November 28, 2016

Outsourcing and Offshoring Jobs to Other Countries: The Good, the Bad, and the Ugly.

Outsourcing and offshoring jobs to other countries is at times a topic of discussion with my insurance, tax, and financial planning clients.  Outsourcing and offshoring to other countries used to be considered by only large companies, including service-orientated duties such as customer service call centers.  However, the concept is now being considered by smaller companies and businesses, including law firms and medical groups that outsource support and billing work to India and the Philippines.  Discussion of this topic has recently gained steam by President-elect Donald Trump's campaign promise to try and keep 2000 Carrier manufacturing jobs in Indiana, rather than moving the jobs to Mexico.

The Good.  The Bad.  And the Ugly.

When I discuss this topic with clients, the reasons are varied.  Sometimes it focuses on what a business client perceives as good, including potentially lower payroll, payroll tax, and employee benefit obligations, and potentially lower liability insurance premiums.  Or the perceived good of lower prices due to cheaper costs of production.  Other discussions focus on the bad, including lost jobs and careers.

But what about the ugly part of outsourcing and offshoring?

The Observer recently published an eye opening article about Fashion and the Garment Industry titled 'Made in America' Versus Offshoring.   Sadly, in the garment industry, 'made in America' rarely exists today, as evidenced by this sobering statistic:
"Until the 1960s, America was still making 95 percent of its clothes. In 2015, only 3 percent was produced in the United States and a staggering 97 percent was outsourced."
A Garment Factory in Bangladesh.
Photo Credit:  cbsnews.com

Workers at a Bangladesh garment factory give jeans a "distressed" look by spraying them with potassium permanganate, a toxic substance that can damage the human nervous system. Only one of the workers is wearing a protective mask.
 Photo credit:  cbsnews.com/Justine Redman 

The trendy, fast fashion retailer H&M is the largest clothing manufacturer in Bangladesh.  The average monthly wage of the estimated 4 million people who work in Bangladesh's garment sweatshops?  $67 dollars a month, or a bit more than $2 a day.  A DAY.

The New York Times recently published a photo expose article on offshore call centers.  These workers in India and the Philippines are better paid and typically have better working conditions than found in the Bangladesh garment sweatshops.  Yet problems exist.  Take a look at this call center for the cosmetic giant L'Oreal ... don't ask me what the ladder is for.  Emergency fire exit, perhaps?

A L'Oreal call center in India.
Photo credit:  nytimes.com

The effects of outsourcing and offshoring jobs from the United States is multi-dimensional.  While price for a good or service is always a consideration, hopefully businesses and people will consider all the effects when given the choice of purchasing a product or service that is truly from the United States, rather than outsourced or offshored to another country.

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7 comments:

  1. Sad how often you don't have a choice of purchasing an item made in the USA.

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    1. I agree. Even products people may think are made in the United States - Nike shoes and athletic wear, for example - are made in Asian countries. Just because a manufacturing-related company is headquartered in the United States does not mean its products are made here.

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  2. China is just as bad.

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    Replies
    1. Plus China concerns also revolve around human food and pet food. My dogs never eat anything made in China, or that may have Chinese-provided ingredients.

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  3. Too often people only look at the cheapest. No consideration for other things.

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    Replies
    1. Your statement has merit. Just look at the success of Walmart.

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  4. Trump needs to move a team into these places.

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Thanks for sharing your comments here! Mary Rae Fouts