Short-term reality clashes with long-term economic theory
Second in an occasional series on jobs moving offshore.
By ROBERT TRIGAUX
Published May 3, 2004
Employees at Allstate Insurance Co.'s claims center in St. Petersburg's Carillon office park recently got the word that the giant insurance company plans this summer to outsource many of its local jobs overseas to India. Allstate told its staff that this was a six-month "trial run."
But with 200 jobs at stake, employees naturally fear the worst.
They probably should. Although opposition to offshore outsourcing - replacing jobs in the United States with jobs in low-wage countries - is rising among adults and investors in this country, a strong majority of U.S. businesses continue to embrace the strategy.
According to a recent Gallup poll, two-thirds of U.S. investors say offshore outsourcing is "bad for the economy." Yet in a separate national survey of business people by eePulse and the University of Michigan, three-quarters say their businesses are outsourcing or planning to outsource jobs in 2004. Next year, U.S. companies plan to send as many as 50 percent more work to India, an Ernst & Young study forecasts.
Why the disconnect? Why do so many criticize outsourcing at the same time that more U.S. businesses feel obligated to ship more jobs overseas to get work done at the lowest possible cost?
Welcome to the economic globalization debate, where short-term business reality frequently clashes with long-term economic theory.
Talk about a country mired at cross purposes. For decades, the United States aggressively promoted the ideas of free global markets, capitalism and democracy. In response, such countries as India, China, the Philippines and other developing countries started to compete, at lower cost, in more white-collar and technology-based businesses - increasingly at the expense of displaced U.S. workers.
Now this country is having second thoughts. Is a protectionist backlash brewing?
There certainly is confusion over outsourcing. A recent Harris Interactive poll asked U.S. adults whether new laws that hampered U.S. companies from getting work done at least cost would make those businesses less competitive. In the poll, 45 percent agreed with that statement, while 35 percent disagreed. About 20 percent were not sure.
That muddled response has not stopped legislatures or governors in at least 35 states including Florida and every other state in the Southeast from proposing measures to restrict or ban the outsourcing of jobs related to work done for the state government. In Tallahassee, legislators considered a measure last month that would require any state work contracted out to private businesses to remain in Florida.
Few of these measures seem likely to become law. But it's no coincidence that so many proposals seeking to protect U.S. jobs have cropped up in an election year.
More often, it is a business manager and not a politician who decides that offshore outsourcing is not the always the best solution. Among recent examples:
- At Indiana's Conseco, an insurance company emerging from troubled times, more than 250 U.S. workers are fielding customer service calls that were handled by a call center in India a year ago, according to a USA Today story.
- Texas PCmaker Dell was among the first tech companies to transplant customer service and technical support to Bangalore, India's version of Silicon Valley. But, as Forbes magazine notes, "Language and cultural rifts between disgruntled U.S. customers and Dell's bright but unseasoned Indian support staff fueled the flames. U.S. customers say they got frustrated when Dell employees fielding calls seemed unwilling to depart from a script." The result? Dell pulled some of its services back to the United States, though it remains a fan of outsourcing.
- In a front page story in the New York Times last Wednesday, the co-founder of a Massachusetts company called Storability Software said the business brought back most of its software programming tasks from India to this country because India lacked the expertise in the type of software it wanted. The co-founder, Hemant Kurande, happens to be Indian.
The bottom line? Offshore outsourcing has plenty of corporate converts and the backing of many economists who consider "least cost" as best for business. For other companies, outsourcing remains more of a financial experiment and ethical dilemma.
The Bush administration has downplayed outsourcing, especially in Midwestern manufacturing states hardest hit because of jobs moved overseas. But the message is different outside this country. U.S. Ambassador to India David Mulford told a meeting of the American Chamber of Commerce in New Delhi on Friday that there could be no turning back on outsourcing U.S. manufacturing and call center jobs to India and China.
CNN's Lou Dobbs Tonight already runs segments of its "Exporting America" series, which is critical of U.S. companies and the federal government sending work overseas.
Other attention comes from more unexpected quarters.
On the TV show West Wing last Wednesday, Communications Workers of America president Morty Bahr spoke out (in a TV "ad" that was part of the show) against offshore outsourcing. He encouraged the fight to keep technology jobs in this country.
Just in time for Labor Day this year, a documentary called American Jobs, about U.S. jobs lost to foreign competition, will be released. Filmmaker and MTV producer Greg Spotts was scheduled to visit Orlando last month to interview former U.S. employees of Siemens. Those workers suffered the indignity of training the technology temps from India who eventually replaced them in the Siemens facility.
Primetime TV play. Movies. All that's missing in pop culture for the outsourced worker is some country song ...
