Serious Studies

Insourcing -- The New Trend?

Uncle Sam Money

Friday is a day for happy stories and this one is happier than most. FORTUNE today reports on an Indian company that has opened a call center in Reno.

"The phenomenon has a name: 'insourcing,' the term experts are starting to use when foreign multinationals open offices on U.S. soil and hire Americans, at a higher price, to do the very jobs they once lured overseas," writes reporter Jia Lynn Yang. "In this case the center in Reno is targeted toward companies willing to pay a premium - its workers there cost up to 40 percent more than their counterparts in India - to give their U.S. customers a more culturally fluent, less frustrating 1-800 experience."

Now, this is a side of globalization that I think most of us who live in the United States can appreciate. It reverses a trend that made many of us nervous, the feeling that jobs are simply slipping away from us, and with them, some of our national identity. It's weird enough for a guy in Atlanta to call the corner business and get instead a centralized rabbit warren in Omaha. But a phone call to your corner bank that ends up eighteen time zones away? Not exactly warm and fuzzy.

Still, whenever I call Citibank (C), for instance, I always like to establish a personal connection right away. "Where are you, by the way?" I will ask the clipped, precise English person on the other end of the phone.

"Mumbai," they will say.

"What's the weather like there?" I will ask. This elicits one of two replies. The first is, "Hot." The other is, "I don't know, I haven't been outside in quite some time." I know how they feel. One day last week I got to the office at 6:00 AM for an earnings call and left at 8:30 PM after all the exploded fat has been cleaned up from the kitchen. Outside that day, it had been 90-degrees and soggy humid in Manhattan. For me, it had been 72 and dry the whole day long.

What's most interesting is that Asian companies are doing this to improve customer service for Americans who want to hear a friendly voice. They are, in a sense, defying the economics, and going for good business practice. What a concept!

This turn-about could extend to other portions of our business civilization, as corporations think about the comfort and well-being of their employees and customers over strict adherence to the short-term bottom line. We could see:

  • Senior management firing all management consultants and using the money to hire internal people and fund pension plans;
  • The "insourcing" of jobs that used to go to out-of-house law firms, advertising and public relations agencies, print departments, cleaning crews, etc.
  • The implementation of the four-day work week;
  • Business-class seating throughout the entire airplane;
  • Free snacks for any customer forced to wait more than 10 minutes online;
  • No commercials in movie theaters that charge more than $7.00 for a ticket;
  • Nobody permitted to make more than $500,000,000 in one year;
  • All instruction manuals to be written in original, comprehensible English, not in pidgin nonsense translated from Urdu;
  • The reinstatement of thousands of real, live human beings where there are now audiotapes instructing you to press numbers in order to be put on hold.

This last is most important. I believe we may date the decline of our society from the moment some genius got the great idea to put computers and digitized voices behind 411 information. These Asian businesses have already taken a great step by recognizing the American consumers might like to speak with voice that is recognizable to them. Somebody smart can take the next step, I think, and realize that most of the time, when a human being has a problem or a question, they might not want to talk with a machine.

23 Comments Add Comment

That is right. Insourcing is inevitable. It is not the penny but who gains matters.

I am from India. I was expecting something like this to happen. Not that every american worker wants more, or every other in world takes less. We know that american dollars changed life style in India. This can't continue for ever. Now with the strengthening rupee against dollar may make the situation harder for all indian companies with global operation more expensive and to find alternate to work from America itself. Not that all american loose to other nationals their jobs, I certainly believe, a day will come that american worker will start to work at economic rates which will be comparable with any other national.

I would like that everyone of us work for our welfare and of our mother country too.

All I can say to the article is AMEN! Time to go back to real people and retire the computers in the customer service world!

Why can't an AMERICAN company open a call center in Reno ? Why does it have to be foreign owned ?? Do they know something that "we" don't?

First of all, it is welcome news, though one that is not expected to catch fire anytime soon.

The rest of the post is "gibberish", for example:
1. The folks in Indian call centers are given "American names"
2. They never divulge their location (Mumbai would, in any case, be too expensive as a call center)
3. More likely to talk about American baseball and football than weather in Mumbai or cricket, etc.

As for the "We could see(s)".... stop dreaming.... and wake up to the same coffee that is brewed in executive offices. Sorry!! and if the economy starts to falter (and trust me, executive payouts do not), there will be more "looking for cost savings" to meet the short-term goals (for in the long term we are dead, are we not?).

