Software, outsourcing means end of era for mailrooms
By Wei Gu Reuters
NEW YORK - Once upon a time, an entry-level job in the mailroom of a large company might serve as the launching pad for a great career in Corporate America.
But mailrooms - nerve centers for big businesses - are being reinvented and, in some cases, closed down completely as companies look to cut costs through outsourcing and by utilizing new software.
Big companies are cutting mailroom employees by adopting software that converts letters and faxes into electronic files and then automatically sorts them.
For example, American Express Co.'s financial advisory group, a customer of Captiva Software Inc., reduced 50 employees - or more than half of its mailroom staff - to save $1.5 million a year in salaries.
"We don't need as many people because the scanners we use can sort a lot of the documents, whereas before, people had to manually sort them," said Glenda Swinford, portfolio architect of American Express Financial Advisors.
According to the U.S. Department of Labor, there are currently about 152,000 U.S. mailroom jobs, with some 4,000 eliminated during the first nine months of this year. Analysts say many more jobs are at risk.
The trend to automate mailroom jobs compounds workforce reductions already being made as back-office operations are handed over to outsourcing firms.
"There is no question that mailrooms are being automated," said John Challenger, chief executive of outplacement company Challenger Gray & Christmas Inc. "The technology today allows companies to not only handle backroom operations through fewer personnel, but it can also be outsourced much more easily."
About 41 percent of mailroom work is currently sent to third parties for processing, up significantly from last year, said industry publication Mailing Systems Technology.
For example, film maker Eastman Kodak Co. uses Pitney Bowes Inc., the world's largest postage meter producer, to manage its mailroom.
Pitney Bowes is also venturing into the digital mailroom market with software that helps create mailers and manages shipping. Kofax Image Products Inc., a division of DICOM Group Plc., also has a similar product.
INFORMATION EXPLOSION
Companies are facing an explosive amount of information as the number of documents generated, both electronically and on paper, will soar to 20 trillion in 2005, according to Xerox Corp. Digital documentation promises to rein in costs of dealing with all that paper.
"We are converting all that paper to a digital world," said Captiva Chief Executive Reynolds Bish.
The company, whose shares have soared more than five-fold this year, expects its digital mailroom software to bring in $1.5 million in its first year. Its 2003 revenue is projected at $56 million.
Adding to the need for high-tech data storage are new corporate governance rules which require companies to retain more information.
"Companies are trying to get their hands around all the information," said Steve Lidberg, an analyst at Pacific Crest Securities. "A lot of regulatory and compliance issues have been put in front of them ... and they have to become much more structured."
Mailroom software is just the tip of the iceberg. Software companies have their eye on selling content-management programs, which allow companies to organize stored documents.
That market is growing at 11 percent a year, higher than the software industry's average of 7 percent, according to consulting firm Bain & Co.
That growth makes companies in the digital documents business attractive takeover targets. Hardware maker EMC Corp. recently offered to buy software maker Documentum Inc. at a premium to expand into the fast-growing market.
"Paper-based information is very costly," said Mitchell Gross, chief executive of Mobius Management Inc., which makes content management software.
Even though the percentage of documents that are printed will decline to 40 percent of all documents in 2005 from 90 percent in 2000, according to Xerox, that does not mean less paper.
In fact, paper usage will actually increase. Paper only declines as a percentage of the total exploding number of documents produced, electronically or not.
DailyHerald
NEW YORK - Once upon a time, an entry-level job in the mailroom of a large company might serve as the launching pad for a great career in Corporate America.
But mailrooms - nerve centers for big businesses - are being reinvented and, in some cases, closed down completely as companies look to cut costs through outsourcing and by utilizing new software.
Big companies are cutting mailroom employees by adopting software that converts letters and faxes into electronic files and then automatically sorts them.
For example, American Express Co.'s financial advisory group, a customer of Captiva Software Inc., reduced 50 employees - or more than half of its mailroom staff - to save $1.5 million a year in salaries.
"We don't need as many people because the scanners we use can sort a lot of the documents, whereas before, people had to manually sort them," said Glenda Swinford, portfolio architect of American Express Financial Advisors.
According to the U.S. Department of Labor, there are currently about 152,000 U.S. mailroom jobs, with some 4,000 eliminated during the first nine months of this year. Analysts say many more jobs are at risk.
The trend to automate mailroom jobs compounds workforce reductions already being made as back-office operations are handed over to outsourcing firms.
"There is no question that mailrooms are being automated," said John Challenger, chief executive of outplacement company Challenger Gray & Christmas Inc. "The technology today allows companies to not only handle backroom operations through fewer personnel, but it can also be outsourced much more easily."
About 41 percent of mailroom work is currently sent to third parties for processing, up significantly from last year, said industry publication Mailing Systems Technology.
For example, film maker Eastman Kodak Co. uses Pitney Bowes Inc., the world's largest postage meter producer, to manage its mailroom.
Pitney Bowes is also venturing into the digital mailroom market with software that helps create mailers and manages shipping. Kofax Image Products Inc., a division of DICOM Group Plc., also has a similar product.
INFORMATION EXPLOSION
Companies are facing an explosive amount of information as the number of documents generated, both electronically and on paper, will soar to 20 trillion in 2005, according to Xerox Corp. Digital documentation promises to rein in costs of dealing with all that paper.
"We are converting all that paper to a digital world," said Captiva Chief Executive Reynolds Bish.
The company, whose shares have soared more than five-fold this year, expects its digital mailroom software to bring in $1.5 million in its first year. Its 2003 revenue is projected at $56 million.
Adding to the need for high-tech data storage are new corporate governance rules which require companies to retain more information.
"Companies are trying to get their hands around all the information," said Steve Lidberg, an analyst at Pacific Crest Securities. "A lot of regulatory and compliance issues have been put in front of them ... and they have to become much more structured."
Mailroom software is just the tip of the iceberg. Software companies have their eye on selling content-management programs, which allow companies to organize stored documents.
That market is growing at 11 percent a year, higher than the software industry's average of 7 percent, according to consulting firm Bain & Co.
That growth makes companies in the digital documents business attractive takeover targets. Hardware maker EMC Corp. recently offered to buy software maker Documentum Inc. at a premium to expand into the fast-growing market.
"Paper-based information is very costly," said Mitchell Gross, chief executive of Mobius Management Inc., which makes content management software.
Even though the percentage of documents that are printed will decline to 40 percent of all documents in 2005 from 90 percent in 2000, according to Xerox, that does not mean less paper.
In fact, paper usage will actually increase. Paper only declines as a percentage of the total exploding number of documents produced, electronically or not.
DailyHerald
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