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He told me he'd been talking to an Israeli company that is making some big advances
in compression technology to allow for easier�察�better transfers of CAT scans via the
Internet so you can quickly get a second opinion from a doctor half a world away。
A few weeks after I spoke with Rao�察�the following e´mail arrived from Bill Brody�察�
the president of Johns Hopkins University�察�whom I had just interviewed for this book�此�
Dear Tom�察�I am speaking at a Hopkins continuing education medical meeting for
radiologists ��I used to be a radiologist�� 。。。 I
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came upon a very fascinating situation that I thought might interest you。 I have just
learned that in many small and some medium´size hospitals in the US�察�radiologists
are outsourcing reading of CAT scans to doctors in India and Australia�。。 �Most of
this evidently occurs at night ��and maybe weekends�� when the radiologists do not have
sufficient staffing to provide in´hospital coverage。 While some radiology groups will
use teleradiology to ship images from the hospital to their home ��or to Vail or Cape
Cod�察�I suppose�� so that they can interpret images and provide a diagnosis 24/7�察�
apparently the smaller hospitals are shipping CAT scan images to radiologists abroad。
The advantage is that it is daytime in Australia or India when it is nighttime here´so
after´hours coverage becomes more readily done by shipping the images across the globe。
Since CAT ��and MRI�� images are already in digital format and available on a network
with a standardized protocol�察�it is no problem to view the images anywhere in the
world 。。。 I assume that the radiologists on the other end 。 。 。 must have trained
in ��the�А�US and acquired the appropriate licenses and credentials。 。 。 The groups
abroad that provide these after´hours readings are called ;Nighthawks; by the
American radiologists that employ them。 Best�察�Bill
Thank goodness I'm a journalist and not an accountant or a radiologist。 There will
be no outsourcing for me´even if some of my readers wish my column could be shipped
off to North Korea。 At least that's what I thought。 Then I heard about the Reuters
operation in India。 I didn't have time to visit the Reuters office in Bangalore�察�but
I was able to get hold of Tom Glocer�察�the CEO of Reuters�察�to hear what he was doing。
Glocer is a pioneer in the outsourcing of elements of the news supply chain。
With 2��300 journalists around the world�察�in 197 bureaus�察�serving a
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market including investment bankers�察�derivatives traders�察�stockbrokers�察�newspapers�察�
radio�察�television�察�and Internet outlets�察�Reuters has always had a very complex
audience to satisfy。 After the dot´com bust�察�though�察�when many of its customers became
very cost´conscious�察�Reuters started asking itself�察�for reasons of both cost and
efficiency�此�Where do we actually need our people to be located to feed our global
news supply chain�拭�And can we actually disaggregate the work of a journalist and keep
part in London and New York and shift part to India�拭�
Glocer started by looking at the most basic bread´and´butter function Reuters
provides�察�which is breaking news about company earnings and related business
developments�察�every second of every day。 ;Exxon comes out with its earnings and we
need to get that as fast possible up on screens around the world�此�'Exxon earned
thirty´nine cents this quarter as opposed to thirty´six cents last quarter。' The core
competency there is speed and accuracy�察─�explained Glocer。 ;You don't need a lot of
analysis。 We just need to get the basic news up as fast as possible。 The flash should
be out in seconds after the company releases�察�and the table ��showing the recent history
of quarterly earnings�А�a few seconds later。;
Those sorts of earnings flashes are to the news business what vanilla is to the ice
cream business´a basic commodity that actually can be made anywhere in the flat world。
The real value´added knowledge work happens in the next five minutes。 That is when
you need a real journalist who knows how to get a comment from the company�察�a comment
from the top two analysts in the field�察�and even some word from competitors to put
the earnings report in perspective。 ;That needs a higher journalistic skill
set´someone in the market with contacts�察�who knows who the best industry analysts
are and has taken the right people to lunch�察─�said Glocer。
The dot´com bust and the flattening of the world forced Glocer to rethink how Reuters
delivered news´whether it could disaggregate the functions of a journalist and ship
the low´value´added functions to India。 His primary goal was to reduce the overlap
Reuters payroll�察�while preserving as many good journalism jobs as possible。 ;So the
first thing we did�察─�said Glocer�察 �was hire six reporters in Bangalore as an
experiment。
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We said�察�'Let's let them just do the flash headlines and the tables and whatever else
we can get them to do in Bangalore。';
These new Indian hires had accounting backgrounds and were trained by Reuters�察�but
