Outsourcing fruits to turn sour?

David Zielenziger

NEW YORK: The rush to outsource jobs in low-cost centers abroad has some similarities to the rush by businesses to get online in the late 90s, with the hype masking problems that could dog companies in the future, an outsourcing survey concluded.

The survey of more than 500 senior finance and information technology executives by outsourcing specialist Hewitt Associates Inc. warns that dealing with people who don't understand U.S. culture and backlash among domestic employees could turn into minefields for U.S. companies moving jobs to low-cost centers for the savings.

"It's almost like a 'dot-com' rush," said Mark Arian, Hewitt's corporate restructuring practice chief, who added that neglecting these issues now could backfire.

For example, Arian said appliance makers are shifting customer service staff to places where many do not have the experience of owning a washing machine. Others are hiring top Indian business graduates without specifying a career path that could include working in the United States.

Companies must do a better job planning for human resources issues, such as training, according to the Hewitt consultant.

Hewitt, based in Lincolnshire, Illinois, derives about 67 percent of revenue from outsourcing, with the rest from consulting and other services.

The shifting of jobs overseas has become a hot issue in the U.S. presidential campaign.

Forrester Research Inc. estimates as many as 3.3 million U.S. service jobs will migrate offshore by 2017. And the American Electronics Association reports that more than 770,000 U.S. technology jobs have been lost since 2001.

COMMUNICATION IS VITAL

Companies should communicate clearly with their domestic employees at the outset of outsourcing, to head off confusion about which jobs are being outsourced, and which ones aren't, according to Hewitt.

Among the top three challenges listed by respondents, 59 percent listed cultural barriers, 35 percent cited lack of quality and 32 percent backlash from home country employees.

While only about a third of the nearly 200 companies surveyed have shifted work abroad, nearly all the companies are considering it. The most popular functions involved are information technology and customer service.

The survey showed that 60 percent of companies that sent jobs abroad are already using India to outsource jobs, with 36 percent using China and 32 percent turning to Mexico. Besides those venues, respondents also said they are exploring shifting jobs to locations from Ireland to Jamaica.

Of about 200 companies surveyed, approximately 60 percent employ more than 10,000 people worldwide and 55 percent are not manufacturers, the Hewitt survey found.

© Reuters