As we approach the U.S. election day, the "outsourcing" rhetoric-meter will be rising rapidly. From presidential to the local council, candidates will be talking about "outsourcing means losing jobs to workers offshore" and "eliminating tax benefits for corporations who outsource - or send jobs abroad." Although it is their right to get on the soapbox (of course, made in the U.S.), as a COP (Certified Outsourcing Professional) I wish they would understand the difference between outsourcing and offshoring and take a stand accordingly (as always, they can still plunge ahead and confuse the issue and not let the facts get in the way).
Outsourcing is when a company turns over a function (process) to another company and has them perform it according to the contract. The company taking over the function can do that work on site, in the U.S. at another location or overseas - again, most contracts put restrictions on alternatives. So, as you read this blog, you may be sitting in a building outsourced and managed by CBRE, on a computer network supported by HP, eating in a cafeteria managed by Aramark or Sodexho, while waiting for a package to be delivered by UPS. Those are all outsourced functions where all jobs remained in the U.S., and in many cases, on site. In fact, most of the outsourcing ends up in keeping jobs in the same country and not moved off shore. There may be a job loss and a potential job loss in the community where the company was located.
Offshoring is when a company has a function performed at a location outside of the country, either as a captive subsidiary or outsourced to a provider located there. Obviously, there are "employment" implications depending on the form of offshoring . In a future blog, we can talk more about offshoring's impact on employment and taxes.
So, Mr./Ms. Politician, before you confuse the public (although it is your right) about the evils of outsourcing, make sure you are not in California (HP and CBRE), New York (IBM, Xerox), Pennsylvania (Aramark) or Georgia (UPS), whose outsourcing business keeps hundreds of thousands, if not millions of people, employed and contributing to the economy.
Jag Dalal, COP, is Managing Director of Thought Leadership for IAOP