Off Shore

Shipping jobs overseas may save money, but it's a public-relations nightmare -- and that's the least of the risks.
CFO StaffJune 1, 2004

Nothing roils the American body politic like foreign competition for jobs. Today’s outcry over offshoring reflects a realization that there is no longer a clear limit to the level of job function that can be outsourced overseas — college degree or the color of one’s collar notwithstanding.

Decades ago, foreign competition — think Japanese cars or imported steel — worried both workers and their employers. But that common purpose was severed in the 1990s, when manufacturers began sending work to factories in Mexico. Companies also began outsourcing — first, nonessential functions like maintenance, and, later, repetitive back-office jobs — to U.S. companies that could do the work more efficiently. Those trends had thoroughly blended by the late 1990s, when programmers in India first gained widespread attention for helping U.S. companies run a round-the-clock race against the Y2K deadline.

Offshoring has come a long way since then. So has the resulting animosity between workers and companies. That was what initially prompted CFO to examine the practice. After all, as the following pages show, weighing the promised cost savings against public anger is tougher than most CFOs want to admit. But the outcry also distracts companies from questions about the risks of sending any part of a business overseas to be managed by someone else. And the same global competitors that make offshoring necessary are likely to make misjudging those risks costly indeed.

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Featured in This Special Issue:

Making It Work

How to avoid some common offshoring blunders — and what to do when you can’t.

Offshoring by the Numbers

Results of our survey of 275 finance executives at a broad range of companies.

The Backlash

The only thing that will make the furor over offshoring worse is hiding from it.

The View from the East

India’s upstart IT-services firms face their own challenges from their giant rivals in the West.

Web Exclusive: Reader Opinions on the Offshoring Backlash

Only 5 percent of those who are offshoring today say public disapproval will cause them to cut back.