Ten years gone: Remembering a blinkered BPO backlash

The United States economy continues to chug along, and unemployment is at the lowest rate it’s been in half a century. When it comes to the business process outsourcing (BPO) industry specifically, intense competition for talented employees means that many agents can demand higher wages. At times like these, turnover tends to increase. And in some cases, higher overall costs could increase pressure on enterprises to send work offshore.

Conversely, ten years ago, in the throes of the Great Recession, relatively high unemployment meant that U.S.-based contact centers were more apt to be filled with relatively high-qualified workers for longer periods of time. And ironically, that’s precisely the moment when a revolt against the BPO industry stirred on Capitol Hill.

How many recall those confusing days when a U.S. Representative by the name of Sue Myrick was offering an amendment to the Troubled Assets Relief Program (TARP) that would, “prevent any company that receives funds as part of the TARP from outsourcing any new customer service or call center jobs to a foreign-based company”?

After initial examination of the available information at the time, there appeared to be an unfortunate conflation of the concepts of “outsourcing” with “foreign-based.” Myrick went on to note that:

I’m not aware of any companies that have participated in the TARP that have entered into any new contracts with foreign-based customer service centers, but I do know that our constituents have a great deal of skepticism about the TARP program and how their money is being spent. And if a company that has been propped up with taxpayer dollars were to outsource these types of jobs, it would create further cynicism.

At the very least, the statement seemed naïve. The obvious question came to mind – did Myrick mean offshore outsourcing specifically, or did she mean outsourcing in general?

Reading her words, it’s hard to tell.

After all, there were hundreds of thousands of American customer care agents working in the United States on an outsourced basis at the time, and that remains the case today. Would the representative have considered those American jobs a negative force on the economy, because they happened to be provided through an outsourced arrangement?

Clearly, top providers of outsourced customer care have diversified global footprints that facilitate the delivery of service from whatever location offers the most compelling business case for a specific client at a specific time. Yet Representative Myrick’s attempts to make us believe she understood the nuances of the business only added to the confusion:

I understand this is a global interconnected economy. However, given the amount of Federal dollars pouring into U.S. companies from TARP and given the fact that the U.S. unemployment is now above 7 percent, I don’t think it’s unreasonable to demand that American workers are used to fill any new customer service jobs for the companies who are assisted with American taxpayer dollars.

The statement begged clarification, because many outsourced jobs were and are in fact opportunities for American workers. But we also need to remember there are many “foreign” outsourcers operating in the U.S., hiring Americans and benefiting the U.S. economy. As this analyst noted at the time, “Asian companies also are setting up shop in the United States, as evidenced by Fujitsu providing call center services from Texas, and India-based companies such as Wipro and Tata, both of which are focused on setting up centers for application development in Atlanta and Cincinnati, respectively.”

The reality is that in a relentlessly competitive global business environment, the imperative for corporations to reduce costs and improve processes and performance means that strategies like offshore delivery and upgraded technology are imperative.

U.S. companies understand this of course, even if the nation’s capitol seemed genuinely befuddled by the international economy during those chaotic days a decade ago; the contradictions inherent in America’s historic trumpeting of international trade while at the same time groaning over offshore outsourcing became obvious. Meantime, many a U.S. corporation remains willing to outsource within the United States and sometimes look beyond America’s shores in pursuit of the best global service delivery mix when circumstances demand it.

Whether this model of capitalism is good or bad, right or wrong, especially in light of so much popular convulsion across the world today, is another matter altogether.

Either way, perhaps the incongruity of the American government’s reaction to a Great Recession that one could argue America’s banking system helped create was not so unlike times past; consider the sharply relevant words of the man who coined the term “dismal science” when describing economics way back in the 19th century. In his classic, if stilted, examination of the hard times in France that would one day spawn the French Revolution, Scottish historian and writer Thomas Carlyle offered the following timeless insight about the situation unfolding in the spring of 1788:

And so this poor Versailles Court, as the chief or central Solecism, finds all the other Solecisms arrayed against it. Most natural! For your human Solecism, be it Person or Combination of Persons, is ever, by law of Nature, uneasy; if verging towards bankruptcy, it is even miserable: — and when would the meanest Solecism consent to blame or amend itself, while there remained another to amend?

Wise words, prodding us to remember that when societies confront severe economic challenge, oftentimes governments seek to stave off popular fury through whatever means necessary, even as they decline to hold themselves responsible for the system they themselves established.

Back in 2009, there was considerable reason to be skeptical of the effectiveness of what might have come across as so many politicians’ attempts to curry political favor with constituents, too many of those pols sipping at the public trough (of disillusionment) while staring uncomprehendingly at a complex global economy – like sheep blinking at a passing train.

Ultimately, one wonders whether Washington’s unsubtle attempts to assign blame during an era of insolvency, to scapegoat the international trade it once championed, was a lot of sound and fury, signifying nothing. Because ten years later, it might seem so. Just look at the latest financial results from the likes of Teleperformance and TTECH. In their case, the BPO train rumbles on.

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