August 29th, 2007
Off shore: shipping jobs overseas may save money, but it’s a public-relations nightmare—and that’s the least of the risks
Nothing rails the American body politic like foreign competition for jobs. Today’s outcry over offshoring reflects a realization that there is no longer a clear limit to the level of job function that can be outsourced overseas–college degree or the color of one’s collar notwithstanding.
Decades ago, foreign competition steel–think Japanese cars or imported steel–worried both workers and their employers. But that common purpose was severed in the 1990s, when manufacturers began sending work to factories in Mexico. Companies also began outsourcing–first, Nonessential functions like maintenance, and, later, repetitive back-office jobs–to U.S. companies that could do the work more efficiently.
Those trends had thoroughly blended by the late 1990s, when programmers in India first gained widespread attention for helping U.S. companies run a round-the-clock race against the Y2K deadline.
Offshoring has come a long way since then. So has the resulting animosity between workers and companies. That was what initially prompted CFO to examine the practice. After all, as the following pages show, weighing to promised cost savings against public anger is tougher than most CFOs want to admit. But the outcry also distracts companies from questions about the risks of sending any part of a business overseas to be managed by someone else. And the same global competitors that make offshoring necessary are likely to make misjudging those risks costly indeed.