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The Arvato Group is a global services company headquartered in
Gütersloh Gütersloh () is a town in North Rhine-Westphalia, Germany, in the region of Ostwestfalen-Lippe and the administrative region of Detmold (administrative region), Detmold. Gütersloh is the administrative centre for a Gütersloh (distric ...
, Germany. Its services include customer support, information technology, logistics, and finance. The history of Arvato goes back to the printing and industry services division of
Bertelsmann The Bertelsmann SE & Co. KGaA, commonly known as Bertelsmann (), is a German privately held company, private multinational corporation, multinational conglomerate (company), conglomerate corporation based in Gütersloh, North Rhine-Westphalia, ...
; the current name was introduced in 1999. Today, Arvato is one of eight divisions of
Bertelsmann The Bertelsmann SE & Co. KGaA, commonly known as Bertelsmann (), is a German privately held company, private multinational corporation, multinational conglomerate (company), conglomerate corporation based in Gütersloh, North Rhine-Westphalia, ...
, the media, services, and education group. In 2016, Arvato had about 68,463 employees and an overall turnover of 3.84 billion euros.


History


Early years of Arvato

Bertelsmann was founded as a publishing house by Carl Bertelsmann in 1835. In the following decades, the company grew steadily. After the
Second World War World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...
, it developed from a mid-sized business to a large enterprise. To meet the demand from the book club ''Lesering'' and the record club ''Schallplattenring'', Bertelsmann massively expanded its warehouse and shipping capacities in the mid-1950s. In 1959, the ''Kommissionshaus Buch und Ton'' was established to make the production and service infrastructure available for other publishing and printing companies. Bertelsmann benefited from this due to
economies of scale In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of Productivity, output produced per unit of cost (production cost). A decrease in ...
. A punch-card index at the Lesering headquarters was acquired from
Lufthansa Deutsche Lufthansa AG (), trading as the Lufthansa Group, is a German aviation group. Its major and founding subsidiary airline Lufthansa German Airlines, branded as Lufthansa, is the flag carrier of Germany. It ranks List of largest airlin ...
, which later became the basis for the information technology expertise of Arvato. During the first years, Reinhard Mohn was the sole owner of the Kommissionshaus Buch und Ton. In 1968, the company became part of the newly founded ''Vereinigte Verlagsauslieferung'' (VVA). Its purpose was the delivery of printed materials and records "in the name and on behalf of its clients."


Business unit formation

Bertelsmann opened its printing business to outside clients in a similar way, forming a new company called ''Mohndruck'' in 1948. After purchasing powerful machines that required a high
capacity utilization Capacity utilization or capacity utilisation is the extent to which a firm or nation employs its installed productive capacity (maximum output of a firm or nation). It is the relationship between output that ''is'' produced with the installed ...
, Bertelsmann acquired more and more orders from other companies in the 1960s. In the 1970s and 1980s, Bertelsmann founded and bought several other
printing Printing is a process for mass reproducing text and images using a master form or template. The earliest non-paper products involving printing include cylinder seals and objects such as the Cyrus Cylinder and the Cylinders of Nabonidus. The ...
and
logistics Logistics is the part of supply chain management that deals with the efficient forward and reverse flow of goods, services, and related information from the point of origin to the Consumption (economics), point of consumption according to the ...
companies in France, Great Britain, Spain, and other European countries. These became part of the printing and industry services division of Bertelsmann. From 1976, the branch was led by Mark Wössner, who later became Bertelsmann CEO. Under his leadership, the expansion continued. For example, Bertelsmann entered the software and hardware distribution market in 1983. Until the mid-1980s, the printing and industry services division generated more than 20 percent of the sales of the whole Bertelsmann group. In the late 1980s, the company also expanded its presence in the United States. In the 1990s, Bertelsmann introduced the loyalty program Miles & More on behalf of Lufthansa in 1993. Additionally, the company became responsible for customer support for the launch of Microsoft's
Windows 95 Windows 95 is a consumer-oriented operating system developed by Microsoft and the first of its Windows 9x family of operating systems, released to manufacturing on July 14, 1995, and generally to retail on August 24, 1995. Windows 95 merged ...
operating system in Germany, Austria, and Switzerland.


