The global news agency moves key financial research and analysis tasks to Bangalore in a move that could well set a new trend in offshore news operations.
A CANNY operational change a few weeks ago by one of the best known names in international news gathering, Reuters, may allow it to stay ahead in the intensely competitive arena of financial services, even while subtly transforming the very mechanics of disseminating information in the Internet age.
When the German-born Paul Julius Reuter used the new invention, the electric telegraph - backed by 45 carrier pigeons - to launch the world's first paid news service in 1851, his core customers were business houses in England, France and Belgium to whom he supplied news from the European markets, dramatically faster than any one could then conceive. In later years, Reuters became a respected name for the dissemination of news in its broadest sense.
Now, over a century and a half later, the British-based company was coming to Bangalore, once more riding the crest of new technological opportunities, to serve its financial and commercial customers in a way that could well turn out to be faster, more efficient and cost-effective than anything being currently attempted. Then, it was the telegram and the telegraph. Now, it is Internet and broadband that is triggering the change.
In 1866, just 15 years after Reuters was born, its first correspondent landed in Mumbai. The company already had a news gathering network in India - but it was mostly a matter of `telegrams' reporting at second hand, such momentous events as the "Sepoy Mutiny" in 1857 which expanded into the War of Independence, by lifting details from true-blue British-owned newspapers like the Bombay Times.
Two years later, Reuters had expanded its presence on the subcontinent with bureaux in Bombay, Madras, Calcutta, Karachi and Colombo. Notable coverage included the dispatch of troops to the Abyssinian War in 1867 and news of `loyal' Indian support for the British effort during the first World War - a thinly veiled propaganda service on behalf of the government.
By 1935, Reuters' Indian operations were its most successful overseas profit centre - and the hard-nosed management decided to tone down subtly any overt pro-Raj slant: after all it was important to ensure that Reuters was still around in an independent India. Already in 1937, its general manager in India was telling his superiors in London: "British control in India is being relaxed... We are not in favour of unduly emphasising British or Empire news at a time when Indian nationalists are taking an increasing share in the government of this country."
THE pragmatism paid off. When India became free in 1947, Reuters had 100,000 in Indian subscriptions - the highest anywhere in the world - and it included an Indian subsidiary, the Associated Press of India (API) with strong presence in the Indian language press. At the initiative of Kasturi Srinivasan of The Hindu, newly-elected president of the Indian and Eastern Newspaper Society (IENS), the ownership of API was transferred to an Indian-owned entity that was later to become the Press Trust of India (PTI). An India Desk was started at Reuters' London office with news from the subcontinent to be fed by PTI.
On January 30, 1948, P.R. Roy, a Reuters reporter was assigned to cover Gandhiji's prayer meeting that evening. At 5-13, he phoned the Delhi office with the news that a man had fired four shots at the Mahatma and that the worst was feared. Reuters flashed its London office: "MAN FIRED FOUR SHOTS AT GANDHI POINTBLANK RANGE WORST FEARED" and was able to claim a world scoop by a clear seven minutes.
In September that year, Jawaharlal Nehru wrote to Kasturi Srinivasan, describing the PTI-Reuters partnership as "another step in our liberation, for a free press and a free news service are the most vital characteristics of a free nation". It was a partnership that lasted just four years. Reuters did not find global value in much of PTI's Indian news feed. In Pakistan, for example the PTI perspective was difficult to sell. In September 1952, PTI ended the news-sharing arrangement. Reuters was suddenly left with just two correspondents and half a dozen stringers in India. Its heydays in this country were seemingly over.
But it was not for long. In 1973, the company returned to the roots of its founder Julius Reuter - the swift dissemination of commercial and financial news and created "Reuter Monitor", an electronic market place for foreign exchange. By 1981, Reuters was offering the same global foreign exchange services to Indian banks, followed by the "Reuters Dealing System" to execute foreign exchange deals. The huge increase in profitability from these financial services saw Reuters become a public company 20 years ago.
In 1994, it created Reuters India Pvt. Ltd (RIPL) to encompass its news services here. In April, it set up a small office in Bangalore to support its financial services with market data and research. By October 7 when its Bangalore facility was formally inaugurated, this had expanded to a 340-strong team, which fuels a data management centre for company information, business intelligence, merger and acquisitions data, public equity offerings and debt markets.
A memo circulated among its United Kingdom staff recently by David Schlesinger, Reuters' global Managing Editor and head of editorial operations, (mostly to assuage fears of any large-scale job losses) spelt out the future scope of work in Bangalore: writing research alerts from analysts' brokerage reports; a polling unit to take the market pulse, starting with Australian economic polling later this year; creating earning tables for companies... .
And as Editor-in-Chief Geert Linnebank explained, doing this type of research and analysis in Bangalore would cost 40 per cent of a similar operation in the U.K. or the U.S.
But as National Association of Software and Service Companies (NASSCOM) president Kiran Karnik reminded them, Reuters was obviously not here "just for `cost arbitrage', but because of the quality of talent - some of the best analytical brains in the world". Justin Abel, Reuters' Global Head of Data Operations, agreed. "Our staff here lead in innovation in data," he said. By the end of 2005 when the strength here would touch 750, Bangalore would be Reuters' largest data operations anywhere, collaborating in real time with the markets of New York, London and Hong Kong. So is this yet another example of outsourcing? Reuters says `no': "These are our staff in Bangalore, we have outsourced to nobody," says Linnebank. Nor is this an offshoot of offshored Information Technology Enabled Services (ITES). "We are in the information business. We rely on technology, but we are not an IT (Information Technology) company."
But the large Reuters presence in Bangalore now, nevertheless, marks a radical change in the mechanics of newsgathering. David Schlesinger, speaking to Frontline on the sidelines of the inauguration function, explained: "News must still be covered from the place where it happens, but in these days of Internet and broadband connectivity, many other functions of a news agency can be carried out whereever it is convenient and logistically sensible to do so." Such tasks would include background research, analysis, `anniversary' specials - and that reliable standby, the `morgue' of famous people's obituaries.
That is where a country like India offers the compelling advantage: a huge human resource of English language professional competence in multiple disciplines. And that is why Justin Abel told the inauguration audience: "India is the place for us." He could not resist adding (turning to Karnataka Chief Minister Dharam Singh, seated next to him), "Infrastructure is critical to us" - a polite reminder that Bangalore's undoubted logistic advantages would be nullified if the basic physical infrastructure of roads and surface transportation did not keep pace with the burgeoning presence of international players. Like Reuters, they too are discovering new and creative ways in which their own pragmatic business interests could dovetail with the Indian professional's international aspirations.
(Note: Details of Reuters' history in India and quotations from the period have been sourced from the company's official history: The Power of News: The History of Reuters by Donald Read; Oxford University Press; 1992; 20)
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