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 Newsletter

 Do we want to depend on middlemen?

Here are some excerpts from the BearStearns & Co. Inc. "Comprehensive Study of the Second Stage of the Internet Revolution"

OUTSOURCED SERVICES
We believe that the Internet will prove to be the most powerful driver of corporate outsourcing in the next century. A lack of both information and a central channel from which to pursue corporate-wide initiatives has made for frustratingly long sales cycles or, in many cases, has kept companies from initiating outsourcing programs, despite the overwhelming cost and productivity benefits of consolidating service decisions with a single-source provider. As a critical medium for facilitating business-to-business (B2B) commerce, the Internet, acting as a direct customer interface, will, in our opinion, be the most productive sales vehicle for corporate outsourcing to date. Examples are already apparent in the commercial printing world, where companies like ImageX.com Inc. (IMGX- 30) and IPrint are growing at breakneck speed by encouraging corporations to consolidate all of their printing decisions with one provider, something that the national printing consolidators have been unable to effect on their own.

While we believe that the Internet will be most potent as a promoter of the outsourcing trend, as an information and productivity tool, the Web should enable the outsourcers themselves to pursue productivity and cost-cutting initiatives. The impact that the Internet will have as an intermediary will, in our view, be in inverse proportion to the level of systems and connectivity already established within an individual company. Given that most of the corporate outsourcers we follow are the outgrowth of a heavy acquisition program, there is a significant need for tools that will foster communication between individual corporate locations. The timing could not be more ideal; with most of their acquisitions behind them, capital is being deployed to implement systems and infrastructure to integrate the companies, and the Internet and intranets represent one of the most cost-effective and comprehensive ways to do so. Bottom line, we believe that the application of Internet communication and technologies will reduce the risk profile of these companies over the next several years and should be a means of boosting profit margins through the elimination of administrative functions and overhead.

The Web does not pose a direct threat to outsourced service providers, as there are limited segments for which we envision Internet providers offering a substitute product. However, the Internet could disrupt the balance of power between the emerging national service providers and their customers. As the Web emerges as the central purchasing vehicle, it could push service providers to the role of middleman or secondary provider, reducing their pricing leverage. This is the principal risk, in our opinion. We believe that companies must take a proactive role and get in front of the Internet procurement equation by acting as the service provider of choice to Internet intermediaries. To sustain their profit margins, the outsourced service providers must also find ways to derive cost savings and productivity improvements from the Web in the delivery of their service offerings. (February 2000)

 In brief

Web Site translation is fastest growing segment of Worldwide Language Translation Industry
According to a new study, "Language Translation, Localization and Globalization: World Market Forecasts, Industry Drivers and eSolutions", by Allied Business Intelligence Inc, an Oyster Bay, NY-based technology research think tank, the total language translation market will be about $9.5 billion annually by year end 2002. The business of translating web sites into multiple languages will grow to a $1.7 billion market by year end 2007. Web site localization will represent 13% of the overall language translation industry by that time. (source: Web)

700.000 pages to translate into the new languages of the European Union
With nine new states from Central and Eastern Europe to join the EU in 2004, the European Union legislation has to be translated into Czech, Estonian, Hungarian, Latvian, Lithuanian, Maltese, Polish, Slovak and Slovene. Five companies have been chosen to carry out the printing. These are: Jouve s.a. (Paris); Imprimerie Centrale (Luxembourg); SDV Saarbrücker Druckerei & Verlag (Saarbrücken); Saarbrücker Zeitung Verlag & Druckerei (Saarbrücken); AIS Berger-Levrault (Nancy). In total, 80 000 pages in each of the new languages will be published, which is equivalent to the current production of the Official Journal L&C series in 11 languages over approximately 18 months. The total budget that has been assigned to cover this operation amounts to more than EUR 50 million.(Source: European Union)