Job Outsourcing by the Financial Sector
Recently, TNTalk! has been discussing job offshoring or outsourcing. There is still plenty of information to be uncovered, so we will forge ahead in continuation of Dr. Manning’s series of articles this week.
Job offshoring is not unique to the United States. In the past, common references have been made to Corporate America. In truth, this is largely a misnomer. The multinational corporations involved are not necessarily American by any stretch of the word. If they were, they no longer are. The current reality is that Corporate America now simply refers to large, usually multinational corporations that are actively involved in the U.S. marketplace. The multinational corporate movement effectively started as early as the 1970s, but was quashed by legislation and limits of technology. In the 1990s, the U.S. market became a global market through the auspices of free trade. Multinationals have grown in an effort to supplant and expand world dominance in the marketplace. Relaxed U.S. legislation and “free trade agreements” enhanced corporate control as multitudes of multinationals came into the U.S. to buy up U.S. companies or establish a new presence. U.S. companies joined and enhanced their ranks with the multinationals on a global basis to compete and to exploit new advantages in tax law and legislation. The fact is that small business may send quite a piece of business overseas to manufacture promotional business items and the like. Multinationals transcend this ability since they operate above the sovereignty of any national or political body to meet their corporate needs and expectations. Multinationals are no longer tied to a single monetary system and are able to protect themselves from the majority of national or regional economic cycles: the ultimate in business accomplishment. The multinationals have transcended the confines of a regional job market as well.
The reality is that offshoring is not limited to the United States in the eyes of the multinationals. Since the U.S. market was opened up in the last decade or so, job offshoring or outsourcing has become a global phenomenon for the benefit of all those willing to ply the advantages of free global trading and an open job market. Multinational corporations, not nations have been the happy beneficiaries of this movement. Offshoring is no longer dominated by call centers. One third of financial institutions offshore processes to China. In 2007, the financial services industry saved roughly 7 billion a year through outsourcing, “an 1800% increase in headcount over the last four years” based on the Global Financial Service Report. Over 75% of major financial institutions now have operations offshore, compared to less than 10% in 2001. Americans have another employment sector where participation is limited. Offshoring has transcended manufacturing jobs. Clearly, offshoring is not limited to information technology employment. Offshoring touches the core of the U.S. and global financial services system from government to banking to corporate services. Chris Gentle, associate partner at Deloitte stated: “Offshoring is maturing at a rapid pace but, in future, the best offshoring strategies will not, and cannot, be based on labour arbitrage alone. Financial institutions need to re-engineer business processes, or risk simply transferring offshore the legacy inefficiencies of older, onshore processes.” Since internal processes are Deloitte’s professed bread and butter, they should know. In 2003, two-thirds of activity offshore was information-technology related. By 2006, over 80% involved a full range of business processes. Offshoring has spread across nearly all business functions, with significant growth around transaction processing, finance and HR followed by investment banking analytics and research.
For years, the economy of India has been the chief recipient for the offshoring of U.S. jobs. India is in danger of losing it crown to China. China’s portion of offshored labor has been rising for years. A third of financial institutions have information-technology processes in China. As the Chinese people learn English, a pool of skilled labor will be in place to compete with the current labor configuration. Do you hear anything about plans for the United States workforce? The United States has been left in the cold and politicians have done nothing to counter the flow or to separate themselves from plundering what is left of the United States economy. Pandora’s box has been open for many years. National needs and productivity are being ignored. Information is being manipulated to secure the desired level of truth. Security of information is being ignored. America is being told to retrain. Is anyone willing to admit that national interests must be addressed or will America sit silent as the U.S. national economy is dismantled for the temporary benefit of the government and multinational corporations? ~ E. Manning
Find out what more about job outsourcing at TNTalk!