If you have ever called customer service for almost any product or service, chances are that your call ended up in another country. American industries commonly outsource customer service jobs to countries like India, Indonesia, South Africa, Ireland, and the Philippines where labor is significantly less expensive.
New York Senator Charles Schumer introduced a bill aimed at stopping off-shore call centers. His new bill would impose an excise tax on US companies that use off shoring. His bill proposes a fee of 25 cents for each call transferred, and companies would be responsible for paying the fees quarterly. Schumer estimates the total of $400 million dollars would be raised annually in penalties, and 250,000 call center jobs are being lost to off shore centers. Could it be because New York has a $9.2 billion deficit?
Schumer claims this bill is also in response to the overwhelming amount of disgruntled complaints customers have concerning “scripted” responses and the difficulty many off shore customer service representatives have with the English language.
Customers also have no idea who is looking at their personal and financial information. The privacy standards are not being upheld, and rarely does a consumer ever get more than a first name of a customer service representative. In addition there is no way to know who is looking at a customer’s bank account, credit card or in some cases… their medical history.
The Connecticut legislature is considering a similar bill; whenever a customer calls into an off-shore center, the representative will be required to state what country they are from or even what state. At that time, the customer will have the option to ask to be reconnected to someone in Connecticut. AT&T is against the bill and states that salaries in Connecticut are higher than in other states and consumers still get the same level of service.
New York industries claim they must keep customer service costs low and have been forced to cross the ocean where labor is far less expensive. Economists speculate that if legislation like this passes, the ultimate cost will be passed onto the consumer.
photo credit: Stephen Cummings
I agree with the last sentence of the article. If politicians use protectionist measures to keep jobs from going offshore, the ultimate “loser” would be the end consumer.
This is a classic case of comparative advantage. My world economy professor explained comparative advantage by citing the example of grading papers. A professor could probably grade her students’ papers better than anyone else could, but her time is better spent doing research, teaching other students, or completing her latest publication. Because of all the other things the professor could be doing, the university is better off letting a student teaching assistant grade the papers.
The key is not to keep those low-level jobs from going offshore but to create more jobs that are higher up on the value chain and add more value.
Technology allows us the ability to collaborate with people across the globe so that we can concentrate on what we do best, which is innovating new products and services, and finding new ways to create value.