Author Solutions Tax Credits Followed By Outsourcing to Philippines

If you’re an iUniverse customer, you should know that a few people on the inside care.  You should also know you’re not the only ones that parent company Author Solutions has taken advantage of. I’ve received word from sources inside Author Solutions that there’s more you and the tax paying citizens of Indiana should be pissed off about…

Take the Money…

One of my biggest concerns with the company as a resident of Indiana is that shortly after Gov. Mitch Daniels toured the Bloomington Offices and praised Author Solutions for “insourcing” jobs from China, Author Solutions started laying off employees and sending jobs to the Philippines. This disgusts me for a number of reasons, not the least of which is that Author Solutions was awarded an Economic Development Tax Credit for creating those Indiana jobs in the first place. Here’s an excerpt from an undated press release on the AuthorHouse website:

“The Indiana Economic Development Corporation offered Author Solutions up to $575,000 in performance-based tax credits and up to $100,000 in training grants based on the company’s job creation plans. The Monroe County Commissioners and the Bloomington Economic Development Corporation have supported property tax abatement to assist the company with new job creation in Monroe County.

The company, which employs 230 associates in Bloomington and 50 in Indianapolis, is currently identifying candidates for creative, customer service and technology positions.”

But things changed. In April 2011, Terry Lee Simpson wrote this letter. In it she complains, “It has come to my attention that Author Solutions, a local self-publishing company owned by Bertram Capital, has recently laid-off more than fifty employees since the beginning of this year.” She urges officials to look into the problem saying that as an Indiana and Monroe County taxpayer, she feels “extremely ripped-off.”

It seems pretty clear that Author Solutions was playing the tax loophole game with the residents of Indiana. Whether or not the company conformed to the letter of the law, Indiana residents got the short end of the stick. An employee recalls:

“I don’t know the exact numbers but I can tell you that two years ago … there were not enough desks or chairs for everyone. Parking was horrible, and people would park along the curbs to get a space. They were moving filing cabinets to hallways to make room for more desks. The Indianapolis office was the same way. In fact, some people had to start working from home because the landlord said we were using too many parking spaces.”

…And Run

author solutions quoteContrast that to today, after numerous layoffs and a transitioning of the workforce to the Philippines, and this is the picture of Author Solutions one employees sees: “Now in Bloomington there is a whole section of about 25 desks that are empty. There are 3 or 4 vacant offices. In Indy, almost one entire half of the office is vacant and is being disassembled.”

An anonymous employee tells me:

“More and more jobs keep ending up in the Philippines… There are now 1200 employees there. 1200!!! That means over 2/3 of services, sales, customer service and marketing are being done out of the Philippines! And the rest of the US staff? Most of them don’t work on the core imprints. There are a handful of people who work on iUniverse and AuthorHouse in the US. The rest of the staff — they only work on the partnerships (Abbott Press, Westbow, Balboa, Inspiring Voices, Crossbooks, Dellarte). Why? Because those partners are smarter than to allow untrained Filipinos to work on their books! There is not a single Trafford or Xlibris employee in the US!”

And the picture in the Philippines isn’t pretty either. The employee likens it to a sweatshop and says the people there are “packed like sardines for pennies a day. No training, no publishing expertise, just shove those books through the assembly line and sell, sell, sell!”

Customers See No Benefits From Cheap Labor

I’m assured that in addition to the number of authors who I’ve interviewed here already, there are still hundreds more who have been ripped off by the company.

The refund process was even changed to take greater advantage of customers. So the longer a customer waits to ask for a refund, the less they get. This works to the company’s advantage because most of the authors wait to ask for their money back, always thinking the company deserves a second chance to make things right.

Refunds work like this: if you have just purchased a package you can get a 100% refund, but as soon as you submit your manuscript it drops to 75%. After you start design, it drops to 50% and so on  until eventually you actually have to PAY Author Solutions $150 or $750 to get a worthless PDF of the file you already paid them to create (Schedule A, Section 9 of the publishing contract).

If labor costs less, they don’t have to pay state and county taxes, and no one’s getting a refund where is all the money going? No doubt it’s being used to make the company appear more profitable to buyers. Rumor has it that an announcement on Bertram Capital’s sale of Author Solutions is just around the corner.

It’s Time for Authors & Hoosiers to Act

As a sale becomes more likely, one employee has a message for iUniverse and other Author Solutions customers: “I can completely sympathize with authors… I wish they would all speak up.” Another employee says, “If you want to get revenge, better alert Publisher’s Weekly about everything you’ve dug up, and get organized with the Attorney General NOW.”

Get in Touch Now:

Fran Marburgh
Office of the Indiana Attorney General
Consumer Protection Invoice
302 West Washington Street, 5th Floor
Indianapolis, Indiana 46204

http://www.in.gov/attorneygeneral/
317.232.6201

Indiana residents should vocalize their objections to local and state representatives as well as let Author Solutions execs know their abuse of tax code provisions for employers who are actually committed to job growth in Indiana is unacceptable.

Indiana citizens, authors and their supporters should voice their compaints. To reach those involved on Twitter: @INATTYGENERAL @keithogorek @authorsolutions @mymanmitch and @iuniversebooks.

About Emily Suess

Emily Suess is a technical marketing writer by day and a freelance copywriter by night. And, no, she's not related to Dr. Seuss.