U.S. papers trim costs by sending work abroad
The Charlotte Observer said Wednesday it will cut 25 of 41 jobs in its ad design group as it sends the work abroad, joining other large companies using foreign outsourcing to trim costs.
The newspaper has been testing outsourcing options for the work since last summer and chose Affinity Express, an Illinois company with facilities in the Philippines and India.
Employees, who have known layoffs were coming, received official notice Wednesday. They can apply for the 16 remaining jobs as artists, designers and "traffic coordinators" working with their overseas counterparts to complete ads, said Observer Publisher Ann Caulkins. Some people also may take positions elsewhere at the paper, which has about 1,000 workers.
Caulkins called the job-cutting discussions "brutal."
"It's a hard conversation to have," she said.
The deal is expected to save 35 to 40 percent on labor for the work, Caulkins said. She wouldn't give a specific figure. The paper also gains access to more sophisticated technology without the need for investment. The transition is expected to be complete by May 31.
Workers losing jobs will receive severance packages based on years of service.
Affinity, one of three companies tested, has been providing similar services for a sister paper, The State in Columbia, since November, Caulkins said. Observer management was able to visit and see firsthand how the system worked.
"We had to be convinced the service would be superior," Caulkins said. "We would not have done this if we thought it would affect customers one bit."
Customers will work only with Observer employees, not Affinity personnel, she said. Some companies that outsource have had complaints from customers, who objected to dealing with workers overseas.
The Observer, like newspapers nationwide, has struggled for years with declining circulation. Last year, the industry's auditors began measuring the reach of newspapers through readership and their quickly growing Web sites. Readership rates take into account that newspapers are passed around, read by several people in offices, restaurants and elsewhere.
Publishers use those figures to set rates and sell ads.
The Observer's Web site, Charlotte.com, which has been a big help in building readership, has seen its audience grow 25 to 30 percent a year for several years, Caulkins said.
