Reed looks to IT outsourcing to cut costs

Publishing giant Reed Elsevier reported a surge in revenues and operating profit for 2009, helped by cost savings made by outsourcing IT development and back office activities.

In its 2009 results announcement last week, the publisher revealed that its revenues for the year had grown 14 percent to £6,071 million, while operating profit had also increased 14 percent to £1,570 million.

However, the business of ChoicePoint, the US risk IT group Reed acquired in September 2008, contributed massively to the positive results. Excluding ChoicePoint and minor acquisitions and disposals, Reed saw underlying revenues and adjusted operating profits fall 4 percent and 15 percent, respectively.

Reed Elsevier said outsourcing its IT work helped hold down costs. Development work, including systems engineering and maintenance and software development engineering, as well as of back office activities such as application management and financial transaction processing were outsourced. Reed also cut costs by consolidating its technology operations and streamlining businesses processes in shared services.

Despite this, Reed still plans significant IT investment in a number of its business divisions, as its online activities experienced growth in 2009.

It plans to improve the customer experience of its Legal division’s products by upgrading the division’s processes and systems as part of a multi-year plan. It is also two years into a multi-year contract for the development of a “next generation platform”.

In a statement Reed said: "Good progress is being made in developing the next generation of legal research products, and the advanced back office infrastructure to support them, to deliver an integrated and superior customer experience across legal research, workflow tools, practice solutions and client development.

Furthermore, Reed hopes to leverage High Performance Cluster Computing technology to power Accurint, its public records product in the US, which is part of the company's Risk Solutions business.

In Reed’s long-term outlook for its Science and Technology division, it expected a strong growth in online usage of scientific articles, after seeing a 20 percent uptick in 2009.

The company also saw a growing demand for electronic tools to improve medical outcomes in its Health Sciences division over the last year, so consequently it plans to “further enhance” electronic research and specialist reference tools for the division as a priority.

Reed said that its core professional information revenues held up “relatively well”. Its Elsevier revenue grew four percent, while the LexisNexis business produced a 14 percent increase in revenue.

The group’s advertising and promotion markets suffered a severe blow, however.

Reed Exhibitions reported a 21 percent fall in revenues and a 28 percent fall in adjusted operating profits, while Reed Business Information, hit hard by a depressed advertising market in the recession, experienced a revenue decline of 18 percent, with adjusted operating profits falling a massive 35 percent.


Copyright © 2010 IDG Communications, Inc.

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