Part II – Does Outsourcing Really Need Better PR?

Last week I  posed the question of whether or not outsourcing needs better PR. In this follow-up, I continue the dialogue.

Because we’re not short of positive perspectives on outsourcing: again, anyone attending even one SIG Summit would come away with plenty of evidence for its value, and the outsourcing community and media such as Outsource have more than enough material to make an overwhelming case for why the model has been a good – a great – one for organizations right across the size spectrum. But the benefits aren’t confined to individual companies: a wealth of scholarly work has been carried out to demonstrate how, in direct opposition to the assertions of its detractors, outsourcing (even offshoring) is good for those very economies it is supposedly corroding.

A 2006 Harvard University study entitled ‘The Politics and Economics of Offshore Outsourcing’  articulates the truth of this superficially counter-intuitive position very nicely. Authors Gregory Mankiw and Phillip Swagel found that “outsourcing appears to be connected to increased US employment and investment rather than to overall job loss. Some US jobs are certainly lost to other countries. On the whole, however, firms involved with offshore outsourcing are not shifting net jobs overseas but instead are creating jobs both in the United States and in other countries… Outsourcing will create winners and losers, and the pain of dislocation will be real for workers and their families. Taken together, however, these conclusions suggest that offshore outsourcing is likely to be beneficial for the United States as a whole.”

While recognizing the significant differences between major economies and that plenty of trends and issues are particular to each, what’s true in that report for the United States can in general also be applied to other developed economies where a good deal of outsourcing takes place. For instance, a 2004  paper by the Advanced Institute of Management Research  asserts that “job losses from sourcing business services abroad seem to be pretty small for the UK compared to total job creation in business services.”

So if even institutions as august as Harvard proclaim the macroeconomic benefits of outsourcing, why is public perception so at odds with “the truth”? I think the key – at least, one key – to understanding this dichotomy can be found in the quotation from the Mankiw and Swagel report given above: “Outsourcing will create winners and losers, and the pain of dislocation will be real for workers and their families.” In general, the public has no love for big business: in America especially a typical citizen may well take pride in his or her country’s economic might, in the success of its big brands and even in the stellar performance of the Dow Jones and NASDAQ – but there is nevertheless an “us against them” mentality colouring the relationship in Joe Public’s mind between him and the mighty corporations in whose shadow he labors (with certain sectors – especially banking, in the wake of the financial crisis – appearing more diabolical than others).

 While the case for outsourcing as a macroeconomic boon may be substantial, its benefits are hardly tangible for, nor immediately obvious to, the man and woman on the street – as any politician knows, using relatively complex economic theory in an attempt to explain to a disgruntled voter why s/he is actually better off than s/he thinks is a recipe for disaster – and while its advantages for individual organizations are much easier to quantity and immeasurably more demonstrable – the £760m Lloyds Banking Group hopes to save is an impressive figure regardless of how vehemently anti-outsourcing one might be – that deeply ingrained “us against them” attitude means it’s unlikely that many glasses will be raised as a result across the pub tables of the land.

Meanwhile, the “pain of dislocation” outsourcing can cause is easy to imagine even if one hasn’t been subjected to it directly. The working man and woman of America, the UK and elsewhere might not know or care about the theory but they fear its effects in practice, and who gives two hoots for the improved performance of a major banking group compared with the trauma suffered by the neighbor whose job is being outsourced? Attacks on outsourcing are part of a much bigger picture: the populist rhetoric of politicians and pundits who know they can make huge gains by attacking the traditional scapegoat, and gain little or nothing (if not actually suffer) by attempting to explain why in the long term and from a macro perspective the outsourcing model is a good thing.

I don’t think this situation will change any time soon – indeed, it may never do so – and there are good reasons for that. Moreover, unless the weight of popular opinion proves so great that politicians are pushed to act against their country’s macroeconomic interests by cracking down in a meaningful way (rather than mere window dressing) on outsourcing, there is no real danger to the model and its practice, just a residual unpleasantness which is of little significance in the grand scheme of things. So does outsourcing need better PR? In an ideal world it would be fantastic if the space could develop without being tarnished as it has been for so long; however, in this far-from-ideal world we have to make do with what we have, and perhaps it’s the lot of outsourcing practitioners to endeavor passionately and successfully in the face of the scorn of a public which will never understand the truth – and doesn’t want to anyway. The success stories we have may have to suffice, and remain within the community where they are of value, rather than blowing in the cold wind of the wider world which benefits from outsourcing whilst despising it regardless.

Jamie Liddell

Jamie Liddell

Editor, Outsource

Jamie Liddell is the Editor-in-Chief of Outsource. He is a journalist with extensive B2B and consumer experience, particularly in the sourcing and international property sectors. A graduate of Cambridge University, Jamie worked as Chief Foreign Correspondent for property media company Blendon Communications before moving into full-time B2B journalism as launch editor of the Shared Services & Outsourcing Network. He took over the helm of the Outsource brand in April 2010 and has since overseen its transformation and evolution into the world’s leading publication focusing on the sourcing, outsourcing and business transformation space.