Restructuring and renaming

In 1996, Bertelsmann's printing and industry services division was spun off as a legally independent
joint-stock company A joint-stock company (JSC) is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Shareho ...
(
Aktiengesellschaft (; abbreviated AG ) is a German language, German word for a corporation limited by Share (finance), share ownership (i.e., one which is owned by its shareholders) whose shares may be traded on a stock market. The term is used in Germany, Austria ...
) named ''Bertelsmann Industrie''. Bertelsmann wanted to expand its service business even more. At that time, Bertelsmann Industrie had approximately 12,600 employees worldwide and generated sales of 3.28 billion Deutschmarks annually. In 1999, the company finally was renamed ''Bertelsmann Arvato'' to illustrate the transformation of the printing and industry services division to an international communications and media service provider. The name Arvato was a neologism with no special meaning. Under the leadership of Gunter Thielen, who became CEO of Bertelsmann in 2002, the LP and CD pressing plants of Sonopress and the encyclopedia publishers were integrated with Arvato, too. With the inauguration of Hartmut Ostrowski as CEO of Arvato in 2002, the company laid the prefix Bertelsmann in the company name but continued to use it for its logo (stylized as arvato BERTELSMANN). Arvato restructured its business into divisions for printing, distribution, and logistics services, as well as storage media and information technology.


Change in the business model

Due to lower volumes of newspapers, magazines, and catalogs, Arvato, Axel Springer, and
Gruner + Jahr Gruner is a surname. Notable people with the surname include: * Dov Gruner (1912–1947), Jewish Zionist leader * Eduard Gruner, Swiss engineer * Elioth Gruner (1882–1939), Australian painter * Gottlieb Sigmund Gruner (1717–1778), Swiss ca ...
founded a
joint venture A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to acce ...
for parts of their printing business; it was named ''Prinovis''. In 2005, all rotogravure printing activities of the three founding partners became part of the company, which was the market leader in Europe from its very beginning. At the same time, Arvato entered the market for public sector services. One of the first clients was the district of
East Riding of Yorkshire The East Riding of Yorkshire, often abbreviated to the East Riding or East Yorkshire, is a Ceremonial counties of England, ceremonial county in the Yorkshire and the Humber region of England. It borders North Yorkshire to the north and west, S ...
where Arvato managed local taxes and welfare payments, for example. In the following years, distribution and logistics became more and more important: Arvato Direct Services and Logistics Services were merged into Arvato Services. Especially in Germany, Arvato won more clients for this division, including publishing houses as well as companies in the high-tech and information technology industry. At the turn of 2007/2008, Hartmut Ostrowski succeeded Gunter Thielen as CEO of Bertelsmann, so Rolf Buch moved to the helm of Arvato. Under his leadership, Arvato started the loyalty program ''DeutschlandCard'', for example. While Ostrowski focused on international expansion, Buch strengthened Arvato's presence in its home market Germany.


Reintegration of staff functions

In the 2010s, Arvato restructured its activities again: First of all, the company acquired the remaining shares of Prinovis from Gruner + Jahr. Subsequently, Bertelsmann merged most of its printing plants into a new division called ''Be Printers''. Arvato increased its focus on high-tech, information technology, and e-commerce services, three rapidly growing markets, while printing stagnated. At the end of 2012, Rolf Buch was surprisingly replaced by , an expert for the said focus areas. Under his leadership, Arvato acquired the insolvent e-commerce company Netrada in 2014, which led to a massive expansion in Arvato's market position in fashion logistics. After two years, Berg left Arvato in mid-2015. Bertelsmann appointed Fernando Carro as CEO of Arvato; he also became a member of the Executive Board of Bertelsmann. As part of the restructuring, Arvato dissolved its
Board of Directors A board of directors is a governing body that supervises the activities of a business, a nonprofit organization, or a government agency. The powers, duties, and responsibilities of a board of directors are determined by government regulatio ...
and replaced it with an executive management team. The Bertelsmann corporate center took over some staff functions of Arvato, while some are provided from within the Arvato divisions independently. In 2016, the Arvato AG was merged into the parent company Bertelsmann SE & Co. KGaA and deleted from the commercial register.


