Moving Back On Shore

Offshoring is certainly one way for companies to save money, but the savings are nugatory without happy customers. Some people point to the growing list of companies that are taking back some or all of their offshored call-center positions as proof that the practice may have drawbacks.

Dell Computer (Nasdaq: DELL) took back call center operations from an Indian outsource vendor late last year when CIO Randy Mott determined there were too many complaints from customers of the fast-growing Optiplex desktop and Latitude laptop product lines.

In one article posted at CNN.com, a Dell customer complained that the agents on the other end of the line were unable to help. He called their service "sponge listening" because the agents soak in the complaint but do nothing about it.

Dell isn't alone. In July Delta Airlines took back services it had contracted to two Indian call centers because some customers complained about the operators' accents.

And it's not just big companies that are taking back big call center functions. Newsday reported on September 9 that North Fork Bank was taking back 80 call center jobs from India because the new CEO, John Kanas, has a bias for doing things in-house.

Kanas is something of a fanatic about customer service. According to Newsday, he put his office on the floor above the call center and installed his own direct line so he could listen in on calls and keep tabs on what was on his customers' minds.

The man deserves a Nobel Prize.

Economic Effects

How does offshoring affect the overall U.S. economy? On that question there is little agreement. While some say the United States will generate more jobs than it loses, others point out that losing jobs can not go on indefinitely without adverse effects.

The distinguished economist Paul A. Samuelson is counted among the latter group. At 89 years old, the emeritus professor of economics at the Massachusetts Institute of Technology is still an active participant in economic debates.

According to the New York Times, he will publish an article in the Journal of Economic Perspectives later this month. The Times says that Samuelson's article challenges the assumption that the economy will benefit in the long run from offshoring service jobs like call center and software development.

Historically the gains to the American economy have offset the losses, but not without considerable dislocation in the short term.

A case in point is the offshoring of manufacturing that started in the 1960s. The movement has accelerated to the point that foreign competitors now stand on an equal footing in industries like auto manufacturing, and other industries like electronics have been almost completely moved off shore.

While the U.S. economy has replaced manufacturing with high-tech and service jobs, many of the new service jobs have paid substantially less. This has led to a now decades-old stagnation in the spending power of the average paycheck.

Now China and India are building an increasingly skilled and technologically savvy work force, causing many U.S. workers to worry about job security .

The One-Handed Economist

But economists have a penchant for seeing both sides of a question. The phrase "on the other hand" crops up so often in the field that President Harry Truman once asked his staff to find "a one-handed economist."

Not surprisingly, then, some economists take a more sanguine view of offshoring. In an interview with the New York Times, Samuelson protege Jagdish N. Bhagwati, a professor at Columbia University and a respected international economist, said he disagrees with Samuelson. In fact, he has written a new book on the subject called In Defense of Globalization.

But it will be years before we know the truth. By then we could find that another industry has left these shores.

Indian Burnout

Does any society or culture have a lock on doing call center work well?

According to the BBC News, even Indian call center agents get burned out. In an article titled "Greying of India's Call Centres," reporter Sunil Raman says that despite relatively high wages, turnover rates at call centers can reach as high as 50 percent -- a number that will not shock managers of American call centers.

Working 7,000 miles away from your customers means working at night -- a sure recipe for burnout. Other familiar complaints are the lack of status or promotion and insufficient training.

As the Times has pointed out, no country is brimming with people waiting to be call center agents.

As a partial fix, some Indian call centers have resorted to hiring older workers, who tend to be more stable, the BBC reported. But they also tend to be harder to train......"