Back in 1989, I attended a half-day summit in Chicago on outsourcing. Staged by Andersen Consulting (now Accenture), the event featured multiple cities tied together with what was, at the time, state-of-the-art video conferencing.
Speaker after speaker talked confidently about the financial and operational benefits of outsourcing "low-value" corporate functions. You could almost feel the people in the room, composed of highly skilled, highly paid IT professionals, nodding in unison.
That was, until, the professor came on the screen.
The Harvard economist started his short presentation with a single, rhetorical question: "Do you know the annual cost of a senior programmer in New Delhi?" The annual salary, he went on to explain, was about one-tenth of that paid to a programmer in Silicon Valley. There was no reason, he said, why U.S. companies wouldn ât start turning to such inexpensive, highly skilled workers in far-flung locations once high-speed data networks made distances irrelevant.
The atmosphere in the room changed instantly. The audience, you see, suddenly understood that outsourcing (more precisely what we now call offshore outsourcing or "offshoring") applied to white-collar workersâpeople just like themselvesâtoo.
Fast forward to 2004.
The whole subject of offshoring is likely to become much more visible as it becomes a debating point in this yearâs presidential race. Despite U.S. companies recently posting the strongest quarterly profit growth since 1993, the recovery has restored far fewer jobs than hoped.
All this leads to one last question: Will brands that shift employment offshore suffer a negative pushback from customers and shareholders? Thatâs very unlikely. Consumers and business buyers alike may be suspicious about the downstream ramifications of globalization, and may even vote for politicians who promise to blunt its effects. But at the end of the day, they will tend to buy goods and servicesâor outsource their own operationsâbased on economic advantage.