While Dell may be bringing back some of its offshore call center operations to the US, the overall trend is still to outsource overseas.
And, according to a recent study by the University of California-Berkeley, the trend is to outsource more and more white-collar jobs overseas, especially to India. The result could be the loss of as many as 14 million service jobs in the United States.
Study authors Ashok Deo Bardhan and Cynthia Kroll, researchers at the Fisher Center for Real Estate and Urban Economics housed at UC Berkeley's Haas School of Business, say that not all of the at-risk jobs are likely to be lost. But, they note, jobs remaining in the United States could be subject to pressures to lower wages, and the jobs that leave may slow the nation's job growth or generate losses in related activities.
While The Outsourcing Institute's Sixth Annual Index concludes that saving money is not as likely a reason to outsource as it has been in the past, sending critical functions overseas is still clearly mostly about saving money.
If you look at the accompanying table, you'll see why.
For example, the average wage for telephone operators in the US is $12.57 per hour while their counterparts in India are paid less than a buck an hour.
Payroll clerks in the US are paid, on average, $15.17 per hour compared with between $1.50 and $2 per hour in India.
The pay differential for upscale financial jobs is huge too. For example, accountants in the US are paid, on average, $23.35 per hour compared with a range of $6 to $15 for their India-based peers. The disparity is even greater for financial researcher/analysts.
Jobs most vulnerable to the new wave of outsourcing, include medical transcriptions services, stock market research for financial firms, customer service call centers, legal online database research, payroll and other “back office” activities.
Altogether, the positions feature vulnerability-producing attributes such as a lack of face-to-face customer service, work processes that enable
telecommuting and Internet work, high wage differ-entials between countries, a high information content, low social networking requirements, and low set-up costs.
Bardhan and Kroll say that the widely quoted Forrester Research (an independent technology research company) report issued in 2002 that 3.3 million jobs would be lost to outsourcing by 2015 already seems conservative.
India, they say, is the leading destination for outsourcing due to its population's widespread use of English, institutional similarities with the United States in its legal system, wide wage differentials with the United States, and its large numbers of science and engineering graduates.
Yet, other locations such as China, East Asia, Russia, Israel, and Ireland also are increasingly popular and competitive outsourcing destinations, the authors say. They cite tentative evidence that shows the outsourcing of business process and software jobs generated more than a million jobs in the '90s and hundreds of thousands more since the turn of the century.
“Because white-collar work is so widely spread throughout the United States, many different parts of the country may feel the effects of this wave of outsourcing,” says Kroll.
Areas that benefited over the past two decades from the migration of “back office” work out of central cities could now see a share of those jobs leave for other parts of the world, warn Kroll and Bardhan.