Offshore Business Practices

[Joe Faux]

I work in wireless telecommunications. For the past year I've been training a small team of offshore workers from India to take over my role and responsibilities. Layoffs have been announced at my firm and I'm expecting walking papers sometime Q1 of 2005. My entire organization, roughly 150 positions from one facility, will be moving overseas. Additional local layoffs, not to exceed 2,000, will continue for the remaining 18 months. My employer is making considerable money, but will save more utilizing offshore workers. The stockholders responded positively on Wall Street. These jobs will not be returning to the United States soon.

This topic is not to request pity. I'm confident in my skills and am capable of finding another employer. As a matter of fact, I've not yet formulated a concrete opinion regarding this subject and am wondering what others think of offshore practices. The parties in my microcosm are too close to the topic for a decent discussion.

Should we be concerned about the loss of jobs? Does this free up people to pursue even more education and technically challenging fields? Is this the natural course of events as “globalization” takes effect? Will these fields eventually become too saturated with lower-paid workers to make it a worthwhile career track? Should the government force companies to stop or limit offshoring? Should I do what I can to help a third world country out?

These are some of the questions I've heard from co-workers and family. I just don't seem to have any good responses.

Thoughts?

[Roosta]

Personally, I don't agree with pushing jobs overseas. There seems to be a big thing over here about moving call centre jobs to India. A lot of these are for banks and financial companies. I don't like the thought that my bank details are available to people thousands of miles away, in a country where there are so many people that a criminal would never be traced.

[jaguar]

in a country where there are so many people that a criminal would never be traced.

Sorry but that smacks of racism. What makes you think that a hard working indian call centre worker who ahs trained for often a year or more for the job and works on a different timezone than the rest of his country just to keep it is more likely to swipe your details than a minumum wage worker in the US? What makes you think they're less traceable? Get over the pictures of shantytowns.

It certainly is the natural path of globalisation, the blue collar classes got fucked by this long ago, technology now makes it possible for screw the white collar workers as well. Watch the engineering grads sweat as the tens of thousands of well trained, eager hard working chinese engineers come on to the market. Is it 'right'? Well why do they have less of a right to a good job than you? If they're willing to work harder for less cash why should the government mandate that you should be hired simply because you're American? After all doing so is simply hurting American Companies (exuse the giggle, they're all based in the caymen islands anyway) ability to compete on the Global Stage.

</devil's advoate>

[Cyber Wolf]

Originally Posted by Joe Faux

Should we be concerned about the loss of jobs?

Yes and no. Losses of jobs can wreak havoc in local economies and on Wall Street. Some areas are largely dependent on large firms and companies that employ thousands of their local populace. A mass layoff can all but devastate a local economy. On the other hand, there are other jobs out there and many of them pay decently. However, they're usually a far cry from what people have been doing. Plumbers and electricians, for example. When's the last time you heard of a waterworks firm sending their plumbing positions offshore? The layoffs can set back people and communities, but how far back depends on the individuals' situations.

Originally Posted by Joe Faux

Does this free up people to pursue even more education and technically challenging fields?

Sure, if they can afford to pay for it without a job. Folks should be constantly educating themselves anyway, especially if they work in a technical field. Mix two or more aspects of the same career line. Give them more reason to keep you once they have you. [/quote]

Originally Posted by Joe Faux

Is this the natural course of events as “globalization” takes effect?

It's not going to stop anytime soon, if that's what you mean.

Originally Posted by Joe Faux

Will these fields eventually become too saturated with lower-paid workers to make it a worthwhile career track?

I really couldn't say because I don't know the world of the wireless communication worker well enough. But I'd figure one could still make a decent career out of it, provided they stay one step ahead of everything. For example, there will still be a need for technicians here in the US for the things that people overseas can't do. A person in India can't make physical repairs here if a board shorts or if a hurricane damages a dish. So if one aspect of a job is threatened, get a leg up on another aspect of the same job and get there early, so you won't be one of hundreds coming in at the last minute. Smoother transition that way.

Originally Posted by Joe Faux

Should the government force companies to stop or limit offshoring?

