This week printing giant (market cap $7b) R.R. Donnelley & Sons Co. (RRD) acquired (press release) offshore service provider OfficeTiger (OT). OT previously gained legal market notice through its Hildebrandt joint venture and outsourcing deals with Milbank Tweed. The acquisition could affect both law firms and vendors.
Its not obvious how RRD’s core print business relates to OT’s offshore “business process outsourcing.” The Wall Street Journal ($) explains that the “hope for Donnelley is that these services will help sell more printing work to its clients, while also making it harder for those clients to move their spending elsewhere.” The Economic Times (of India) comments: “Analysts said Donnelley may be keen to cut its costs as a printer and publishing company and wants to obtain critical size quickly in India… Donnelley seems to be struggling and has been restructuring its business, selling off portions of it.”
Whatever the motivation, the acquisition could change vendor dynamics in the legal market. Any US company that currently contracts with OT for offshore services may now worry that the RRD-OT combination could become a competitor. And vendors that have been mulling offering offshore services may now decide and act quickly.
For law firms, I think the news is good. First, large firms considering offshore services may find comfort in ownership by a big company like RRD. And second, if other vendors do start offering more offshore services, then firms will have a wider range of choices and more bargaining power.