Labor cheaper in U.S. than overseas

Bob Moon Feb 16, 2009
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Labor cheaper in U.S. than overseas

Bob Moon Feb 16, 2009
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Steve Chiotakis: A lot of those jobs going overseas. The 2009 Out-sourcing World Summit kicks off today near San Diego. It’s a chance for hard-pressed American businesses to explore that idea of finding cheaper labor outside of the United States. But it’s also a time to re-examine whether out-sourcing is really worth it. Here’s Marketplace’s Bob Moon.


Bob Moon: If your job hasn’t been “downsized,” it turns out you can worry less these days that it might be outsourced.

Globalization has gone haywire lately with foreign exchange rates and labor costs turning upside down. And Forrester Research’s Christine Ferrusi Ross says corporate bosses are asking a question that could be key to your future:

Christine Ferrusi Ross: What’s the breakpoint at which it financially makes sense to go offshore? Six months ago it was, say, 15 percent cheaper and worth going. Maybe now they’re saying it’s not so much.

You heard that right: The economic downturn is making American workers more cost-competitive with those cheap-labor overseas call centers and back-office alternatives. Suddenly, it seems, we’re becoming just as cheap to hire, when you figure in the overhead for phone lines and other outsourcing expenses:

Ross: As our unemployment rate in the U.S. goes up, there’s more opportunity to get resources at a cost that maybe you wouldn’t have been able to get them before.

Ross doesn’t expect to see the offshore labor market contract. U.S. labor costs will eventually rise again, and so, she says, will outsourcing demand.

In Los Angeles, I’m Bob Moon for Marketplace.

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