I don't know if they could really get companies to stop, but I do think they could get companies to limit their offshoring. I think there should be limits on it, as the loss of these jobs takes away from the prosperity of this country. Someone laid off from a goodpaying technical job could fairly easily find a job at a retail store, but that would be a dramatic cut in pay and could completely throw off this person's financial situation. They may not make enough to cover the standard expenses. They may have to move to a smaller house or apartment and sell the car for a used/cheaper one just to pay off debt or make ends meet. Prosperity in this country is generally measured by what you can afford and if people are forced to be able to afford less and less, then we become less prosperous. Perhaps it wouldn't be so bad if companies offered options for other positions or if other companies in the same field did reachouts for the skilled people who are losing their jobs.

Originally Posted by Joe Faux

Should I do what I can to help a third world country out?

Do what you feel is right, but being forced out of a job shouldn't be part of it. If you feel helping out people in a third world country is worth your job, you should have the option to quit and open up your job to someone else, not be outsourced.

[Clodfobble]

For the customer support aspects of it at the very least, I suspect that within another year or so there will be a backlash--most people can't understand the Indian accent, and out of frustration they will take their money to companies that provide tech support with an American accent. Good customer service is still an important part of the American economy, and people are willing to pay more for it.

On the other hand, I know the call centers in India are already trying to counter that dissatisfaction by giving special speech classes to their employees to help them speak to American customers.

[Elspode]

I think that, once enough jobs are offshored by corporations looking to enhance the bottom line, there won't be a sufficiently affluent customer base to buy whatever they are selling. It is difficult for people with no jobs to buy whatever a given company is selling, and I don't think it is possible for the USA to be populated entirely by CEOs of service-based companies whose labor profits are generated by the efforts of third-world employees.

Eventually, American companies will have to start marketing their products in India, where all the jobs are.

[Dagney]

Originally Posted by Clodfobble

For the customer support aspects of it at the very least, I suspect that within another year or so there will be a backlash--most people can't understand the Indian accent, and out of frustration they will take their money to companies that provide tech support with an American accent. Good customer service is still an important part of the American economy, and people are willing to pay more for it.

On the other hand, I know the call centers in India are already trying to counter that dissatisfaction by giving special speech classes to their employees to help them speak to American customers.

Just an aside....a number of larger Telecom companies who strive for an 'American' accent from their call centres...find it.

In Canada.

I know from first hand experience...(Worked for two of them.....)

[garnet]

Originally Posted by Joe Faux

Should we be concerned about the loss of jobs?

Absolutely. My old company outsources a lot of their work to India. Shortly before I left they shut down our LA office, and cut jobs at almost every other location. It was only a matter of time before I lost my job, so I got out. I hated the place anyway, so it wasn't that big of a loss to me, but it certainly was to other people.

The thing that bothers me the most is that they ship these jobs to India to "remain competitive" yet upper management's salaries were getting bigger and bigger. In the end, it's padding the pockets of the big guys, and the peons are left working at the Food Court in the mall.

I suppose it's not really that simple, but it sure is sad to see employees nearing retirement with many years of service being kicked to the curb. It's bad for the employees who lose their jobs, bad for morale of the remaining employees, and bad for the economy.

[jaguar]

The thing that bothers me the most is that they ship these jobs to India to "remain competitive" yet upper management's salaries were getting bigger and bigger. In the end, it's padding the pockets of the big guys, and the peons are left working at the Food Court in the mall.

Not far off it. More an issue of poor corperate governance. It's the job of the board to keep renumeration reasonable to maxamise profit for shareholders (at least in a public company).

[tw]

From the Wall Street Journal of 15 September 1993

The Battle of Nafta
Keith Gibson heard the "giant sucking sound" of cheap Mexican wages four years ago and headed south. He shut down a factory on the Connecticut coast and opened one in Ciudad Juarez, where he could pay Mexicans one-third the wage rates he was paying Americans. "All the figures pointed out we should make a killing," he says.

Instead, the company he runs, Quality Coils Inc, nearly got killed.