Organization

Arvato is one of eight divisions of
Bertelsmann The Bertelsmann SE & Co. KGaA, commonly known as Bertelsmann (), is a German privately held company, private multinational corporation, multinational conglomerate (company), conglomerate corporation based in Gütersloh, North Rhine-Westphalia, ...
. Together with the ''Bertelsmann Printing Group'', founded in 2016, it forms the services divisions of the group. Based on sales of 4.8 billion
euro The euro (currency symbol, symbol: euro sign, €; ISO 4217, currency code: EUR) is the official currency of 20 of the Member state of the European Union, member states of the European Union. This group of states is officially known as the ...
s in the fiscal year 2015, Arvato was the second-largest division of Bertelsmann after
RTL Group RTL Group S.A. ("Radio Télévision Luxembourg") is a Luxembourg-based international media conglomerate, with another corporate office in Cologne, Germany. The company operates 56 television channels and 36 radio stations in Germany, France an ...
. Countries outside Germany generated more than half of the revenue, with France and the United States being the most important foreign markets. In 2015, exactly 230 individual companies as well as five joint ventures and associated enterprises belonged to Arvato, many of them for local business operations. In the fiscal year 2015, Arvato had 72,457 employees worldwide, an increase of 1,804 employees compared to the previous year. Since 2014, Arvato has been organized in so-called solution groups, which were introduced during the era of Achim Berg. These operate largely autonomously not for products and technology, but according to client requirements and operations. Each solution group is led by the
chief executive officer A chief executive officer (CEO), also known as a chief executive or managing director, is the top-ranking corporate officer charged with the management of an organization, usually a company or a nonprofit organization. CEOs find roles in variou ...
. Currently, there are four solution groups for
customer relationship management Customer relationship management (CRM) is a strategic process that organizations use to manage, analyze, and improve their interactions with customers. By leveraging data-driven insights, CRM helps businesses optimize communication, enhance cus ...
,
supply chain management In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management, logistics and marketing channels, through which raw materials can be developed into finished produc ...
,
financial services Financial services are service (economics), economic services tied to finance provided by financial institutions. Financial services encompass a broad range of tertiary sector of the economy, service sector activities, especially as concerns finan ...
, and information technology services. The Arvato management board consists of Thomas Rabe, Bernd Hirsch, Immanuel Hermreck, Thomas Mackenbrock, Rolf Hellermann, Andreas Krohn, Frank Schirrmeister, and Matthias Moeller.


