By Steve Schifferes

Economics reporter, BBC News, Bangalore



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They are journalists employed by the world's biggest news agency, Reuters.

Their job is to cover US financial news.

And they are working overnight so that they can report company news live as it happens on the New York Stock Exchange - from India.

Cost savings

But why in the world is Reuters covering Wall Street from Bangalore?

In a word: salaries.

These Indian financial journalists can be employed by Reuters for a fraction of the cost of employing a journalist at their New York office.

Reuters Editor-in-Chief, David Schlesinger, says that the move meant that they could broaden their coverage of US companies without incurring crippling costs.

Whatever the risks and benefits, outsourcing is here to stay.

World Association of Newspapers

He was able to hire 100 new journalists in Bangalore without in any way reducing the size of his New York office.

"Now we can send our New York journalists out to do more interesting stories. This is good for our business and good for journalism," he told the BBC.

And some other wire services are now following Reuters' lead and beating a path to Bangalore, according to local journalists.

But Mr Schlesinger insists that this is not outsourcing.

"Bangalore is a Reuters bureau like any other in the world. And Reuters journalists there work to the standards as Reuters journalists anywhere."

Internet journalism

Such a system has only recently become feasible - as a result of the internet.

Getting ready for the working day in the Bangalore newsroom

Most US companies now put out their press releases on the internet, and they all use financial PR firms to release their profit figures just as the stock market opens.

So Reuters journalists in Bangalore can access the same basic information - in the same time frame - as their colleagues in New York.

And the reduced cost of telecommunications links means that the news written in Bangalore can be sent around the world as quickly as the news written in New York - of key importance for a wire service, which depends on speed for its competitive advantage.

Reuters already knew about the data transmission capability of India.

In 2004, two years after it first established a corporate presence here, it moved its IT database operations to Bangalore.

It now employs 1,500 people to make sure that its clients receive the millions of bits of financial data it transmits every day.

Dateline: India

But, nevertheless, Reuters was taking a big gamble in trying to source its company news from India, as Abi Sekimitsu, the Reuters editor assigned to run the Bangalore office, explains.

Bangalore bureau chief Abi Sekimitsu has seen staff leave

"The Reuters brand is a strong one. There is no shortage of talented journalists here, but we need to train them up carefully to make sure they understand our values," she says.

But she stresses the journalists she employs are now eager to expand the range of stories they do, and have already moved from just doing headlines and summaries to writing more complex stories.

The Reuters journalists working in Bangalore do find some aspects of the job intimidating.

For Ankur Relia, covering the New York financial markets has taken some getting used to.

Ankur Relia writes 20 company news stories a day

He writes up to 20 brief stories a day reporting briefly on US company results.

But he is happy to defer to the New York office if a more complicated story involving a major US company passes his way.

To maintain their exacting standards, Reuters has recently created a new post in the Bangalore office - an additional training editor.

And they have hired a former Bloomberg employee and CNBC TV presenter, Kavita Chandran, on a two-year assignment.

Kavita, an Indian national, had been working for Bloomberg in New York.

She says it has been hard to adjust to coming back to Bangalore - but it is a very exciting time.

"We have a bright, enthusiastic young staff, who are eager to learn about US markets.

"I encourage them to read the NY Times and Wall St Journal online every day."

But she finds there are some cultural differences between work styles in the US and India that need tackling.

"Indian culture is much more laid-back and the work ethic is different. We need to install a sense of urgency, especially for breaking news, and ensure crisp and accurate copy."

"My role is really to clear up the cultural misunderstandings," she says.

"Being Indian, but having worked for more than 10 years in New York, I can spot the difficulties in communication and language between the two offices."

Turnover problems

However, the biggest problem that Reuters is facing in Bangalore is something they did not expect - turnover.

GLOSSARY Outsourcing: Moving company functions from internal departments to external firms Offshoring: Relocating corporate activities overseas. Nearshoring: Relocating offshore activities nearer the client's home country BPO: Business processing outsourcing - moving white collar tasks like accounting or invoicing. to an external firm Captive firms: Companies owned by foreign multinationals who perform outsourcing services for the parent firm UK call centres/US contact centers: Offices where workers provide telephone customer services like sales

Despite paying above the going rate for journalists, the turnover of staff in Bangalore is high compared with other Reuters offices.

"I am a Reuters lifer," Ms Sekimitsu told the BBC. "When I joined Reuters in Hong Kong, I planned to make my career in the firm. But some of the young journalists I am employing seem to think that a year is a long time to work for one company."

It's not just competition from rivals that have caused the problem.

India's economic boom - and the deregulation of television - has led to an explosion in financial journalism, with six financial news channels on cable TV.

And salaries of financial journalists on newspapers are rising as well.

With many financial journalists attracted to working in Mumbai, India's financial capital, Reuters is finding it increasingly difficult to retain its staff.

Newspaper outsourcing

Reuters' Bangalore operation is only one example of a broader trend in outsourcing by media organisations.

Many American newspapers, facing severe cost pressures, are looking to outsource many of their key functions to India.

Recent moves have included:

Columbus Dispatch : Ohio newspaper outsourced 90 jobs in advertising design to Affinity Express in Pune, India

: Ohio newspaper outsourced 90 jobs in advertising design to Affinity Express in Pune, India Dallas Morning News : IT computer support outsourced to India

: IT computer support outsourced to India Knight Ridder Group: Considered outsourcing its copy editing to India in 2006, before being taken over by McClatchy

According to the World Association of Newspapers, the trend is gathering strength.

In a report published last year, the organisation said that "whatever the risks and benefits, outsourcing is here to stay".

"The newspaper industry has only taken tentative steps into outsourcing what was once considered core competencies such as editorial, advertising, and circulation. But the trend is gaining momentum," it added.

And the BBC too

And it is not just newspapers that are taking advantage of the cost savings of outsourcing to India.

The BBC recently announced that it would save £20m by outsourcing its payroll and expenses services to Xansa, based in Madras, India, although customer support would still be based in the UK.

Savings will go towards the BBC's target of releasing £355m of savings to invest in programmes and services.

"The BBC is taking advantage of the significant savings of globalisation while maintaining the benefits of more local customer support," the corporation said.