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Home > India > Business > Business Headline > Report

Media outsourcing attracts ire of US brigade

Ravi Menon in Bangalore | June 03, 2008 13:24 IST

For instance, a digital advertising contract between India's second largest IT services provider Infosys Technologies and a major American newspaper group is threatening to become a rallying point for the brigade to regroup and renew attacks on outsourcing of management information systems (MIS) and key operations-related work to India.

Infosys Technologies, according to sources, signed an advertising outsourcing deal with Missouri-based Kansas City Star sometime last month. The daily, a part of the McClatchy Company that also publishes the Miami Herald, will outsource advertising production work for its new media/digital business to Bangalore.

An industry source claimed that City Star would be outsourcing its entire digital advertising team to Infosys [Get Quote]. "While the deal is not substantial in terms of payback, over the next three to five years, City Star has been looking at gaining the economy of scale in its production set-up over the past year by outsourcing digital media production across a few of its publications to different vendors," the source said.

On the daily's website, City Star President and Publisher Mark Zieman said the move is expected to reduce the number of employees in the newspaper's advertising services department by up to nine.

"Given the historic transformation going on in our industry, the Star must continue to find ways to run more efficiently in every area," Zieman wrote, adding that all creative work for print and online advertisers would continue to be handled inhouse. "Of course, our advertising customers will continue to interact with our local sales and design representatives," Zieman said.

Zieman did not respond to an e-mailed questionnaire on the deal. An Infosys spokesperson, when contacted, refused to elaborate on the terms and duration of the agreement with the Star, saying that the company does not respond to queries on individual contracts.

Infosys is not the lone vendor in this case. Holdings of McClatchy, the third largest media conglomerate in the US, include the Miami Herald, the Star Tribune, Sacremento Bee, and the Raleigh News & Observer.

The first three dailies have outsourced a part of their advertising production to Express KCS, which runs a production centre in Gurgaon. A few publications owned by MediaNews Group Inc, including the San Jose Mercury News, are known to be among KCS' customers.

In February this year, publishing company Gannet Co Inc outsourced digital ad production work for group newspapers Rochester Democrat and Chronicle, and Press & Sun-Bulletin, among other papers, to 2AdPro, a division of Bangalore-based content services vendor Ninestars Information Technology Ltd. Ninestars has global delivery centres in Chennai and Kancheepuram with software development and R&D work done out of Bangalore.

Earlier, The Miami Herald and San Francisco Chronicle, a Hearst Communications Inc publication, briefly flirted with the idea of outsourcing a substantial portion of editorial design work, including copy editing and page layout, to New Delhi-based Mindworks.

Both were quick to drop the plan in the face of stiff opposition from their rank and file, and hyperventilation on the topic from the local press. Now, it's the turn of advertising executives, ad production designers and graphic artists to quake in their shoes at the thought of their jobs getting outsourced to India.

The global market for multimedia digitisation services, which includes digital advertising production, currently stands at $2 billion, growing at over 30 per cent annually, according to experts. Indian companies are targetting an addressable market of 8-10 per cent by 2010. Not big by the hefty software exports target of $50 billion for that year, though a good handle for the outsourcing doomsayers to clobber Indian tech vendors with.

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