Oh well.... enough response to nonsense.

BTW, I am of Indian origin who became a citizen 30 years ago. In America there is only one "Mother Country"... America!! (except, of course, for those specific parade days to celebrate one's heritage).

I would have considered the US foolish if it thought that outsourcing all activity to other countries would make its own country freer to do more sophisticated work. This would have been against the nature of human life. To quote from the Bible, "There will be poor always..." so despite everything the US still has homeless, poverty, crime against humanity etc. Insourcing will feed the US ecosystem and this is the best way. India will figure out a way to feed its own. And bravo to all transmigration, brain drain, competition, a better life abroad, and a poor country to show off US dollars in.

This is bound to happen. I also like draw your attention to phenomenal rise in the DOW in recent times, some analysts claim one of the primary reasons for that is Americam companies are doing good business overseas, particularly in India and China.
Development of the third world is good for american business in the long run.
Your blog seems to suggest just the opposite.

No, no. I agree that development of business in the developing world is great for everybody. I just think exporting jobs to countries where people will accept much less money to do them is not, in the end, either right or good business. I've heard quite a few business people justify horrible working conditions in far flung locations using the Total Outsourcing philosophy. But the whole world doing business under one great economic umbrella? Count me in.

This is not new. Stream International offers their customers a "Smart Shore" solution giving them the ability to have their call center on-shore (US or Canada), off-shore (India, Costa Rica, etc.) or a combination of the two. They are the best at this.

I'm not surprised at all. I used to have TXU as my electric company, but their customer service got to a very low point after they outsourced their call centers to India. It was one of several reasons that I eventually decided to switch providers. I think for some things, like customer service, businesses are just beginning to see the true cost of outsourcing.

This seems to be an image building exercise and well publicized one. After taking away a few million jobs from the soil returning with a few hundred as a bandage to be able to keep doing business.

This reminds of a couple of years ago when I needed tech help from the computer manufacturer that I bought my pc from. I was of course transfered to a call center in India. They preceeded to read from a script which wasn't helping the particular problem I had, it was for a different problem (I knew that much about the situation)and they of course disagreed with me. It sent me into whole new level of anger and when asked to speak to someone here in America, I was denied (of course). While going through all the options in the company phone tree after that phone call, I discovered that if you had a corporate account or a government one you were granted the privilage of speaking with someone in Texas. If you don't have one of those accounts they will refuse to help you. The average consumer isn't important enough anymore.

One thing I have encountered while filling in for our receptionist is companies using Indian call centers for out bound sales calls for companies in this country. They have flat out refused to take us off of their call list when asked to.

I should also mention that sometime ago I worked in a call center. I think it's an excellent first job out of college for people wanting to learn basic sales skills (in some situations).

I don't want to seem unappreciative but it is a little depressing to realize that American workers only cost 40% more than Indian workers despite the fact that America's cost of living is 500% higher than India's. Hopefully, rent and food are cheap in Reno, Ohio.

With the notion of insourcing, it is silly to consider that this is something that is 100% positive.

Yes, it is positive but most of the time, they are jobs that were owned by American companies that was bought out by international company. Meaning, the job count did not necessarily increase but more or less stayed the same (or less).

I would like to clearly bring that to light.

Hey guys, please see Simpsons on Outsourcing at the YouTube. Have a great laugh!

This makes sense. U.S. multinationals aren't the only ones who need skilled workers, whose sleep cycles are synchronized with the 6pm-6am portion of the 24 hour day, for software development for the home market. Indian multinationals need them to. And with shift differential pay differences between the U.S. and India closing fast, it probably makes more sense to outsource to the U.S.

I am an American who works in Bangalore, yep. If you want to see really bad customer service ya'all come here. Computer service, well most of the techies don't speak English, problems with cell phone, ah explain yourself five times to someone who's English you can't understand, bank problem as a preferred high balance customer-your got it, to a call center you go, as all senior personal banker numbers no longer work. OK even the Indians here complain of the same lousy service in Bangalore. All bills have to be paid in person, all bills are hand delivered by a company employee as no one uses the India Post Office. Maybe soon India will send it's customer service operations to the USA for better service. My Indian friends are amazed that in the USA we pay bills on line or just mail a check.

