AOL (NYSE: TWX) UK has announced plans to outsource editorial services to India, primarily to reduce cost. It also intends to bring down its permanent journalist staff from 39 to 17, and relocate online editorial support jobs to Bangalore.

Outsourcing of editorial services is catching up as companies realize its advantages in order to maintain the competitive edge. Some recent examples include outsourcing of editorial production by New Zealand based publisher APN News & Media for the New Zealand Herald and other regional newspapers and weeklies. O'Reilly also announced outsourcing of editorial production for its newspaper published in Ireland.


The offshore opportunity
The fundamentals of the media and publishing businesses are changing very rapidly thanks to the spread of the Internet and web technologies. This puts pressure on companies to provide services at a much lower cost at much faster turnarounds. Labour intensive editorial support services thus become an ideal candidate for offshoring.  

Destinations such as India offer a host of advantages including a vast pool of educated, creative and English speaking population with good writing skills. Traditionally too, India has been strong in journalism, giving it an edge over countries like China. The typical cost savings for a publisher offshoring to India are estimated to be around 30-40%.

Offshoring of editorial services to India started three years back with Reuters moving its editorial jobs from US and Europe to India. Moreover, the early success of Time Warner. CNET, Thomson Press, Integra, Macmillan and other companies sets a positive precedent for offshoring to India.

Indian BPO firms are already gearing up as they foresee substantial amount of editorial work coming to India. Pure-play publishing service providers (e.g. Datamatics, Mindworks, etc) are already at an advantage. However, there are other non-publishing entrants getting ready for the future opportunity. For instance, Satyam Computer Services is planning to create a media and entertainment unit. While in the short-term it plans to build up a team that can manage content, the goal is to ultimately offer sub-editing and even writing. In terms of building capabilities, it will work its way by first offering lower value adding work like reworking of content and then gradually move towards creation of content. Earlier, Genpact and Infosys, two large outsourcing vendors in India announced tie-ups with large Indian media companies to start outsourcing services.


Going Forward
As editorial offshoring catches pace Indian BPO companies will have to deliver international quality at a lower price point. The importance of quality is underscored, as the offshoring trend has not been without its critics. Journalist associations and federations overseas are of the view that outsourcing of editorial work will erode the quality of journalism resulting in reduced circulation, which will further add to outsourcing companies’ woes. Meeting client expectations will be crucial to counter this criticism.

Further, in terms of future capabilities, Indian BPOs will have to come up to speed quickly, which might be a problem in the short run, especially for the smaller companies. As more and more editorial work comes to India and the Indian firms are able to deliver the desired results, confidence levels will soon build-up. This will result in more foreign media companies offshoring their work to India to avail the twin benefit of cost saving and quality services.