According to Sky, the move came after a review of its print buying. The company has not explained why it took the decision, although some have speculated that it may have realised it could do it more cheaply itself. It has also been suggested that, in a time of increasing financial belt-tightening, someone may have panicked when they saw how much Sky was paying to outsource their print and decided to hide the cost by bringing it in house.
Whatever the reason for Sky’s decision, questions are now being asked. Was it made because of the current economic climate? Will other big companies follow suit? Does Sky know something the rest of the industry doesn’t? Could it spell the end of print management firms? And most importantly, was it the right decision?
Economic downturn
As with many changes currently taking place in UK industry, a lot of people were quick to jump on Sky’s decision as being down to the economic climate. But Tony Massey, group sales and marketing director at HH Associates, thinks it is simply a coincidence.
He says: “A couple of years ago, Vodaphone did a similar thing. To say that it is down to a recession is the easy option. I think you have to look at Sky in isolation, rather than an example of an industry.
“Just look at the Reader’s Digest deal with Williams Lea: you could look at that and draw a very different conclusion. These contracts run for two, three or five years, and you imagine that most companies have some kind of appraisal and review of their arrangements. I am sure we will see other companies moving their print buying in either direction in the near future.”
NSquared Consulting’s Mike Newman believes that large companies could follow Sky’s lead, but that most will use a “bit of both” system.
He says: “There is an opportunity at the moment for certain procurement departments to take more control. I advocate a direct model, with some print bought directly, some bought ad hoc and some managed either externally or through an in-house team.”
Another issue that Newman sees with in-sourcing is a diminished talent pool. He believes that in-house buyers won’t get paid enough money. However, he believes that a credit crunch could well lead more skilled print buyers to move to in-house teams.
He explains: “With the credit crunch there are now more talented people who will work for less money, I wonder if companies that are looking at in-sourcing will be willing to pay what the other side’s paying.”
For many, Sky’s decision has come as quite a surprise. Europa Partners’ Nicholas Mockett believes that more companies will actually choose to outsource if a recession becomes a reality.
He said: “Outsourcing has two economic advantages. People can specialise in their jobs for one. Henry Ford used to make people specialise: if you spend all day, every day, making widgets, you become quite good at it. If you make widgets one day and doors the next, you aren’t as good.
“It also plays into economies of scale. When you provide a service that is not your core business, you need a certain number of people to carry out that service. These people may be excellent at their job, but they won’t be working 50% of the time. When you outsource, somebody else pays for that 50%. The print management firm may want a 20% mark-up, but you still save money.”
And, in an economic climate that lends itself to redundancies, it is unlikely that many companies will want to use up sought-after cash flow on something they can pass on to an expert.
Access Plus managing director Daniel Emerson says: “If you look at the number of redundancies in large companies because of scanter resources, why would they want to use those resources on print buying?
“At the end of the day, if a print management firm is doing its job properly, the client should always outsource.”
Beginning of the end?
At this point, print management companies are confident that Sky’s decision is a one-off. Of course, print management firms will always say that, in the same way that printers will always champion the death knell of the “parasites” that keep stealing their profits.
It is a cliché, but the fact is only time will tell how the situation will be resolved. Other companies may wait and see how Sky deals with things, while the industry is waiting to see if this is, in fact, the death knell for print management that printers have been calling for since the sector was born.
