Jul 2, 2007

Companies Hiding Offshoring

Instead of shifting whole divisions overseas, U.S. companies are replacing their American workers in smaller groups. By not filling openings caused through normal attrition and transferring positions, as to allow the disbandment of the divisions destined to be offshored, companies do not have to file with or provide benefits that would be required by U.S, Department of Labor Worker Adjustment and Retraining Notification (WARN) Act.

This also allows companies to stay off the medias radar screen and avoid negative press.

From a
Mike Sunnucks article in the The Business Journal of Phoenix:

“U.S. employers are treading carefully these days when it comes to the outsourcing and offshoring of American jobs to India and other foreign markets.”

“Plenty of U.S. businesses are investing in India, either adding or moving jobs to call centers and technology hubs to that south Asia market. But in order to avoid criticism here at home, those companies emphasize that job shifts to India are about building a presence in the world's second-most populous country and leveraging resources in a competitive global marketplace.”

“Instead of shipping 500 U.S. jobs to Bangladore or Chennai all at once and enduring media criticism as well as displaced or anxious American workers, U.S. companies are offshoring in smaller, less obvious steps.”

“That includes looking to see whether positions can be shipped abroad when turnover occurs, and taking such steps with a smaller number of positions or work groups.“


daniel said...

Hiding, but not denying. The market in India has proven big gains for U.S. companies looking to outsource or invest in other market sectors. Here is an article i found with some useful information about the market in India...

Investing in India


Fred Adelman said...


We’re not denying that India has and will continue to be at the top of the food chain for jobs offshored by American companies. We’re just concerned over what the consequences will be when the full impact of offshoring and of the trade deficit begins to be felt.

Add to that the federal deficit, the Social Security mess and the massive outflows, that will take place when we “boomers” retire, and you’ll have a great opportunity to short American stocks.