18 October 2006

Reuters, India and the Newspaper Guild

Reuters operates a large office in Bangalore where reporters and financial analysts work to produce market-moving stories about small and mid-cap corporations in the United States. On the surface, this appears to be yet another move by a major corporation to "outsource" or more accurately, "offshore" jobs to less expensive locations to improve their respective bottom lines. When analyzed thoroughly, this move is more about increasing capabilities rather than replace the jobs of New York and London-based financial journalists.

The sheer volume of financial information produced each day is staggering. Thousands of companies release earnings and other important data continually each day. This onslaught of data is analogous to the National Security Agency's cell-phone intercept data. The massive volume of information coupled with the lack of skilled analysts with which to process the data makes the data useless for decision makers, be it national security policy formulators or financial professionals or even the average wage-earning investor looking to optimize personal retirement funds. The establishment of the Reuters operation in Bangalore has allowed coverage of companies that, in the past, would have been ignored by the media.

The Bangalore center has added value to Reuters' coverage. Initially, Bloomberg Financial (Reuters' chief competition in financial news) scoffed at the idea of covering Wall Street from Bangalore. Interestingly, Bloomberg now has an office in Mumbai (Bombay) operating under the same logic as the pioneering Reuters effort.

The Newspaper Guild of New York has protested the expansion of the Reuters Bangalore operation. The most common complaint and party-line being that offshoring of financial reporting will degrade the standards of financial journalism at the expense of New York jobs. This criticism is unfounded and even racist. Journalists in India, especially with the Reuters operation are just as highly trained as their stateside and European colleagues. In the number-intense world of financial journalism, Indian journalists might even be more qualified, given stronger educational emphasis on finance and markets than often found in US journalism programs. Additionally, Indian journalists are perhaps further removed from bias in their interpretation of the numbers. After all, few Indian journalists have US-managed 401(K)s or pension funds.

Reuters still has boots-on-the-ground in every corner of the news world. An interview with a CEO at a US corporate headquarters still requires journalists. However now, the Wall Street Reuters (and now Bloomberg) reporters will have more opportunity for in-depth reporting because their time is not completely consumed by the routine work of distilling financial data on smaller companies into stories. The Reuters Bangalore office is allowing the New York and London reporters to find better stories and dig deeper into companies.

The Newspaper Guild of New York is spouting the same AFL-CIO arguments used for ages against outsourcing and offshoring. The results of the Reuters offshoring experiment are beginning to disprove the Newspaper Guild's propaganda. Perhaps the Newspaper Guild members should be investigating and reporting more and picketing less. If one of these "highly-experienced and skilled" Guild members had been doing their job, perhaps the financial gerrymandering of Worldcomm and Enron might have been detected earlier.


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