• February 1, 2012
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Congress Moves to Cut Off Off-Shoring

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Legislation introduced in Congress December 7 would prohibit companies that outsource call center jobs overseas from receiving federal grants and loans.

The bill, called the "U.S. Call Center and Consumer Protection Act," was proposed by Rep. Tim Bishop (D-N.Y.) and cosponsored by Reps. Dave McKinley (R-W. Va.), Mike Michaud (D-Maine), and Gene Green (D-Texas). It would require the U.S. Department of Labor to track firms that move call center jobs overseas; the firms would then be ineligible for any direct or indirect federal loans or loan guarantees for five years.

The legislation would also require overseas call center employees to disclose their location to U.S. consumers and give customers the right to be transferred to a U.S.-based call center upon request. It would further require companies to notify the U.S. Department of Labor 120 days prior to any proposed moves off-shore and require the list of companies that off-shore call center work to be made available to the U.S. public.

"It's common sense that we should not be rewarding companies that ship jobs overseas while millions of qualified Americans are looking for work," Bishop said in a statement. "Taxpayer dollars should only be used to incentivize good corporate citizens who create American jobs."

McKinley called the proposed legislation "a common-sense jobs bill that will protect American workers and consumers." "Our taxpayers should not be financing those who send our jobs overseas," he said in a statement.

The bill also has the full support of the Communications Workers of America (CWA), the labor union representing about 700,000 telecommunications workers, including about 150,000 call center employees.

"Americans are fed up with good-paying, family-supporting call center jobs here in the United States being shipped overseas so the one percent can make a little extra money," said CWA Chief of Staff Ron Collins in a statement. "This legislation does not prevent them from moving if they want, but it prevents them from gaining access to our tax dollars while they do so."

According to the CWA, total call center employment has dropped from 5.2 million jobs in 2006 to 4.7 million in 2010, a loss of approximately 500,000 jobs in just four years. Analyst firm Ovum last year estimated the number of call center operators abroad taking calls from U.S. consumers at 243,000.

A Homecoming of Sorts

Meanwhile, the Jobs4America Coalition, a broad-based group of companies and organizations, committed itself to working with American businesses to create up to 100,000 new U.S.-based call center jobs within the next two years. Most of those jobs are planned for work-at-home agents, the disabled, and out-of-work veterans.

With unemployment hovering around 9 percent, the coalition's stated goal is to take advantage of the large pool of well-educated Americans now looking for work. New technologies and a ready workforce have made it possible to create additional contact center jobs in the U.S., the coalition claims.

Although some call center jobs have made their way back to the U.S., thousands of customer service positions are still being outsourced to locations like India, the Philippines, and Egypt, where operating costs are considerably less. In Egypt, for example, call centers operate at 54 percent of the cost of similar U.S.-based facilities, according to Everest Research Institute data.

Nonetheless, BDO USA, an accounting, tax, and financial advisory firm, reports sharp cuts in the use of offshore contact centers by U.S. tech companies. A recent BDO survey of 100 chief financial officers found that just 12 percent of firms currently maintain offshore contact centers or help desks, a significant drop from 35 percent in 2009 and 19 percent in 2010.

The two largest outsourcing locations, India and the Philippines, account for about half of the $21 billion global off-shoring industry; the Philippines will earn $5.7 billion and India will earn $5.5 billion for contact center work this year from firms in the U.S., Europe, and Australia, Everest says.

Contact center growth has occurred in the Midwest and the Gulf Coast as many firms bring operations home.

For many of those firms, last spring's political unrest in Egypt showed a big hazard in operating call centers abroad. When the populist movement to overthrow former President Hosni Mubarak was in full swing, the government shut down the bulk of the country's telephone and Internet service, disconnecting an estimated 20,000 call center workers for such companies as General Motors, Unilever, Microsoft, Oracle, IBM, Google, HP, and Intel, causing these companies to scramble to reroute personnel and resources to other locations.

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