The Hindu : Outsourcing: A hardsell in the U.S.

Online edition of India's National Newspaper
Sunday, Mar 07, 2004

Business

Business

Outsourcing: A hardsell in the U.S.

NEW YORK, MARCH 6. Globalisation is having a bad year. Unions do not like it. Politicians on the campaign trail rail against it. As each monthly employment report confirms the anaemic pace of job creation — Friday's report was especially grim — more members of the Congress talk about obstructing it. Now, even some practitioners are speaking out against business globalisation, too.

"I really hate it," said Al Lubrano, President of Technical Materials Inc., a Lincoln, R.I., manufacturer of specialty metal parts for computers, telecommunications equipment and other applications. "I think we're really selling out our manufacturing community down the river". But like many other American business executives, Lubrano has had to join the trend: Next year, to better serve its customers, Technical Materials plans to open its first operation in China.

The gap between the stated ideal and the business reality is also evident with Angelo R. Mozilo, Chairman of Countrywide Financial, one of the largest mortgage lenders, who was quoted in October in the trade publication National Mortgage News as saying, "I feel it is Countrywide's responsibility to create jobs in the U.S., not outside the U.S".

By this year, however, Mr. Mozilo was describing how Countrywide had leased 40,000 sq. ft. of office space in Bombay and planned to create 250 customer service and support jobs there over the next two years.

The business community's dissonant attitudes toward global outsourcing — hiring out work overseas — are evident in the results of a survey released on Friday by the business consultant McKinsey & Co.

But when the executives were asked about the effects of outsourcing on their own businesses, the executive consensus broke down. In Europe, 70 per cent of executives said outsourcing was good for their business. So did 86 per cent of Chinese executives and 97 percent of those in India.

Yet in the U.S., headquarters to many of the most aggressive and successful globalizing companies in the world, the fraction of executives that said outsourcing was either very positive or somewhat positive for their company dropped to 58 per cent.

Some of this ambivalence may reflect the growing political hostility in this country against outsourcing, which has come to a boil in the face of lacklustre job creation despite robust economic growth.

On the presidential campaign stump, Sen. John Kerry, D-Mass., regularly condemns the `Benedict Arnold' companies that send jobs overseas. Senate Democrats are backing a bill that would require executives to provide at least 90 days' notice if they plan to lay off more than 14 workers to move their functions overseas. On Thursday, the Senate passed by a large margin a measure that would put new restrictions on government contractors' shifting jobs overseas.

Foreign direct investment by American corporations has averaged about $125 billion annually over the last ten years. Though much of this was devoted to serve foreign markets, a growing portion has sought to reap the benefits of cheap labour and resources to make products and services for sale back home. — New York Times

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Outsourcing: A hardsell in the U.S.

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