05 Aug Outsourcing Offshore – Wisconsin Companies Sending Work Abroad
Not long ago, jobs leaving the United States were almost solely in the manufacturing sector, as more and more factories picked up and moved to Mexico or other Latin American countries to cut costs. Not to mention all the products made in Asia. However, a recent trend has other workers on edge, and Wisconsin has not been left out.
Offshore outsourcing, a fairly new term that usually means companies sending technical work to India, is touching local companies, workers and consulting firms. More and more companies are putting IT workers in overseas companies to work, saving money because India has plenty of highly skilled technical workers who often are paid less than a quarter of what their American counterparts earn.
For instance, an article in TIME magazine states an American programmer receives $66,100 and an Indian one gets $10,000. In an era when companies are trying very hard to compete and be more efficient, offshore outsourcing is another way they are trying to get ahead.
According to a Forrester Research article, the company projects 3.3 million U.S. jobs will move to countries like India, Russia, China, and the Philippines in the next 15 years.
James Jackson of Accelerate Madison says that while people may form their opinions on the trend based on emotion, it’s important to look at the issue from businesses’ viewpoint. “Companies remaining successful is in our best interest,” Jackson said. “I don’t think it crushes our local economy,” Jackson said. “I think there’s some give and take.
“You cannot buy a TV made in the United States, but people sit and whine about this and everyone has a TV in their home,” he said. “When it hits closer to home, people complain about it.”
The IT market was oversaturated with people, Jackson said, so this trend may force them to consider a career change, which will not be bad for our economy. “When the water in the harbor rises, all boats rise,” he said. “Overall, it’s not right for every company, but the reality is that we’re not going to stop it, so we should embrace it and figure out how to use it to our advantage.”
Not all projects are suited for offshore outsourcing, Jackson said, including anything that doesn’t have a clearly defined objective. “That’s just a recipe for disaster,” he said. Smart IT consulting firms will develop relationships with offshore companies to provide that service, but also focus on the skills they can provide clients, he said.
Wisconsin in India
CUNA Mutual Group is a local company testing the offshore outsourcing waters. The company has completed three pilot projects with Mastek of India, and currently is evaluating it for future projects.
“We are pleased with the results and continue to evaluate it,” said Sydney Lindner, assistant vice president of public relations for CUNA Mutual. “We haven’t made a decision whether or not we will continue.”
Lindner said the development projects, creating behind-the-scene systems to help one part of the company interface with another, will be assessed for the next few months, and the company has “no plans to do anything specific” offshore in the future, she said.
A clear negative to sending work abroad is the concern it creates within the IT staff, Linder said. “We value our IT staff; they are extremely talented. If we continued offshore IT, it would be a very small part of our IT strategy.” Working closely with the IT staff is the most important facet of outsourcing, she said. “Once they realize it’s another extension of what their doing instead of replacing them, they understand. As with anything, there’s a learning curve and it takes education.”
New Jersey legislation
New Jersey State Senator Shirley Turner drafted a bill last year to ensure that New Jersey state government funds employ only U.S. workers, rather than workers based in India or other countries. The bill was sparked by a contract a Glendale, Wis., firm has with the State of New Jersey to administer a program of electronic benefit cards for New Jersey welfare and food stamp recipients.
eFunds Corp. had used the tax-payer funds to employ a call center in Green Bay, APAC Customer Services Inc., to field phone calls from participants. However, in February eFunds shifted the contract to a call center in India.
The bill was passed the New Jersey State Senate and was then sent to the New Jersey State Assembly where it was tabled by a committee and sent back to the senator for revisions.
Jennifer Braico is a freelance writer and contributor to Wisconsin Technology Network. She can be reached at email@example.com.