Obama Rips Outsourcing in State of Union; What's the Foreign Call Center Reaction?

Brian Cantor

Outsourcers are a common political target for those trying to court the everyday American, and in the final State of the Union of his term, US President Barack Obama delivered a firm call to create jobs within our borders. Naturally, this message resonated throughout the call center world, which presently places a great emphasis on offshore operations.


Situating offshore outsourcing with "bad debt" and "phony financial profits" as a root cause of economic weakness, Obama called for tax code reforms that promote job creation in the United States. Though his key rhetoric involved restoring manufacturing to domestic shores, Obama’s broader message simply involved assuring corporations are not incentivized to send any jobs elsewhere.

"First, if you're a business that wants to outsource jobs, you shouldn't get a tax deduction for doing it," explained Obama. "That money should be used to cover moving expenses for companies like Master Lock that decide to bring jobs home.

"Second, no American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax. And every penny should go towards lowering taxes for companies that choose to stay here and hire here. "

The sentiment is not necessarily new (and is, in fact, part of prospective legislation), but with this speech effectively kicking off Obama’s re-election campaign, it is clear he will spend the next several months proudly trumpeting his opposition to outsourcing in his effort to mobilize American voters.

Still, when it comes to successfully operationalizing the philosophy, let alone measuring the results, great skepticism exists over the possibility that the impact will escalate beyond patriotic rhetoric.

According to the Associated Press, Martin Crisotomo, spokesperson for the Business Processing Association for the Philippines, believes US political outsourcing opposition poses no legitimate threat to his nation’s call center industry.

The Philippines is the world’s largest provider of outsourced call center operations, with 70% of the revenue coming from the US, and Crisotomo believes outsourcing, an inseparable part of today’s globalized economy, cuts costs and thus makes far too much sense to fall by the wayside.

"At the end, it will not be politics but it will be the bottom line," said Crisotomo.

And while not all Filipinos are so confident--Eastern Samar Representative Ben Evadrone called for his government to send oppositional lobbyists to Washington on grounds that the passing of the anti-outsourcing legislation could result in $9 billion in lost revenue and 800,000 lost jobs—the prevailing sentiment is that as long as Filipino providers continue to demonstrate the value, their call center businesses will not perish.

"So as long as we give them the best quality service at the right cost, plus timely delivery, we will always be the preferred location," said Wilfredo Sa-a, executive director of the Cebu Educational Development Foundation for IT.

And with that statement, Sa-a underscores the concept that will truly dictate the future of call center operations. Even under the status quo, the question of how to structure one’s call center is not as simple as, "Go offshore and save money, or stay onshore and deliver a better customer experience while being more patriotic."

As it stands, some organizations are rooting their call centers in America because it is the most logical decision for business. Some, especially when leveraging IVR technology and at-home agent programs, are able to position onshoring as the more valuable alternative. Others, striving to improve their public reputation or obligated to meet union bargaining terms, see it as a compulsory option.

Meanwhile, even with the advances in technology and the exponentially-increased pressure to control call center operations to deliver the best possible customer experience, many major organizations see no reason to abandon their outsourcing policy. Offshore facilities are house "the value."

Make no mistake, the bottom line always matters, and in terms of immediate ramifications, a combined financial incentive to root operations in America and disincentive to send them elsewhere will likely have a negative impact on outsourcing.

But as Sa-a notes, the game-changer is the ability to create value. Taxes and subsidies can tip the scale, but they do not necessarily end the discussion. If foreign call centers can continue to improve their value proposition, playing on the cost-, scale-, management- and technology efficiencies that work, they will be able to overcome some legislative setbacks and remain a viable option for American businesses.

Similarly, if the variety of developments in call center technology, agent management and CRM are not properly leveraged to boost the value of onshore call centers in comparison to overseas ones, legislative support will not suddenly make them can’t-miss options for businesses.

What is your take? Will this latest round of attention on the outsourcing question take flight—and if so, will it greatly impact the customer management field?