Media increasingly outsources tech, copy editing

Computerworld - IT services firm HCL Technologies Ltd., one of the major Indian offshore companies, this week said it won a multimillion-dollar contract to manage data centers and infrastructure operations for News Corp.'s U.K. subsidiary, News International. It was a routine deal for the tech sector, but the Indian firms are also looking for more work from publishers, including gaining larger shares in areas such as advertising and content management.

In short, as advertising declines, the pace of onshore and offshore outsourcing in the media industry appears to be picking up. And it involves many aspects of the news media businesses, including editorial employees.

The Toronto Star late last month announced that it was laying off 78 people, including copy editors. It is planning to use a new company, Pagemasters North America, for copy editing and pagination. Pagemasters is part of an Australian company but was launched in August in Toronto as a joint operation with the Canadian Press news service.

Bob Hepburn, the Star's spokesman, said the reason for the move to Pagemasters is to save money on copy editing and pagination. The strategy was explained in a staff memo by publisher John Cruickshank. A copy of the note, heavily edited by an apparently disgruntled Star editor, was republished on the Torontoist Web site under the headline: "Why the Star needs its own editors."

Pagemasters wants to offer its services in the U.S., which would make it a nearshore outsourcing firm, in the tech industry's parlance, giving it the ability to leverage wage differentials between the U.S. and Canada.

But Stewart Muir, Pagemasters' managing director, said the company isn't planning "a wage arbitration model of turning dollar jobs into nickel jobs -- we are not that."

"What we do is take the processes of editorial operations in daily newspapers and apply efficiencies and economies of scale," Stewart said. The company will have offices near U.S. customers to benefit from "local knowledge." Employee pay will be based on market conditions and skill levels, he said.

If media companies are warming to outsourcing, tech may help lead the way. HCL, for instance, reported in its results for the quarter that ended Sept. 30 that its media publishing and entertainment business had grown nearly 53% year over year, second only to infrastructure services, which increased 55%. The percentage gains are large partly because media publishing accounts for only a small part of its business -- 6.8% of revenue, as of Sept. 30. In June, media was 5.6% of revenue.

Not all outsourcing tech companies report the gains that Noida, India-based HCL did, and many don't break out publishing-specific numbers.