Offshoring, inshoring, freeshoring: Where are the jobs headed?
Over the past few weeks, IBM (IBM) submitted a patent for a new form of off-shoring methodology, while Sallie Mae decided to move 2,000 overseas customer-service jobs back to the United States. As President Obama's economic stimulus package works to encourage American job creation, it's worth asking if the days of off-shoring are nearing their end.
Offshoring, or the process of relocating jobs to countries where labor is cheaper, has exploded in recent years. This is largely due to three main factors: reduced labor costs, less restrictive labor laws, and lax regulatory standards. While off-shoring was initially done with manufacturing jobs, it has expanded to include white-collar employment, including customer-service positions and even some legal work.
Although Sallie Mae's credits its decision to "reshore" as part of a strategy to help American consumers and restore jobs to America's citizens, it seems likely that this is only the public relations face on a larger issue. To begin with, studies have shown that consumers are 26 percent more likely to express dissatisfaction with overseas contact centers. While myriad factors play into this, the most commonly cited reason was that the representatives were not able to help customers with their problems, either because of a language barrier or a lack of cultural understanding.
In a broader context, overseas call centers run counter to what many perceive as the growth arc of American business. The migration of manufacturing jobs seems like a logical consequence of America's move toward a more educated populace, but the movement of tech support and consumer interaction jobs seems counterintutive. After all, if the country is supposedly shifting toward a greater proportion of white-collar jobs, it hardly makes sense to move them overseas. For many, it is particularly galling that Sallie Mae, a quasi-governmental enterprise, would choose to hire overseas workers instead of American citizens.
Given the country's current move to stabilize unemployment, it seems odd that IBM has chosen this particular time to patent its global outsourcing mathematical model. This model, which factors in currency valuation, labor rates, employee morale, and overall language skills, attempts to reduce the offshoring debate to a simple number.
It is hardly coincidental that IBM is simultaneously planning to move over 4,000 jobs to India. In one hypothetical assessment, the company's predictive model assumes that 50 percent of some tech jobs may shift to China by 2010.
Even as the offshoring/reshoring debate continues, a third option seems to be emerging as a considerable force. Homeshoring, or homesourcing, which involves shifting the workplace from a centralized location to an individual worker's home, has already caught the attention of eBay's (EBAY) former COO Maynard Webb, and seems to be spreading as a viable option for many businesses. Essentially, it offers an interesting method for companies to keep jobs in the United States while reducing worker costs. Using freelancers, many of whom aren't eligible for health care, retirement, or other traditional work-related benefits, homeshoring compensates the worker by vastly reducing commuting and other work-related costs.
Ultimately, homeshoring might make it possible to keep many call center jobs in the United States. For consumers, this would result in fewer language and cultural barrier problems, while employers would reap the benefits of improved customer relations and better PR. Finally, for the employees themselves, homeshoring offers decent work and the convenience of a home-based business. Little wonder, then, that in an economy where offshoring has left many Americans jobless, when it comes to the ideal workplace, there may be "no place like home."