RENEE MONTAGNE, host:
As the presidential candidates talk about trade and the economy, U.S. businesses continue to send jobs overseas. Offshoring, or sending jobs to countries where workers cost less, is a normal part of business these days.
Reporter Kate O'Sullivan spoke to chief financial officers about offshoring for an article in the March issue of CFO Magazine.
Welcome to the program.
Ms. KATE O'SULLIVAN (Senior writer, CFO Magazine): Thanks, Renee.
MONTAGNE: Now, has offshoring by U.S. companies actually grown?
Ms. O'SULLIVAN: Absolutely. We wanted to update a story that we did in 2004 on this topic, because during the last presidential election, offshoring was such a hot issue, and we haven't heard a lot about it. But we actually found that offshoring has doubled since 2004 when we last measured it.
MONTAGNE: And what kind of work are we talking about here?
Ms. O'SULLIVAN: Information technology functions continue to be the largest area of offshoring, but finance functions are also going offshore, from payroll processing, accounts receivable, collections, those sorts of things. But other specialized areas are also moving as companies get more comfortable with sending work overseas, so things like even legal research, reading of medical test results. In fact, a lot of human resources processing can be done overseas.
MONTAGNE: India is the place that I think if anybody thinks about offshoring or outsourcing services like call centers and tech support. Is it, in fact, still the main destination for offshoring?
Ms. O'SULLIVAN: Absolutely. India has a lead in terms of their educated workforce. People talk about China as a location for offshoring, and China is catching up, but they don't have the English language skills that India has.
MONTAGNE: Now, when you talk to companies about offshoring, they often use the word labor arbitrage. It means buying and selling things in different markets to take advantage of the price differences. So labor arbitrage, is that, in a sense, about buying and selling people?
Ms. O'SULLIVAN: It is. It's really sort of a nice technical way of saying we can pay people less money somewhere outside of the United States. In fact, CFOs are looking at many other countries as options for offshoring as India becomes more expensive.
So I spoke with a number of people who are looking at the Philippines as an option, elsewhere in Asia. People are talking about Vietnam as possibly an up-and-coming location. But also people are looking at Africa. People are looking at the Middle East, and people are looking at Latin America as all different possibilities for establishing offshore operations.
MONTAGNE: It seems as if the whole issue about offshoring, which was very big, has it disappeared from the headlines? And if so, why?
Ms. O'SULLIVAN: It has really died down from when we first examined this issue. We asked CFOs this time around if they felt that there was still a political concern, if they felt that there would be a backlash against offshoring. And most of them said, yes, it's still a concern, but it's much less than it used it to be. And I think it's because, for better or for worse, these jobs continue to be sent offshore because it's cheaper.
Now, the argument is that that will leave the best, most interesting, most challenging jobs for people here in the U.S. But the question is, is our labor force ready to handle those jobs? And I think that's why you'll hear the presidential candidates, at least from what I've been reading, they're really focusing on retraining, finding new industries to explore, rather than saying we have to stop these jobs from going overseas, because, so far, nobody's been able to do that.
MONTAGNE: Kate O'Sullivan is a senior writer at CFO magazine. Thanks very much for joining us.
Ms. O'SULLIVAN: Thanks so much, Renee. Transcript provided by NPR, Copyright NPR.