Services

; Aftersales Solutions Arvato provides services needed after the sale of third-party products to end users, such as the repair and preparation of devices. Since the 2000s, Arvato has helped fixing mobile phones, including devices from
HTC Corporation HTC Corporation ( zh, t=宏達國際電子股份有限公司, p=Hóngdá Guójì Diànzǐ Gǔfèn Yǒuxiàn Gōngsī, first=t), or High Tech Computer Corporation (abbreviated and trading as HTC), is a Taiwanese consumer electronics corporatio ...
. ; Corporate Information Management Arvato provides many services related to the logistics of marketing and sales materials and other documents. The company organizes the production, storage, and distribution of these. In recent years, the connection between digital and printed works has become more important. ; CRM & Customer Services Arvato offers customer relationship management services. The company operates call centers and manages digital communication channels for its customers, for example. Also,
data mining Data mining is the process of extracting and finding patterns in massive data sets involving methods at the intersection of machine learning, statistics, and database systems. Data mining is an interdisciplinary subfield of computer science and ...
processes and some solutions for the
public sector The public sector, also called the state sector, is the part of the economy composed of both public services and public enterprises. Public sectors include the public goods and governmental services such as the military, law enforcement, pu ...
are offered in this area. ; E-Commerce Solutions
E-commerce E-commerce (electronic commerce) refers to commercial activities including the electronic buying or selling products and services which are conducted on online platforms or over the Internet. E-commerce draws on technologies such as mobile co ...
has been a strategic growth area for Arvato and for Bertelsmann, at least since 2014. The company's services range from the establishment and operation of websites and related infrastructure to the logistics of goods. One client of Arvato in this field is the fashion house ''Ahlers''. ; Financial Solutions Arvato's financial solutions include
payment processing A payment processor is a system that enables financial transactions, commonly employed by a merchant, to handle transactions with customers from various channels such as credit cards and debit cards or bank accounts. They are usually broken dow ...
, factoring, and debt collection services. Furthermore, the company's credit rating and risk management activities, as well as insurance services, are offered in this field. Financial services have been one of the most profitable Arvato businesses and are also a strategic growth area for Bertelsmann. Arvato was revealed, by a Times investigation to have obtained warrants to break into the home of vulnerable customers, and to have executed those warrants. This resulted in an investigation by the Financial Conduct Authority (FCA). Subsequently, suppliers who have previously worked with Arvato have ceased trading with the company. ; IT Solutions Arvato Systems provides information technology services of many kinds. Primarily, the company is heavily involved in
cloud computing Cloud computing is "a paradigm for enabling network access to a scalable and elastic pool of shareable physical or virtual resources with self-service provisioning and administration on-demand," according to International Organization for ...
. Arvato provides solutions for media, commerce, and several other industries. ; SCM & Logistics Arvato helps its clients with supply chain management, i.e. the provision of materials and products from manufacturing to the consumers. The portfolio of the company includes various solutions tailored to different industries, e.g. trade and fashion companies, information technology, and high-tech companies or
publishing house Publishing is the activities of making information, literature, music, software, and other content, physical or digital, available to the public for sale or free of charge. Traditionally, the term publishing refers to the creation and distribu ...
s. An example of the latter is the ''Vereinigte Verlagsauslieferung'' (VVA). This area also includes business intelligence services.


Criticism


Human resources and wages

The human resources and compensation policies of Arvato have repeatedly been discussed: In 2005, Arvato Direct Services built a
call center A call centre (English in the Commonwealth of Nations, Commonwealth spelling) or call center (American English, American spelling; American and British English spelling differences#-re, -er, see spelling differences) is a managed capability th ...
in
Cottbus Cottbus () or (;) is a university city and the second-largest city in the German state of Brandenburg after the state capital, Potsdam. With around 100,000 inhabitants, Cottbus is the most populous city in Lusatia. Cottbus lies in the Sorbian ...
, Germany. The company was criticized for seeking more than usual financial support from the local employment agency. The trade union
Ver.di (''Verdi'' (stylized as ''ver.di''; vɛʁdiː; English: ''United Services Trade Union'') is a German trade union based in Berlin, Germany. It was established on 19 March 2001 as the result of a merger of five individual unions and is a m ...
and others shared this view. 2007, Ver.di criticized the reintroduction of the 40-hour working week with Arvato Services. In 2012, employees had to accept lower wages because of job cuts at '' Arvato Entertainment''. Arvato rejected criticism in this particular case because decisions have been discussed with Ver.di previously.