To all the frustrated Americans who have had to bang their head against a wall in their attempt to get a problem resolved through an Indian Call Centre, I can vouch that the frustration is the same for us Indians too.

I am an Indian, calling from India into the customer support cell, which in turn is also located in India. But the quality levels are so low here that even I find myself totally driven up the wall.

I've had thousands of rupees worth of billing mistakes in my telephone account and it took me 8 months to even get someone to sit up and take notice. And all this while I used to be talking to Call Centre Dummies who were reading scripts off the screen, with the least amount of concern about what my real problem is.

My point is, that with such poor quality of services being offered to both Indian and aboroad, these call centres are going to get it back where it hurts them, sooner or later.

I am kinda counting on it !!

Yes , yes and yes again Mr Bing. Even in South Africa where we are trying to get some of that sweet American offshore call centre business, people are getting tired of the auto voices. Real people, give me real people

As a complement, there are companies that are now 'homeshoring' to home-based call centers located here in the US. These companies save costs because of a lack of fixed costs (no building to rent, expand, computers), labor costs (independent contractors), as well as greater agent selectivity (not geographically limited to central call center). Some of these providers include: Working Solutions, VIPdesk, West at Home, LiveOps and Arise (formerly Willow).


You have quite an insightful blog here. I'll read more before commenting much, as the more I read, the more I learn. :-) But just wanted to note that I work in Wheeling for an "onshoring" outfit that provides business services within the company it services - which I guess is similar in concept to IKON providing Office Services or Mail Room services within a law firm or investment bank. In this function, we service people not only within the US but for all offices world-wide -- in conceptualization and practice it's a pretty cool implementation of nascent on-shoring services.

I remember the nightmare of managing a project with international human resources when off-shore outsourcing first picked up more than 10 years ago. The work ethics was completely different, and all the unspoken expectations weren't understood. It's an environment where every single i must be dotted and every single t crossed, then one braced for whatever that might come. There was no common understanding to leverage, on which a homogeneous work force constantly rely to be efficient. The powers that be never considered this in their decision to outsource. The result was a "team" that wasn't even effective. That we managed to get something out of the door was the result of heavy-duty hand-holding and patching by the US staff.

Outsourcing works for some business
models and certain industries but not all. Insourcing could well be the reaction after a costly mistake from a bad decision based on poor analysis of one's own business.

Amazon Wednesday to get here yesterday 8/09. It doesn't get here yesterday.

samira Md., Customer Service (Md. a name or is this a doctor?) tells me I am sorry that you have not yet received your order. I see that the order summary in Your Account estimated it would be delivered by August 9, 2007 It's been our experience that the majority of late packages arrive just a day or two after the estimated delivery date. Therefore, we would like to ask that you wait until close of business on August 10, 2007, for this shipment to arrive.

OK, but today - no package. So, I write and tell them. Uday Kumar Customer Service tells me I'm sorry--it appears that your shipment was lost in transit. I've placed a new order and we'll ship it to the same address as soon as possible. August 13, 2007 is the estimated arrival.

I email them saying that 8/13 is not acceptable and that they should have 'Saturday Delivered' it so that it gets here tomorrow.

Naga (guess this is like Madonna or Cher - only one name needed) Customer Service says I am sorry that you have not yet received your replacement order. I see that the order summary in Your Account estimated it would be delivered by August 13, 2007. It's been our experience that the majority of late packages arrive just a day or two after the estimated delivery date. Therefore, we would like to ask that you wait until close of business on August 14, 2007 for this shipment to arrive.

It's not 8/13 yet!

So, I respond to Amazon:

I don't think folks even read the entire complaint.

The CSR writes, "I am sorry that you have not yet received your replacement order. I see that the order summary in Your Account estimated it would be delivered by August 13, 2007. It's been our experience that the majority of late packages arrive just a day or two after the estimated delivery date. Therefore, we would like to ask that you wait until close of business on August 14, 2007" This is written to me on 8/10......

This is not Back to the Future - ie, August 13th has not happened yet. This order is a REORDER of a next-day-air that I had for arrival on 8/09 that is not here today, 8/10. It should have been reordered with Saturday Delivery so that it arrives tomorrow.

Naga closes with, "Again, I apologize for the delay, and hope that your order arrives soon."
So, even she is 'Hoping' at this point.

Is the date in India 4 days in advance of the USA? has been using homebased sales, CMS & tech support agents for years. It is time these call, and work, comes back to the US!