Vol. 49, No. 4
Exporting white-collar jobs to countries with lower labor costs is like a lot of things in life—many do it, but few talk about it. And as the term “offshoring” becomes a hot button, some have developed other ways to describe the practice.
EDS, the country’s second-largest IT services provider, was one of the first companies to engage in the explosive phenomenon of business process offshoring—hiring workers in developing countries who will work for a fraction of the costs of U.S. labor—and the only company contacted that was willing to openly discuss its practice.
Yet even EDS discusses offshoring in careful terms; since 2002, the company has referred to the practice as “best shoring”—a term that the company says more fully describes its philosophy regarding its foreign operations.
“It’s more than just sourcing work to an offshore location,” says Travis Jacobsen, an EDS spokesman in Plano, Texas. “We wanted our clients to know it’s not only sending work to the lowest-cost location, but to the best location that fits the clients’ needs.”
New York-based Cornell University professor Patrick Wright saw how emotionally charged the flight of jobs was last fall when the university’s Center for Advanced Human Resource Studies (CAHRS) hosted some of the country’s most well-known companies at a meeting titled “Global Sourcing and Domestic Competitiveness: HR Issues and Responses.” Despite the meeting’s title, many speakers balked at addressing offshoring, even at a closed-door meeting among colleagues. One company nixed its presentation altogether after its legal department forbade the speaker from uttering the word “offshoring.”
“It’s the hottest issue in terms of no one wants to touch it,” says Wright, who is also CAHRS director. “They said, ‘Oh no, not on our life. We are invisible on this topic. It’s an election year and we do not want to be public anywhere on this issue.’ ”
The reticence is easy to understand, as no company wants to take the heat IBM did when a company memo was reported in the Wall Street Journal in January. The article said the company could save $168 million annually beginning in 2006 by moving several thousand programmer jobs overseas and compared hourly rates for programmers with similar experience—$56 an hour in the United States vs. $12.50 an hour in China.
“Even though IBM is probably as progressive a company as you can find in dealing with this issue,” Wright says, “they are still being portrayed in a negative light because it’s such a sensitive topic.”