Buying and hiring American by choice (rather than by force)
March 18, 2010
Despite media accounts and political initiatives to force companies to buy American services and not to outsource work offshore, believe it or not there are plenty of companies who are choosing to buy and/or hire Americans without being forced to do so. In fact, the LBO Wire recently noted that call center group CCT Group Ltd. (which owns Cyber City Teleservices and is backed by HSBC Private Equity Asia Ltd.) has bought fellow call center provider Interactive Response Technologies Inc. for the purposes of offering clients (CCT’s clients include DirecTV, Dell Inc. and Activision while IRT’s clients include T-Mobile, AT&T and Office Depot) what they are apparently happy to pay extra for: American voices and the perception of quality. IRT manages US-based call centers that employ Americans while CCT manages call centers based in the Philippines and Panama and according to a CCT representative, clients are willing to pay US$27-$28 per hour for a US-based service while an offshore service will cost them around US$13-$14 per hour.
Why pay more? Apparently, its all about perception. There is a perception that US based agents are of higher quality than those based in the Philippines. And while CCT does not agree with this perception of a difference in the quality of work performed, they have found that clients will pay a premium to have work done onshore due to either political or internal corporate policy reasons. Moreover, it should also be noted that CCT earns about US$40 million in revenue while IRT earns about US$80 million and both companies have average margins that are above 15% – despite their different business models.
Meanwhile, InfoWorld has recently noted the growing trend of hiring Americans in the USA as not only a politically correct strategy for Indian outsourcers but also as a good business strategy. Consider the following cases they cited:
- Tata Consultancy Services (TCS), India’s largest outsourcer, has announced that it will expand its business alliance with The Dow Chemical Company and this alliance includes the setting up of a services facility near Dow’s global headquarters in Midland, Michigan. TCS has also announced that it would expand its software services delivery center in Milford, Ohio – a suburb of Cincinnati.
- Wipro, India’s third largest outsourcer, will expand its development center in Atlanta from 350 to 1,000 staff. In fact, 80% of their existing Atlanta staff were hired locally – including recent graduates from reputable schools around Atlanta, retired army personnel and experienced professionals.
- Meanwhile, Infosys BPO has also announced that it will acquire McCamish Systems, an Atlanta based BPO company focused on the insurance and financial services market.
And while political considerations were cited as a reason for Indian outsourcers to expand their onshore presence in the US, it was also noted that certain types of work such as the development of technology platforms for services delivery along with analytical work, requires having close proximity to the clients themselves. Moreover, Indian outsourcers want to become global players in much the same manner that Toyota has become a global car maker by setting up factories all over the world that are near their customers.
In other words, you don’t need to pass legislation to force companies to buy or hire American as in many instances, its also a good and sound business strategy.