The Bristol-based maker of electromagnetic coils lost money regularly in Mexico, he says, because of high absenteeism, low productivity, and problem with long-distance management. Worn down, Mr Gibson pulled the plug on the Mexican operation last April, move the factory back to Stonington Conn, and rehired some of the 30 people laid off in 1989.

Here's what he learned: "I can hire one person in Connecticut for what three were doing in Juarez." ...

But the experience in Mexico of companies such as Quality Coils suggests that the Perot argument is simplistic -- and probably wrong. It overlooks the many factors, other than wage levels, that actually drive business decisions.

For one thing, wages in Mexico aren't nearly as low as many people believe, and low Mexican productivity often erases much of the wage advantage anyway. Moreover, a host of problems, ranging from congested roads to corrupt judges, run up operating costs. And few companies base plant locations on a simple calculation of wage differentials; for most US manufacturers, the cost of labor is less imoprtant than such factors as the skills of the work force, the quality of transportation, and the access to technology. ...

The biggest problem concerns productivity. Daniels Oks, a World Bank economist, calculates that US wages are 5.25 times higher than Mexico's, but that Mexican workers are about one-fifth as productive as Americans because of much outdated machinery, clogged transportation, ineffective management, and poor education. The result: US wages are just 2.6% higher than Mexico's, on average, after factoring in productivity. Mr Oks worries about the fallout from Nafta -- but his fears don't track Mr Perot's. He frets that Mexico's manufacturers wouldn't be able to compete with higher-quality US companies if trade barrires are phased out.

Some US companies, especially large ones, bring their Mexican operations up to US standards. Ford Motor Co says its Hermosillo plant ranks in the top third of auto-industry productivity. But Ford lavished far more attention on the plant than most companies can afford: busing workers, sending several hundred abroad for training and lobbying the Mexican state government to build housing. ...

For a time, Mr Gibson was bewildered by the problems in Juarez. He says he flew there to try to measure how many coils a worker could produce, and he found that the numbre was roughly comparable to that in Connecticut. But somehow, the Mexican operations were losing $100,000 to $150,000 a year on sales of $750,000. If labor was cheaper and production comparable, why the losses?

Mr Gibson says that he slowly realized that the Juarez workers were pumping up production whenever he or other Connecticut managers were in town. To confirm his suspicion, he says, managers woud pretend to watch production in one end of the plant while keeping any eye on other workers. They noticed that the Mexican workers were producing at half tht rate of their American counterparts, many of whom had at least five years of experience winding, soldering and wrapping coils. ...

Finally, in frustration, Quality Coils shut down the Mexican operation in April and reopened the Connecticut factory. Randy Shorts, Quality Coils' manager in Juarez, says that the Mexican workers could match the productivity in Connecticut, and he blames Mr Gibson for giving up. But Mr Gibson says he is glad he got out. Quality Coil's costs for wages and overhead were due to increase to $5.38 an hour this year. With Juarez productivity, overall only one-third of Connecticuts's, he figures he is better off hiring workers up north.

[richlevy]

Number 1 rule of Capitalism - "You get what you pay for"

[Cyber Wolf]

I wonder what a company that has its customer services centers elsewhere does in terms of the local national holidays or religious holidays. If the bulk of the customer service center employees follow Islam, for example, will customers who call have to put up with no answer or an automated system when the employees take time out to pray? What about Christmas? Since they don't celebrate it, does that mean customers get to have customer service as usual on Dec. 25th? How about on July 4 or the last Monday of May? And what about the other way around? What do the customers do when the employees have a holiday they normally take off but we don't?

[xoxoxoBruce]

Originally Posted by richlevy

Number 1 rule of Capitalism - "You get what you pay for"

That's the Cliff's Notes version. The actual stone tablet reads " You get what you pay for...or less."

[wolf]

I placed a phone call to a customer service/catalog order department today and was quite surprised to find that my call had actually been connected to someplace in America.

Yes, United States of, not just "North".

[elSicomoro]

The last couple of times I called EarthLink, I got an Indian-sounding person with an American/Christian name. Too funny.