Digital Mailroom Outsourcing: Definition, Purpose and How It Works

In today’s turbulent economy, organizations are under tremendous pressure to find ways to reduce costs, free up staff time, mitigate potential risks, and deliver a better customer experience.

One area that is ripe for improvement is the way that organizations handle incoming mail and documents.  The way that most organizations handle the invoices, contracts, sales orders, and other paper and electronic documents that they receive is labor-intensive, time-consuming, and error prone.

Outsourcing their mailroom to a digital partner offers organizations an alternative.

The global market for digital mailroom outsourcing is expected to grow to $5.2 billion in 2025 from $2.6 billion in 2020, according to a study by IDC.  Seventy percent of businesses are considering outsourcing their digital mailroom, per the Association for Intelligent Document Processing.

This article explores how outsourced digital mailroom services work.

What is a digital mailroom?

A digital mailroom solution uses intelligent data capture, workflow automation, and other technologies to streamline the handling of incoming paper and electronic mail and documents.

Here’s how a digital mailroom solution typically works:

• Receipt.  Letters, packages, invoices, correspondence, and other types of physical mail are received as usual.  Documents sent via email, fax, mobile, and file transfer are also received.
• Scanning.  Physical documents are converted to digital images for further processing.  Some digital mailroom solutions use high-speed scanners that process multiple types of documents co-mingled and extract information from documents during the scanning process (in-line).
• Sorting.  Digital mailroom solutions review the information and key characteristics of each document to automatically identify and sort the documents by type (e.g., invoices, contracts).
• Extraction.  The digital mailroom solution uses optical character recognition (OCR), barcode recognition, artificial intelligence (AI), and other technologies to convert scanned images into editable and searchable text and extract key data from the documents.  To ensure accuracy, extracted data is validated against information residing in a database or system of record.
• Distribution.  Once the documents are classified and the data is verified, the documents are digitally routed to appropriate individuals or departments, based on pre-set business rules.
• Integration.  Documents and data can be exported to a customer relationship management (CRM) system, enterprise resource planning (ERP) application, document management platform, or other legacy system.  Robotic process automation (RPA) can facilitate the seamless exchange of data without the need for computer programming.
• Archival.  Documents and data are centrally indexed and stored in a cloud-based repository.

These capabilities modernize the way that organizations handle incoming mail and documents.

What is digital mailroom outsourcing?

Organizations can build on the benefits of a digital mailroom solution by offloading the responsibility of managing the organization’s incoming mail and other documents to a third-party services provider.

Third parties that specialize in digital mailroom services can handle the entire mailroom process on an organization’s behalf – from the receipt and sort of mail and documents to routing and archival.

Outsourced digital mailroom services differ from in-house solutions in a few ways:

1. Partnership with a services provider.  Instead of handling incoming mail and documents internally, an organization partners with a vendor that offers digital mailroom services.  Some services providers focus solely on mailroom outsourcing, while others offer digital mailroom services as part of a portfolio of business process outsourcing (BPO) offerings
2. Mail collection.  The outsourcing provider collects physical mail on behalf of the organization.  Some outsourcing providers also collect documents sent electronically.
3. Scanning and capture.  Outsourcing providers use high-production scanners to convert physical mail and other documents into digital images.  OCR, AI, and other data capture technologies extract information from scanned and electronically delivered documents.
4. Validation.  Outsourcing providers can classify documents based on predefined criteria and validate and cross-reference data with records or databases to ensure information accuracy.
5.  Distribution. Digital mailroom services providers employ workflow automation tools to route processed documents to the appropriate person for review, approval, or further action.
6. Integration.  An outsourced digital mailroom provider may integrate their processes with an organization’s internal systems to facilitate easy access and retrieval of information.
7. Disposal or return of mail.  After documents are converted to digital format, an outsourcing provider may securely dispose of the physical documents or return them to the organization.

These services can build on the benefits of a digital mailroom solution for many organizations.

What are the benefits of outsourced digital mailroom services?

Outsourced digital mailroom services offer several compelling advantages for organizations.

• Reduced upfront costs.  Outsourcing eliminates the upfront costs of setting up an in-house digital mailroom.  Organizations pay for outsourced digital mailroom services as they go.
• Improved efficiency.  Outsourced services providers have the expertise, experience, and access to advanced technologies to streamline the entire mailroom process.
• Faster turnaround times.  The advanced capture technologies and automated workflows used by outsourced digital mailroom providers significantly reduces the time it takes for mail and other documents to reach the intended recipients, leading to improved response times.
• Focus on core competencies.  By outsourcing the handling of incoming mail and documents, organizations can focus more on their core business activities and strategic initiatives.
• Scalability.  Outsourcing the handling of incoming mail and documents to a third-party services provider makes it easy for an organization to meet changing demands.   There’s no need for an organization to hire more staff, purchase more scanners, or configure systems.
• Access to best-in-class technology.  Outsourcing the handling of incoming mail and documents to a third party provides organizations with access to innovative technologies without having to purchase, implement, and manage the solutions themselves.  And outsourcing providers focus on continuous improvement to enhance their service offerings.
•  Ironclad security. Outsourcing providers have a lot riding on their ability to safeguard the incoming mail and document that they handle on behalf of their clients.  Organizations can expect providers to invest in access controls, encryption, comprehensive tracking, and other measures to reduce the risk of data breaches and ensuring adherence to relevant privacy laws.
• Business continuity.  Systems downtime can bring an outsourcing provider’s business to its knees.  Organizations can count on outsourcing providers to build redundancy and disaster recovery into their operations, so they can process mail without interruption.
• Global reach.  Some outsourcing providers deliver centralized and standardized digital mailroom services for multinational companies with operations in multiple locations.

Each of these benefits is compelling.

Together, they can help an organization achieve a competitive advantage.

Conclusion

Optimizing the handling of incoming mail and documents is crucial for organizations that want to thrive in today’s highly competitive, digital environment.  Outsourcing the mailroom process to a third-party empowers organizations to reduce costs, improve efficiency, and accelerate cycle times, while delivering an exceptional customer experience and maintaining a high level of data security.  The typical business saves 20 percent by outsourcing to a digital mailroom provider, Gartner says.  By partnering with the right digital mailroom services provider, an organization can offload the burden of managing incoming mail and focus on its core competencies and growth objectives.