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Outsourcing is when one company sends a job process to another source for completion. Off-shoring is outsourcing jobs overseas. Sitel and Genpact are two of the largest global outsourcers. Sitel, a Nashville, Tennessee global outsourcing provider, employs 60,000 workers in 27 countries including: 11,000 in the Philippines, 4,000 in India and 9,000 in the Latin American bilingual countries of Columbia, Brazil, Panama, Mexico, and Chili. Genpact was created by GE and has research and development locations in New York, Shanghai, Munich and Bangalore. Genpact has more than 19,000 workers handling back office processing and manning call-centers in Mexico and India. Offshore outsourcing is no longer limited to back office and call-center jobs. Today it includes: software design, skilled programming work, accounting, microeconomics, radiology, financial analysis, electronics, architecture and more. In 2011, it is possible to secure information technology services from global outsourcers such as Tata Consultancy Services Ltd. or Tata Technologies and obtain all the business processing services and regulatory approvals you need for your next venture. Off-shoring is not a new method of business. In fact, 45% of American apparel, 60% of audio and video devises, and 70% of footwear comes to the U.S. from low-labor cost countries. In the past, Proctor & Gamble, Dupont, Cisco Systems, ABN AMRO, Unilever, Rockwell Collins, and Marriott each signed offshore megadeals worth billions. In 2004, Wyeth Pharmaceuticals moved its entire clinical testing operation to the outsourcing specialist Accenture Ltd. Big Pharma allied with partners overseas in China, India, and Russia to do extensive molecular research. General Electric has 13,000 employees in a research center in Shanghai. Pfizer Drug has 200 employees at this same center. Pfizer is running 44 new drug trials in an outsource center in India. Microsoft has 1,500 employees at research and development centers in India and China. Nokia is building a new $150 million mobile phone plant in India that will employ 2,000 workers. Intel has 2,500 employees in India working on a micro-compressor called Xeon7400. They have established a $500 million capital technology fund in China for investment in wireless broadband technology and media communications. Other big name corporations involved in outsourcing in China and India include: Daimler Chrysler, GM, Siemens, Matsushita Electric, IBM, American Express, Hewlett Packard, and Johnson & Johnson. What causes medical research and technology jobs to be outsourced offshore? The advent of the Internet made a hundredfold increase in telecommunications and band width capacity. Add to that the deregulation of the U.S. telephone system and you have the two most significant causes. It is partly an educational issue. There is a huge gap between a Chinese student's degree of understanding in science and math and that of a U.S. student at the same educational level. U.S. students score behind 20 countries in math and 13 in science. China graduates almost twice as many electrical engineers with PHD degrees as the U.S. Cornell University is now operating a medical school in Qatar. Microsoft is building a $28 million research and development campus in Beijing. Currently in India, over 14 million high school graduates have reasonable to good use of the English language. Since 2002, bachelor degrees are down by 50 percent in the U.S. in science, technology, engineering, and mathematics. Usually, degrees in any of these areas have virtually guaranteed employment in the U.S. Based on media representation, American students of all ages have backed away from these lucrative career choices. American students need to be provided with true statistics so they can make better employment education plans. Those considering medical transcription careers should know that with the advent of voice recognition software, jobs in that industry will be scarce in less than 10 years. Global outsourcing companies often send foreign students to U.S. trade schools to learn specialties not currently taught abroad and then bring them home to work. Sitel's Nicaragua center has 1,400 workers with university degrees and 75 percent earned them in the U.S. In the last four years, India has become the leader in the information technology sector. Educating foreign students in American schools has caused much conflict among U.S. Labor Unions. Congress has responded by tightening student visa regulations. What's the intrigue of off-shoring? It allows small companies to compete effectively with huge corporations. Off-shoring is rated in three categories. The first is financial attractiveness. In 2009, Ghana was number one in this category. Second is skills availability. India ranked first place in the same year. Third is business environment. Chili took the number one spot also in 2009. Many would say that labor-cost reductions and taxes are the only drive. After factoring the costs of telecommunications and management expenses, off-shoring a customer service call can save a company up to 55 percent. It costs Eli Lilly & Company $1.1 billion dollars to develop and release a new drug in the U.S. The same process costs $800 million overseas. Processes that pay $10-$12 an hour in the U.S. can be hired out for $4-$6 an hour in Latin America. India and China are the primary countries for outsourcing electronics. Mexico is the leader in manufacturing jobs and engineering. Cost-reduction is not the sole incentive. What the opposition fails to mention is the repeated number of companies re-investing their labor and tax savings into the development of more U.S. jobs. Wachovia recently spent $1 billion re-investing the savings from off-shoring into its core business in the U.S. Indy Mac, a Pasadena, California based home mortgage operation, has maneuvered one of the most profitable