Saving Joe: US Economy and BPO

Tuesday, March 26, 2013

Despite the very positive report of the US Bureau of Labor Statistics (BLS) which ranked unemployment at 7.7%, its lowest since the recession hit, the United States is still in recovery mode. 12 million Americans are still unemployed, living on welfare or have given up looking for work, while a portion of the country is struggling with salary cuts. Obviously, the country's economy is still far from its glory days of leading the Global Economy.

The solution the country is looking for may be found in outsourcing. Business process outsourcing (BPO), the act of tapping workforces in other countries or states, is a popular business practice that enables firms to save on labor costs, focus on their core competencies and save them from total bankruptcy.

However, BPO is not widely embraced by the American public for numerous fears. For one, business owners are hesitant of tapping BPO firms as they are afraid of trading quality for cheaper labor costs. On the other hand, consumers are afraid that BPO firms are stealing jobs that should be rightly given to Americans and these erode the tax base. Also, they perceive that third-country service providers cannot be trusted with sensitive data.

The BPO industry is perhaps one of the most competitive industries to date.

With the competition heating up for the BPO scene in Manila, Mumbai and other developing countries, all of
them are looking for ways to edge out competition. In reality, there is only one way to do that which is to provide high quality, precise and excellent service – at affordable rates.

bpoAside from the drive from competition, BPO firms employ rigorous screening processes for their employees. These employees have to go through meticulous trainings and demanding continuous skill development. Also, BPO firms have non-revenue Quality Assurance teams on board which are dedicated to checking quality. The companies also offer their employees tempting incentives in order to entice them to work exemplary well.

There are governing bodies for BPO companies, and most firms follow the Six Sigma doctrine and enforces systemic changes in the company.

With these things in place, BPO firms ensure that they will be giving you top of the line service.

Outsourcing takes jobs away from Americans

Now, this is one argument that is simply false. reported that the service sector contributed 78.5% of the US GDP in 2007. Considering that the service sector is comprised of positions that require actual merchant-consumer interaction, these positions cannot be outsourced. Given this argument, outsourcing has but a minute chunk of the US economy.

The BLS also reported that there are 3.7 million job openings in the country as of January 31, 2013. These jobs are available in different industries including professional and business services, construction, health care, retail and trade industry, among others. These and the rest that are being opened are available to the American public – all they have to do is take it.

Finally, Cato Institute Senior Fellow Michael Tanner says that outsourcing is beneficial to the United States as it allows the country's dwindling resources to penetrate foreign markets. This capability helps companies focus on their core competencies rather than on unskilled product assembly. By outsourcing a part of a company's services or functions, that company can tap cheaper labor which translates to more revenue. By getting cheaper labor, the company can then convert the revenue to more job openings for Americans.