ANALYSIS

Outsourcing Fears Debunked in Teleconference

If one topic has become a hot potato in both the political and employment realms, it is offshore outsourcing. Many companies that have shipped work to countries like India and Russia have claimed the cost savings and the quality of the output have increased efficiency, productivity and ROI.

Meanwhile, technology professionals have been crying foul, noting that the recent economic uptick does not include an increase in jobs. Some are pondering whether a high-tech union should be formed to stop the massive exodus of jobs across the Pacific Ocean. Some companies, too, have expressed hesitation about outsourcing, anxious about security concerns and frequent turmoil in regions where technology workers are selling their services.

Although economists have said offshoring represents only a tiny portion of U.S. employment, politicians have become increasingly focused on the topicanyway. Because jobs and the economy are turning out to be the number one issue in the upcoming presidential election, voters’ and candidates’ positions on offshore outsourcing could partly determine who sits in the White House for the next four years.

No matter which side a company takes, it seems this type of outsourcing is destined to increase, leading to a need for middleman companies that facilitate the process. One such firm, global staffing company Accountants In India (AII), hosted a teleconference Tuesday to discuss major outsourcing issues like security, ethics and workflow.

Issues, We Got Issues

Although the tone of the AII teleconference was to assure participants that work sent to India is safe and beneficial, there was still talk about the many issues that crop up when offshore outsourcing is introduced at a company.

KC Truby, the firm’s CEO, noted that AII was founded in February because he and cofounder Wayne Harding thought American CPA firms were not giving outsourcing a chance.

Some of the issues related to the tactic, such as costs, security, reliability and competency, were stopping some firms from employing an outsourcing strategy even when it seemed to make sense.

Since trying to build its client list, AII has heard other comments from some CPA firms that choose not to outsource. These include fears about political turmoil, workflow concerns, concerns about cultural clashes and suspicion about hidden costs.

Small World After All

Cultural differences have been brought up in the offshore-outsourcing discussion in the past, but Harding offered a new spin on what previously has been thought of as a problem.

“In the U.S., we have adopted the idea of entitlement,” he said. “We think we’re entitled to jobs. In India, it’s very different. They have a lot of respect and admiration for people who provide jobs for them.”

This attitude of deep gratitude toward an employer, coupled with the emphasis India has placed on teaching English to its residents, results in dedicated, competent employees, according to Harding.

Lock Down

The largest issue by far that companies bring up when voicing objections to offshore outsourcing is security. Transmitting sensitive company data to a foreign country is enough to make any CIO hesitate, at least for a moment.

However, Harding noted that because Indian companies are so keen on winning U.S. contracts, they have implemented many security measures that would seem quite severe if used in the United States.

For example, many employees are not allowed to have paper and pens or pencils at their desk. They work at terminals that are unable to download information or new software. Some infractions are treated as criminal offenses.

Harding emphasized that Indian employees are functionally the same as U.S. employees for a company, because they sign on to the same server and do all their work in that virtual space. No company data is transmitted or downloaded, minimizing the risk of a security breach.

“The security you have in place for your own firm is the same as for a staff member overseas,” he said. “They are under your rules and regulations.”

Winds of Change

During the teleconference, AII also brought in Nimi McConigley, vice president of global operations at the company. She became the first India-born person to serve in any U.S. legislative body when she became a member of the Wyoming State Legislature.

McConigley dispelled any idea that India’s workers are being exploited simply because they work for approximately US$8 per hour doing high-tech, skilled work. She noted that when she was in India in the 1960s, poverty was rampant and the government had adopted a policy of isolationism that barred foreign investment.

With so much work coming in from the United States, the overall change in India has been striking, according to McConigley. On a recent visit, she noticed a palpable air of high morale. “Economic stability is in reach,” she said. “100 million Indians have been lifted out of poverty.”

Because outsourcing is creating a large Indian middle class, McConigley noted that it could have a beneficial affect for a wide range of U.S.-based companies in the future.

“The increasing prosperity is creating what could be the best market for American goods,” she said. “You just have to look around the streets of Bangalore to see that it’s beginning to look like San Jose in the boom time of the 1990s.”

1 Comment

  • Come now! As someone who has the shameful entry on their resume as a practice manager sending jobs to offshore locations, I think I can see offshoring bunk when I read it. To say that offshore employees are subject to the same laws as a US employee overseas is absurd.
    FACT — US Laws can not touch any Indian firm unless Indian courts deem to follow the case (which they usually do not). Ask the employees and stockholders of Silverline Technologies if you want an example.
    FACT — Once you give up control of your data, unless that data remains subject to consumer and business laws in the US the ONLY ones who are going to be held liable are the US firms that send it outside. Hold on to your hats, guys. When your clients are showing up on those identity theft commercials, you can point the finger offshore all you want. However, it’s your company that is going to hold the liability. Have you tried suing an Indian firm lately? Once they shut down their onshore operations and escape to Mumbai, you get to hold the bag.
    FACT — Offshoring firms give all sorts of assurances that are little more than smoke & mirrors. Ask any manager that has received a resume for an Indian Senior Program Manager that holds an MBA from an exotic sounding institution. Through their US business view, its sounds great and they expect more than what actually arrives. "Senior Program Manager" is someone who has attended a 5 day class, read a book, and has actually written a program that runs. "MBA" is *not* Masters of Business Administration", but rather a certificate program from a mail order course that takes less than a month to complete inclusiding shipping time.
    Its is way past time to get past the illusions that are being thrown out as the wonders of offshoring. Get past the greed that kicks in when sales types tell you you can save 75%.
    TCO no longer means Total Cost of Ownership – Its now "Total Cost of Offshoring". Take into account that you PAY for rooms filled with these 25% offshore people to argue about solutions for days on end. Add in all the expenses to your reputation for late delivery. Add the extra you spend in travel for sending your remaining US managers on world tours to find out what is actually going on. Add in your legal attempts to remedy the situations and failing.
    Give Michael Dell a ring and ask why his call centers are coming back onshore. Give Wachovia and ask them to tell you about the success of their offshoring program. Call Volkswagen and ask them to tell you how pleased they were with the ethics of their offshoring partner a few years back. Try asking Lockheed how much they spend on their managers travel expenses to various parts of the globe.
    When you are done, ask yourself why you would EVER go down this road and why you would believe some offshore accounting firm tell you that everything is OK.
    If you still want to send your money off to a far away place on a "get rich scheme", I am sure you also get email from someone claiming to need your help getting riches out of Zimbabwe. Maybe you should reply.

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