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Battlefield Reuters

US arbitrator to hear journalists' plea against outsourcing jobs to Bangalore


10 April 2005: Bangalore boys beware! Those journos who took the first bus to Bangalore last year when Reuters set up its India centre in the southern city may be in for some heartburn, if their American colleagues have their way. A US arbitrator will soon hear the Newspaper Guild of New York's charge that offshoring US-based editorial jobs violates its contract with Reuters. The arbitrator's decision will be legally binding. The case could take months to complete. 

Reuters journalists in US, represented by the News Guild of New York are waging a battle to keep their jobs and prevent the Reuters management from shifting jobs out of their country. The News Guild claims that the Reuters management's move to shift editorial jobs out of US violates an agreement signed between them and the Reuters management six years back. The employees union claims that Reuters America LLC got several tax sops when it set up its swanky US headquarters (see picture) in 2000. These sops, they claim, were given in exchange for an assurance that core Reuters editorial jobs will not be moved out of US. The Reuters management and the Guild are currently renegotiating the wage agreement. 

Last year, Reuters set up its Indian outsourcing operations at Bangalore, hiring editorial and non-editorial jobs. Reuters is planning to jack up staff strength at its Bangalore centre to 1,200 to 1,500. The multinational-level salaries offered by Reuters saw several journalists quit their jobs, moving to Bangalore in 2004. However, these salaries are still lower than the compensation for those doing similar duties in the western operations of Reuters.

Barry Lipton “We intend to use every legal tool available to us to stop the company from taking a step that not only harms our members, but may also harm the quality of its service,” said Newspaper Guild president Barry Lipton in a statement.

With advanced news and communication technology, much of corporate reporting and earnings analysis can be done offshore, which is why Reuters moved many of these jobs to low-wage countries. Barry Lipton says that what initially started as reporting of small-and-medium size companies is now changing to full-fledged reporting of all US business news. Though none of the US Reuters editorial jobs have been lost so far due to offshoring, Barry Lipton fears that such job losses are not far.

Reuters CEO Tom Glocer However, Reuters CEO Tom Glocer is determined to cut costs and turn Reuters around. Reuters reported 52% higher profits in January 2005, but its employees union claims that the numbers have been boosted by non-sustainable sale of assets and harmful offshoring. Reuters, under Tom Glocer's “Fast Forward” program, aims to cut about 3000 jobs worldwide in about 3 years' time, besides reducing workers' compensation. Reuters also has sent some London-based non-editorial jobs to Bangalore.

Reuters employees in US have planned a protest against its outsourcing plans on coming Thursday. Journalists and other non-journalist employees will picket Reuters' US headquarters in Times Square and other US bureaus at lunchtime to call attention to the dispute.

"Instead of focusing on producing the highest quality news, Reuters is now focused on producing the cheapest news. This change is not just bad for our members, it's bad for Reuters and its clients," said Barry Lipton. The Guild says that Reuters went ahead with plans to expand its Bangalore operations, despite an alert from the Guild last year that such a move breaks the agreement with the staff union.

"This is remote-control journalism, with low-paid reporters in India writing US news to US editors' specifications. It produces a cheaper product but adds no value to stories with reporting at the source," Lipton said.

On January 13, 2005, many Reuters journalists in US belonging to the News Guild withheld their bylines to protest against demands for concessions in contract talks and offshoring. The one-day action was taken by more than 350 editorial employees, who have been working without a contract for nearly two years, the Guild had then said.

Reuters' global cost-cutting program is now believed to be in its final year. Reuters is also proposing to consolidate its London and Washington photo-editing desks in Singapore, where wages are also lower.

In fact, Reuters is not the first major MNC news service provider to set up India operations. In early 2000, Bridge News set up its India back office in Mumbai, and outsourced a lot of the editing work to India. However, the operations were wound up hardly a year later, when its US parent filed for Chapter 11 bankruptcy protection. A portion of Bridge News operations (basically non-news) was later taken over by Reuters. Other major MNC wire agency firms currently working in India include Dow Jones, (publishers of Wall Street Journal), Bloomberg and Associated Press. None of them have outsourced editorial work to India so far.

Betty Wong, managing editor for Reuters America was quoted as saying earlier: "Our Bangalore operation is meeting the company's high expectations. Reuters employees there are contributing to the quality and reliability of our products that Reuters customers have come to expect. Reuters is committed to achieving a fair and reasonable collective bargaining agreement with the Guild."

Current Reuters CEO Tom Glocer joined the company in New York in 1993 as Vice President and Deputy Counsel, Reuters America. He was appointed Executive Vice President and General Counsel, Reuters America Holdings in 1995. In 1997, he was appointed Chief Executive Officer, Reuters Latin America, with responsibility for Reuters operations in Central and South America. In February 2000 he was appointed Chief Executive Officer, Reuters Information. 

Prior to joining Reuters, Tom was a mergers and acquisitions lawyer with Davis Polk & Wardwell in New York, Paris and Tokyo. He also has business start-up experience in the development of software for educational games.


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