In the past week, analysts and consulting firms have issued reports warning about the downside of overseas call center outsourcing, and even a presidential candidate joined the fray, but most researchers and consultants forecast a continued preference for moving call center jobs abroad. Democratic presidential candidate John Kerry says he would require overseas call centers to disclose their location, according to The Associated Press. The Massachusetts senator said he wouldn’t ban outsourcing, but would provide tax credits to companies that maintain U.S. factories and “close every single loophole that gives companies incentives to move jobs abroad.” The executives of businesses — including those of U.S.-based teleservices outsourcing firms — who have moved at least some of their call centers offshore to India, the Philippines and other overseas locations, point to the savings in labor costs, the added efficiencies and the overall benefits to their customers.

In spite of the recent backlash, the push for banks and other financial institutions to send call centers overseas is on the rise, according to a just-released report from Cutting Edge Information, a market research firm based in Durham, N.C. Cutting Edge cites a recent Wall Street Journal article, which states that approximately 170,000 new jobs have been created in India over the past few years, and the number will grow to about 1.1 million by 2008. “India has become the location of choice for many financial services firms,” said Elio Evangelista, author of the report and senior analyst at Cutting Edge Information. “Besides the lower cost of labor, companies find higher employee retention rates in India where customer service jobs are held in higher esteem than in the U.S.” According to META Group, a Stamford, Conn.-based research firm, the major risk for stateside executives is the perception of actual savings yielded by outsourcing offshore. IT organizations often assume that labor arbitrage will yield savings similar to a person-to-person comparison (e.g., a full-time equivalent in India will cost 40 percent less) without regard for the hidden costs and differences in operating models, META researchers say. The reality is a general savings of 15 percent-20 percent during the first year. As the current offshore outsourcing movement prepares to grow between 20-25 percent in the next two years, despite initial resistance and geopolitical concerns, key decision-makers should consider a series of risk factors before sending projects/functions overseas. In addition, META Group urges executives to consider putting a contingency plan in place in case the vendor fails to deliver.

Fear of a backlash was a major issue at a technology summit this month in Hyderabad, India. Indiana’s failed contract with Tata Consultancy Services, and customer complaints that prompted Dell Inc. to reroute some help desk calls from India to Idaho in November, worry Indians, who have received billions of dollars in outsourcing contracts. “This is a matter of concern for all of us,” India's info tech minister, Arun Shourie, told officials from 30 Asian countries at the summit. “We must come together to find a consensus approach to fight this backlash.” Yet, in a research report in mid-2003, Gartner Inc. predicted that at least one out of 10 technology jobs in the United States would move overseas by the end of 2004. Forrester Research predicts at least 3.3 million white-collar jobs and $136 billion in wages will shift from the United States to low-cost countries by 2015.