they were paid standard local wages and vacation and health benefits。 ;India is an
unbelievably rich place for recruiting people�察�not only with technical skills but
also financial skills�察─�said Glocer。 When a company puts out its earnings�察�one of
the first things it does is hand it to the wires´Reuters�察�Dow Jones�察�and Bloomberg´for
distribution。 ;We will get that raw data�察─�he said�察 �and then it's a race to see how
fast we can turn it around。 Bangalore is one of the most wired places in the world�察�
and although there's a slight delay´one second or less´in getting the information
over there�察�it turns out you can just as easily sit in Bangalore and get the electronic
version of a press release and turn it into a story as you can in London or New York。;
The difference�察�however�察�is that wages and rents in Bangalore are less than one´fifth
what they are in those Western capitals。
While economics and the flattening of the world have pushed Reuters down this path�察�
Glocer has tried to make a virtue of necessity。 ;We think we can off´load commoditized
reporting and get that done efficiently somewhere else in the world�察─�he said�察�and
then give the conventional Reuters journalists�察�whom the company is able to retain�察�
a chance to focus on doing much higher´value´added and personally fulfilling
journalism and analysis。 ;Let's say you were a Reuters journalist in New York。 Do
you reach your life's fulfillment by turning press releases into boxes on the screen�察�
or by doing the analysis�拭─�asked Glocer。 Obviously�察�it is the latter。 Outsourcing
news bulletins to India also allows Reuters to extend the breadth of its reporting
to more small´cap companies�察�companies itwas not cost´efficient for Reuters to follow
before with higher´paid journalists in New York。 But with lower´wage Indian reporters�察�
who can be hired in large numbers for the cost of one reporter in New York�察�it can
now do that from Bangalore。 By the summer of 2004�察�Reuters had grown its Bangalore
content operation to three hundred staff�察�aiming eventually for a total of fifteen
hundred。 Some of those are Reuters veterans sent out to train the Indian teams�察�some
are reporters filing earnings flashes�察�but most are journalists doing
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slightly more specialized data analysis´number crunching´for securities offerings。
;A lot of our clients are doing the same thing�察─�said Glocer。 ;Investment research
has had to have huge amounts of cost ripped out of it�察�so a lot of firms are using
shift work in Bangalore to do bread´and´butter company analysis。; Until recently the
big Wall Street firms had conducted investment research by spending millions of
dollars on star analysts and then charging part of their salaries to their
stockbrokerage departments�察�which shared the analysis with their best customers�察�and
part to their investment banking business�察�which sometimes used glowing analyses of
a company to lure its banking business。 In the wake of New York State Attorney General
Eliot Spitzer's investigations into Wall Street practices�察�following several
scandals�察�investment banking and stockbrokerage have had to be distinctly
separated´so that analysts will stop hyping companies in order to get their investment
banking。 But as a result�察�the big Wall Street investment firms have had to sharply
reduce the cost of their market research�察�all of which has to be paid for now by their
brokerage departments alone。 And this created a great incentive for them to outsource
some of this analytical work to places like Bangalore。 In addition to being able to
pay an analyst in Bangalore about 15��000 in total compensation�察�as opposed to 80��000
in New York or London�察�Reuters has found that its India employees tend to be
financially literate and highly motivated as well。 Reuters also recently opened a
software development center in Bangkok because it turned out to be a good place to
recruit developers who had been overlooked by all the Western companies vying for
talent in Bangalore。
I find myself torn by this trend。 Having started my career as a wire service reporter
with United Press International�察�I have enormous sympathy with wire service reporters
and the pressures�察�both professional and financial�察�under which they toil。 But UPI
might still be thriving today as a wire service�察�which it is not�察�if it had been able
to outsource some of its lower´end business when I started as a reporter in London
twenty´five years ago。
;It is delicate with the staff�察─�said Glocer�察�who has cut the entire Reuters staff
by roughly a quarter�察�without deep cuts among the reporters。 The Reuters staff�察�he
said�察�understand that this is being done so
that the company can survive and then thrive again。 At the same time�察�said Glocer�察�
;these are sophisticated people out reporting。 They see that our clients are doing
the exact same things。 They get the plot of the story 。 。 。 What is vital is to be
honest with people about what we are doing and why and not sugarcoat the message。
I firmly believe in the lesson of classical economists about moving work to where
it can be done best。 However�察�we must not ignore that in some case