.xerox.co.uk.

About Xerox Global Services
Xerox Global Services, one of the three main business units of Xerox, offers a broad portfolio of services including consulting and systems integration, imaging, content management and outsourcing. We work with our clients to improve and manage their document intensive business processes - everyday processes like customer communications, billing, training, or records management. Please refer to www.xerox.co.uk/globalservices (insert local country website address) for further information.

Xerox®, The Document Company® and the digital X® are trademarks of Xerox Corporation. All non-Xerox brands and product names are trademarks or registered trademarks of their respective companies.

About RS Consulting
Established in 1984, RS Consulting is a highly respected independent research consultancy employing around 40 staff in the UK, and with an annual turnover in excess of £6 million. RS Consulting specialises in market research for leading players in the following sectors: technology; corporate finance; public policy; and industry & supply chain. More than 90 per cent of RS’ consulting and research work is international, with the company providing customers with information on: market sizing and forecasting; segmentation; pricing; new product development and concept testing; channel strategy; customer satisfaction and loyalty; buyer behaviour and the decision process. RS’ global headquarters are in central London. Please refer to www.rsconsulting.com for further information.