Our Ancestry.com tour included the corporate offices

and the digitization department. This is Laryn Brown, head of the Document Preservation department, in front of monitors tracking the scanning.
About a dozen people operated different kinds of scanners; one photographs books and automatically turns the pages. There was a flatbed scanner bigger than me.
In the works is a UV scanner, which can bring out ink on severely damaged and faded records (we saw an example of what this technology can do—it turned a nearly blank page into a readable document).
More and more often, though, Ancestry.com will digitize paper records on-site at repositories, with digital images sent to headquarters for processing.
Yes, many records are indexed in China and Uganda. Indexers receive months of training in English and whatever language the records are in; they're asked to key exactly what they see, even when a word is misspelled. US employees do quality spot checks and occasionally send back batches of records for re-indexing.
Back in the USA, another team examines records and indexes to “normalize” those misspellings and aberrations in data fields. Say a set of records is from California. The clerks who created the records way back when may have written the state as CA, Cal., Calif. or Calfa. The Ancestry.com staff will add “California” to the index for these records so they come up in customers' California searches.
More on searching later!