I have for some time, been covering the impact of government policy in key areas such as outsourcing and offshoring including its economic effect in relation to the Clark and Fourastie three (now four) sector hypothesis regarding the evolution of a wealthy nation’s economy. You can access these as well as other links from past Procurement Insights articles and related PI Window on Business radio broadcasts at the conclusion of this post.
So when I happened across Paul Teague’s post in today’s Procurement Leaders Blog on the repatriation of transactional and call-center work, I was delighted in that this is a subject upon which a great deal more attention is required. I was also interested in understanding the depth of his insights as these areas have traditionally fallen outside of the general procurement industry’s collective radar.
After all, it wasn’t that long ago that Arianna Huffington echoed a sentiment that I have been expressing for some time in that countries such as the United States are at risk of becoming third world nations in the key Tertiary and Quaternary sectors that have for example redefined and driven the Indian economy.
In fact, in my September 24th, 2009 post “Will Britannia Rule the Waves of the Vast Sea that is the Global Economy?” I had pointed to the then recent statistics which showed that India’s indigenous software engineering talent has made that country the off shoring destination of American high-tech firms, each of which have committed to investing $1 billion into its economy. The results of this outsourcing boom I would write, is that India has seen double-digit wage growth for much of the 2000s.
So in principle, what Teague was talking about in terms of his reference to the Gregg Brandyberry and Curtis Wynn Our Shore initiative (which is focused on bringing outsourced transactional and call-center work back to the US), is in reality the repatriation of an important Tertiary sector industry that is key to North American economic vitality and growth.
By the way, and for those who may not be familiar with the Colin Clark and Jean Fourastie hypothesis, the four sectors to which they are referring includes the extraction of raw materials (Primary), manufacturing (Secondary), services (Tertiary) and knowledge-based (Quaternary).
Taking into account that the economies of the United States and Canada have to a certain degree remained largely dependent on the Primary and Secondary sectors, a disconcerting reality that was reflected in Huffington’s position that America now has plenty of countries it’s competing with from an innovation standpoint — many of which are much more serious about innovation than we are, the Brandyberry and Wynn initiative while well intentioned may be the equivalent of the proverbial spit in the ocean dilemma. This doesn’t even take into account that the repatriation of call centers in and of itself requires an established infrastructure in which service levels and related costs can be balanced and then integrated back into a market that has a standard of living expectation that may very well make this a difficult if not downright impossible task.
This doesn’t mean that the challenge should not be undertaken, and I will certainly look forward to researching the nuts and bolts of the Our Shore strategy to see how these as well as other potential obstacles will be addressed.
I am also of the opinion that we should not limit our repatriation efforts to transactional and call center work alone, as there are several other key areas within the Tertiary and Quaternary sectors that require our attention including software engineering and ongoing R&D.
However, and as we discovered during my interview with Brad Feld regarding the need for the creation of Founder’s Visas, which would allow foreign students who are graduating from some of the top schools in the U.S. and who also desire to start their enterprise in the same country in which they received their education to do so unencumbered, is also critical to our retooling efforts.
With the U.S. still being the preferred destination for the majority of those seeking to pursue their entrepreneurial dreams, a revised immigration policy would help us to move away from competing with lower wage offshore countries by stimulating the transition to higher level key sector pursuits where we can still establish a competitive advantage through indigenous development of new market expertise and opportunities.
Or to put it another way, and again keeping in mind that I haven’t seen the numbers relating to the Our Shore concept, pursuing call center dominance today is like buying something back that you had originally sold at a garage sale. You have to think as to why you allowed it to slip away in the first place.
All this being said there is nonetheless an important point to the Teague post, which can be summed up in a single word . . . awareness.
Not that long ago, and as alluded to earlier, very few people in the world of procurement would have given any real thought to the issues surrounding an increasingly globalized economy and the true impact of outsourcing and offshoring. That Teague as of late, should now choose to write about these subjects in earnest (refer to his January 17th post The dark side of outsourcing and, his post on the 19th Does offshoring harm the US economy), represents a responsible awakening to a greater reality.
In short, you cannot address a problem unless you know it exists and understand its ramifications. This is an important first step, and one in which I can only hope that others will also take.