Irregular credit scores

In 2005, Arvato acquired the credit agency ''Infoscore'', headquartered in
Baden-Baden Baden-Baden () is a spa town in the states of Germany, state of Baden-Württemberg, south-western Germany, at the north-western border of the Black Forest mountain range on the small river Oos (river), Oos, ten kilometres (six miles) east of the ...
, Germany. Its data, information, and receivables management was merged with Arvato's subsidiary to form Arvato Infoscore, a company with a total of 1,700 employees. It became an object of repeated criticism because of allegedly dubious
credit rating A credit rating is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government). It is the practice of predicting or forecasting the ability of a supposed debtor to pay back the debt or default. The ...
s. 2012, for example, the public broadcaster NDR reported the case of a consumer who was refused to pay by invoice. This decision was taken by a mail-order company based on a credit rating by Arvato Infoscore. Although the company hardly knew more than the name and address of the consumer and had no other adverse information, it gave a low score based on socio-demographic characteristics. According to a report by the State Commissioner for Data Protection in the German state of Baden-Württemberg, outdated data were used for this credit rating. In 2013, another public broadcaster, WDR, made similar allegations: The television magazine ''Markt'' checked the credit reports of 80 test consumers. The magazine concluded that credit ratings issued by Arvato Infoscore often were not comprehensive. There was a "significant gap" in the quality of information. Furthermore, Markt pointed out that complaints about scoring providers like Arvato Infoscore were rising. Besides the credit ratings, data protection at Arvato Infoscore was the object of media coverage several times. 2015, the NDR criticized the self-service website for tenant self-disclosures showed sensitive personal information of one entered the name, address, and date of birth. Without any further verification, Arvato Infoscore made available information on debt, seizure, and mortgage payments, for example. Critics said that this opened the door for abuse. Arvato Infoscore instead argued that obtaining a self-disclosure for third parties was not permitted. Nevertheless, the disputed website was shut down. 2016, SWR, another public broadcaster, reported that Arvato Infoscore handles the collection of penalty fares for
Deutsche Bahn (, ; abbreviated as DB or DB AG ) is the national railway company of Germany, and a state-owned enterprise under the control of the German government. Headquartered in the Bahntower in Berlin, it is a joint-stock company ( AG). DB was fou ...
. As part of this, information about travelers is passed without their knowledge. The lawyer Karl-Nikolaus Peifer classified this process as a breach of data protection and fair-trade laws. The SWR also provided evidence that Arvato Infoscore had used information from such penalty fares for credit ratings of some customers, too.


Facebook content moderation

In December 2016, '' SZ-Magazin'' reported that Arvato employees in the company's
Berlin Berlin ( ; ) is the Capital of Germany, capital and largest city of Germany, by both area and List of cities in Germany by population, population. With 3.7 million inhabitants, it has the List of cities in the European Union by population withi ...
office sustained
psychological trauma Psychological trauma (also known as mental trauma, psychiatric trauma, emotional damage, or psychotrauma) is an emotional response caused by severe distressing events, such as Major trauma, bodily injury, Sexual assault, sexual violence, or ot ...
, including
posttraumatic stress disorder Post-traumatic stress disorder (PTSD) is a mental disorder that develops from experiencing a Psychological trauma, traumatic event, such as sexual assault, domestic violence, child abuse, warfare and its associated traumas, natural disaster ...
, as a result of exposure to videos of
torture Torture is the deliberate infliction of severe pain or suffering on a person for reasons including corporal punishment, punishment, forced confession, extracting a confession, interrogational torture, interrogation for information, or intimid ...
,
murder Murder is the unlawful killing of another human without justification (jurisprudence), justification or valid excuse (legal), excuse committed with the necessary Intention (criminal law), intention as defined by the law in a specific jurisd ...
, bestiality, and
child pornography Child pornography (also abbreviated as CP, also called child porn or kiddie porn, and child sexual abuse material, known by the acronym CSAM (underscoring that children can not be deemed willing participants under law)), is Eroticism, erotic ma ...
they were required to evaluate as content moderators for
Facebook Facebook is a social media and social networking service owned by the American technology conglomerate Meta Platforms, Meta. Created in 2004 by Mark Zuckerberg with four other Harvard College students and roommates, Eduardo Saverin, Andre ...
. Inspectors from the Berlin (LAGetSi), the city's
occupational safety and health Occupational safety and health (OSH) or occupational health and safety (OHS) is a multidisciplinary field concerned with the safety, health, and welfare of people at work (i.e., while performing duties required by one's occupation). OSH is re ...
department, visited the office in February 2017, but the inspection did not result in formal action.


References

{{Authority control Companies established in 1996 Companies based in North Rhine-Westphalia Bertelsmann subsidiaries German brands