It's almost July, and once again we're facing the most patriotic weekend of the year, when you can bet you'll be hearing at least a little high-flown talk about what it means to be a real patriot. (Hint: In today's atmosphere of public discourse, the guys who aren't patriots belong to whatever political party isn't yours.)
The dictionary defines patriotism as "devoted love, support and defense of one's country; national loyalty." A relatively few Americans demonstrate their patriotism "in the defense of one's country," at least in the literal sense; and all props and respect to them. The rest of us will be patriotic by putting up a flag, watching fireworks and eating hot dogs.
Over the years, some of us have tried to demonstrate our national loyalty by "buying American." But in today's confused global economy, this has become increasingly ambiguous (what if it's made here with imported parts? What if it's made there with American-made parts? What exactly constitutes "made in the U.S.A." anymore?). Even the most rabid self-proclaimed patriot can't claim to have never bought cheap imported goods at Wal-Mart, driven a foreign-made car, or eaten fish from China, vegetables from Mexico or meat from Canada (according to USDA's "U.S. Food Import Patterns, 1997-2007").
But what about "hiring American," especially at a time when more than 13 million Americans are out of a job? Although in some cases offshoring and outsourcing have bad reputations (and ironically, have become less affordable to U.S. businesses as salaries in developing countries have increased), many businesses maintain they can't survive without delegating at least some their back-office functions to Peggy from Kazkovia.
I recently asked a LinkedIn insurance group about the impact of offshoring and outsourcing on the insurance industry. After quickly defining the difference between them (outsourcing can include American workers), respondents grouped themselves into camps of pros and cons.
Offshoring supporters claim that delegating "tedious mundane tasks" to foreign workers allows U.S. insurance businesses to compete and frees up their professionals to better serve customers. One company that outsourced its data processing functions to China realized annual revenue increases of 100 percent and profit increases of 166 percent, according to a source.
Others drew a clear distinction between offshoring and outsourcing. "There are many models of outsourcing and the key for each agency is to find the model that works for you–meets your personnel and information security requirements, and matches the organizational culture of your firm," wrote one. "The insurance industry has actually embraced offshore outsourcing to a certain extent, especially in strategically progressive firms. The good news is that it is has been widely used to support the U.S.-based insurance professional staff. The result is that we haven't seen a lot of downsizing and trading U.S. jobs for foreign jobs like the manufacturing sector has experienced."
Still others were concerned with the quality of work delivered by offshore concerns. "When so many businesses are taking advantage of offshore talent, it makes you wonder why the insurance industry has had a rather tepid response to offshore outsourcing," wrote Sharon Emek, who heads up the WAHVE outsourcing firm, which connects retired, experienced insurance professionals with businesses. "But there is good reason, and everyone who works in insurance intuitively knows why. Our business is complicated, requiring long-term solid experience and an expert knowledge base."
"I would never buy insurance from any carrier that offshored my business," wrote one respondent, who was concerned with the quality of service. "It is annoying enough being forced to deal with India, Philippines, Mexico for tech support on my computer or cell phone."
Others were worried about what offshoring could do to a company's reputation: "Think of your competitors. Assuming you are an American company, do you want your competitors saying, 'We use local talent, while that company sends American work overseas'? Ultimately, there is a cost/benefit analysis for each company but I would be very reluctant to make that decision."
And although none specifically addressed the moral issue of hiring cheap foreign labor when Americans need jobs, it's a question I'd like to raise. Yes, U.S. businesses have a responsibility to deliver results to shareholders and keep costs low to remain competitive. But don't they also have a responsibility to be good corporate citizens and support the economy of their home country?
It's hard to argue against the cost savings and convenience of offshoring and outsourcing. But keeping in mind the growing educational levels of workers in developing countries, the future of offshoring will probably involve not just telemarketers and back-office functionaries, but risk managers, underwriters, agents and brokers.
Can we as an industry — and as a country — really afford those kinds of efficiencies?
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