off-shoring ventures to date. They have climbed from the 22nd to the 9th largest mortgage firm in the U.S. Using leading edge technology, they can now process, price, and approve a loan in less than 1 minute. India's Exiservice Holdings, Inc. now handles 83 back office services for them including bill collecting and new customer welcome calls. This move has made them more productive and flexible. It has greatly improved their customer service without one American job being lost. Re-investment of their savings has allowed them to double their U.S. work force. They are still hiring stateside. Penske Truck Leasing, in a joint venture with GE, invested $768 million by purchasing Rollins Truck Leasing Corporation. They sent 30 some back office processes to Genpact providers offshore. The results of this move have strengthened their position. They are now leasing in excess of 216,000 trucks and providing logistic services for their customers. The Genpact alliance allows a driver to call an 800 number in India and receive whatever they need from instructions to permits in 30 minutes or less. This process stateside took up to two hours. The driver's entire log, including mileage, tolls, and fuel tickets, is shipped to Mexico for processing. This offshore experience has brought a $15 million savings in labor-costs and provided thousands of new jobs for drivers and workers in shipping, receiving and maintenance in the U.S. The opposition to offshore outsourcing takes a bold and vocal stand. Many quote and often exaggerate Bureau of Labor and Statistics numbers. Where the Bureau says that between 2001 and 2003 more than 200,000 jobs were sent offshore, it often becomes 250,000 jobs depending on the speaker. It is rarely reported that the U.S. creates that many jobs a month in a good year. The Bureau states that by 2012 there will be 3.9 to 4.9 million new jobs created in the IT field. They predict that by 2015 there may be 3.3 million jobs off shored. This last statement includes all positions in every line of work, not just in information technology as the opposition loosely implies. During the Bush-Kerry election, John Kerry suggested the outright banning of foreign outsourcing of state and federal government contract jobs. He also advocated eliminating tax breaks for firms that off shored and providing tax credits for those that chose not to. Off-shoring opponents often say that foreigners are stealing American jobs. Admittedly, some jobs have been lost to off-shoring. From November, 2001 to January, 2004, more than 700,000 jobs were lost. Off-shoring accounted for 5 percent of that amount. Mergers and acquisitions made up another 10 percent. Automation accounted for a great number of those losses. Those that feel off-shoring is skimming the cream off America's top often report that low-wage countries do nothing to better themselves. In 2009, an Indian outsourcing company purchased Aviva Insurance for $228 million providing India with $1 million worth of work for the next eight years. There has been little if any sympathy for foreign nations losing jobs. World Trade Organization reforms destroyed nearly 20 million Chinese farmers' jobs. The North American Free Trade Agreement cost Mexico 1.3 million agricultural positions. In 2008, terrorists attacked Mumbai taking 168 lives. The result was 400 call-center jobs being returned to the U.S. Members of off-shoring opposition rejoiced. Understandably, it is often easier to get caught up in the crusade fervor than to step aside and take the time to research the truth. It is certain that global outsourcing is a permanent manifestation. Natural resources, labor and capital would have been difficult to move between countries two centuries ago, but now with telecommunication innovations rapidly developing, Guatemala has access to New Jersey pretzels and Kansas can order Macadamia nuts hand picked off an Australian tree. It's time to look to the future and take our place as the progressive leader in the Global outsourcing economy in which we now live. Works Cited: Anderson, Sarah, et al. "Toward a Progressive View on Outsourcing." Nation 278.11 (2004): 22-26. Academic Search Complete. EBSCO. Web. 9 July 2010. Bloomberg, L.P. "Outsourcing: Stop the Hysteria." Business Week 8 Mar. 2004. Web. 17 Jul 2010. http://www.businessweek.com/print/magazine/content/04_10/b3873132_mz029.htm?chan=mz. Brown, Kevin. "When Your Outsourcer Outsources." Speech Technology 1 Nov. 2009. Web. 15 Jul 2010. http://www.speechtechmag.com/Articles/PrintArticle.aspx?ArticleID=57652. Engardio, Pete, Michael Arndt, and Dean Foust. "The Future of Outsourcing. (Cover story)." Business Week 3969 (2006): 50-58. Academic Search Complete. EBSCO. Web. 9 July 2010. Hansen, Fay. "The back shoring myth." Workforce Management 88.13 (2009): 25-28. Academic Search Complete. EBSCO. Web. 9 July 2010. Heyman, J.D., et al. "Is This Woman a Threat To The American Worker?" People 62.2 (2004): 109-112. Academic Search Complete. EBSCO. Web. 9 July 2010. Hira, Ron. "U. S. Workers in a Global Job Market." Issues in Science & Technology 25.3 (2009): 53-58. Academic Search Complete. EBSCO. Web. 9 July 2010. Little, Jane Sneddon. "Outsourcing jobs overseas: A cause for concern?" Regional Review 14.2 (2004): 2-6. Academic Search Complete. EBSCO. Web. 9 July 2010. Purdum, Traci, and John Teresko. "SMART OUTSOURCING." Industry Week/IW 253.10 (2004): 71-77. Academic Search Complete. EBSCO. Web. 9 July 2010. Schneiderman, Ron. "Off-shoring. Outsourcing. Out Of Work." Electronic Design 53.23 (2005): 65-74. Academic Search Complete. EBSCO. Web. 9 July 2010. Smerd, Jeremy. "India on the outs?" Workforce Management 88.6 (2009): 30-34. Academic Search Complete. EBSCO. Web. 9 July 2010. Stokes, Bruce. "And Away They Go. (Cover story)." National Journal 36.13 (2004): 940-945. Academic Search Complete. EBSCO. Web. 9 July 2010. |
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