Hire U.S. Labor and Bangalore CEOs to make America great again!

Guest Post by Anonymous Trump Fan.

Greetings, dear Americans! As our new President appears and promises to change this system and make America great again, it’s time we look at one of the things he could do to really make America great, and it’s in his specialty, business.

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Trump and Clinton want to bring back millions of outsourced jobs – here’s why they can’t

By Stephan Manning and Marcus M. Larsen.

One of the big themes in the current presidential race is how decades of free trade have dealt a heavy blow to the American worker as millions of jobs were shipped overseas to take advantage of cheap labor.

That’s even turned some pro free-trade Republicans into protectionists. As a result, the candidates are promising to bring these jobs back to the U.S. – whether by lowering taxes (Donald Trump), improving skills (Hillary Clinton) or building infrastructure (Bernie Sanders).

But can all these manufacturing, service and knowledge-intensive jobs that were outsourced or offshored to China, India and other places really be “brought back,” as the candidates seem to believe?

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Oxford English for Cheap: The Dark Side of Offshore Call Centers

By Mehdi Boussebaa.

Offshoring of call center work to ‘developing’ nations by Western companies has become a huge business. For many, it represents a positive force of ‘globalisation’, bringing not only labor cost benefits to Western companies but also employment and career opportunities to ‘developing’ nations. Others, however, see a darker side. Call center work is often exploitative, oppressive and talent-wasting as it puts university-educated workers through ‘dreary work, unsocial hours and Big Brother-style observation’ (The Observer, 30 October 2005). Plus, these workers often experience abuse and racism on the phone and even lose – partly at least – their identity in an attempt to pass for Westerners. According to Shehzad Nadeem, training Indian workers in a ‘neutral’ global English accent may have the effect that these workers get stripped of their mother tongue (The Guardian, 9 February 2011). A recently published study in the Journal of International Business Studies (Englishization in offshore call centers: A postcolonial perspective) goes even further: training and monitoring the ability of Indian workers to speak ‘pure’ English in some ways re-creates colonial relations and further divides the West from the rest. Why is that?

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Slumdog Millionaires: Can Impact Sourcing Alleviate Poverty?

By Chacko Kannothra and Stephan Manning.

Call centers, tech support, payroll processing – more and more service jobs are performed abroad. Global outsourcing is one of the most controversial trends of our time. To some, it is mainly a cost-cutting exercise which has led to job losses in Western economies and has started a ‘global race to the bottom’. The recent shift of clients and providers to second and third-tier outsourcing locations to keep labor costs low is an indicator of that. To others, outsourcing has also generated new income and entrepreneurial opportunities especially in developing countries. Clearly, in particular for the young and educated in urban areas, such as Bangalore in India, the outsourcing sector has been a career stepping stone. But how about the vast majority who still live in poverty? Will the global service industry widen the gap between the new urban elite and the rest? Maybe not if we believe in the new trend of ‘impact sourcing’ – the creation of outsourcing jobs and training opportunities for the poor and disadvantaged, in particular from slums and rural areas. Impact sourcing was celebrated a few weeks ago at the 17th World Outsourcing Summit as a promising way of combining business and social benefit. The Rockefeller Foundation even calls it a means towards reducing poverty. But are these claims realistic?

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The Offshoring Paradox: Are Firms Unable or Unwilling to Retain Their Employees?

By Stephan Manning.

It is almost ironic. Some years ago many U.S. and European firms started offshoring IT, finance and accounting, software testing, engineering work and other services to India, China and other developing countries mainly to cut labor costs. Now, most of these firms struggle with retaining qualified workers abroad, after having cut thousands of jobs at home. According to various reports by the Offshoring Research Network, employee turnover remains one of the most persisting problems facing firms with offshore operations. Why is that? Well, many firms complain about ‘wage inflation’ in offshoring hotspots (see Plunkett 2014 report). But is that the whole story? Compared to Silicon Valley software engineers, most counterparts in Bangalore, India, still earn only 10-20% of salaries in the Bay area (see Payscale, article by Tam). So are firms unable or unwilling to retain workers offshore?

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After the Decline of Large U.S. Corporations: Where Do the New Giants Come from?

By Stephan Manning.

The latest Forbes 2000 Rankings leave no doubt: Large corporations continue to exist (and they grow even larger), but fewer than ever originate in the U.S. Among the Top 10 listed firms (in terms of sales, profits, assets, and market value) four are Chinese – including the first and second ranked Industrial and Commercial Bank of China (ICBC) and China Construction Bank. So is it really true that large corporations are collapsing, as Gerald Davis and Israel Drori suggest in their provocative article? Or are we simply witnessing the declining relevance of U.S.-based firms? Should we, in turn, just focus on the continuous power of Western multinationals in global production networks, as David Levy suggests in his related post, or is there another important dynamic: the gradual but certain shift of gravity from U.S., European and Japanese firms to new giants from BRIC countries – China, India, Russia and Brazil – and other emerging economies? Continue reading

Tech support en français s’il vous plaît!? The challenges of becoming a new global outsourcing hub

By Stephan Manning.

Outsourcing of IT, tech support and other business services has become a global trend. Watching India’s success in the outsourcing space, many developing countries now try to grow their own business service economy. Even African countries, including South Africa, Egypt, Morocco, Ghana, and Mauritius, have built up outsourcing capabilities in recent years (see recent article by Abbott). In fact, 8 out of the Top 100 outsourcing destinations worldwide, according to the latest 2013 Tholons Ranking, are located in Africa. Not surprisingly, Kenya’s government for example also lists business process outsourcing (BPO) as a major economic building block in their Vision 2030. Boasting an improved IT infrastructure, political stability and English language capabilities, Kenya is hoping to become a major BPO hub. Other countries are following suit. But what does it really take to become a global outsourcing hub? Can any country with low-cost labor, a good IT infrastructure and favorable business climate join the club? Continue reading