Monday, February 28, 2011

As "Offshoring" Loses Popularity and "Onshoring" Trends, Am I Crazy to Propose "Urbansourcing"?

It seems corporations have started to recognize over the past decade that outsourcing American jobs to foreign labor pools is not the money-saving no-brainer it originally seemed to be.

A few years back, Stephanie Overby at went to great detail to show how businesses, in their rush to save money, probably overlooked or didn’t anticipate many “hidden costs” of outsourcing (aka "offshoring").

Specifically, she details the costs and challenges that pop up when working with colleagues half a world away. For instance, there are hassles related to managing foreign workers; never-ending travel expenses in all directions; the costs of transitioning technology, architecture, and knowledge while operations continue at home; the emotional and financial costs of layoffs and retention bonuses; the time it takes to adjust to different cultures (laws, business practices, ethics, and communication challenges); delays and problems that need to be addressed from many time-zones away; new quality assurance and testing needs… on and on. In the end, not many companies succeeded in saving gobs of money, and many have refocused on the home front in their ongoing search for new ways to save on labor costs.

This all reminded me of a question I've had from time to time while working on this Mapping For Justice project; a question that I’ve posed before to different community leaders, mentoring leaders… friends and family who dabble with economics… and even complete strangers on a couple occasions:

Why couldn’t some corporate mastermind find a way to cut labor costs by grooming “cheap” labor available right down the street, right here in our city?

Last I looked there were a lot of people who could probably use a minimum-wage gig, and if the “hidden costs” of offshoring the labor make it somewhat of a wash, are companies currently looking to develop our students right here in our backyard, to take on some menial jobs like customer service? I know as a Chicagoan, I’d rather talk with someone who knew my city, my culture, and the nuances of my problems, while feeling good that companies were putting money into the pockets of local consumers, which in turn helps our struggling local economy instead of, say, India’s.

Or Arkansas’s.

Now that companies are coming back to the United States to replenish their staffs, CNN reports that “some companies are starting to eye job-hungry areas of the country as prime candidates for the kind of outsourced work that once would have gone overseas.”

“Ruralsourcing” or “onshoring,” the story tells us, “recruits workers from minimum-wage jobs and gives them intensive training in IT specialties.” Mentoring in rural America!

If this is any indication, it seems companies aren't thinking solely about "menial" jobs when looking at places in the United States to develop workers from "minimum-wage" skill sets.

And really, why should they set their sights low? I have worked with some CPS high school students like Sean at Cabrini Connections tutor/mentor program’s Tech Club (a club where students from Chicago’s notorious Cabrini Green neighborhood meet each week to learn marketable tech skills), who are perfectly capable of rising to any challenge I have faced in the corporate sector.

Socially-responsible and forward-thinking companies would be foolish to look thousands of miles beyond the Seans living right down their road.

In 2005, Russ Finney wrote an article in which he observed that “companies must keep a talent base close to home to remain innovative. Educational institutions still need to meet the emerging requirements for skilled entry-level IT talent.”

He continued, “already companies are preparing to refill their downturn diminished entry labor pool with a new wave of IT recruits. These companies need to get the word out to ensure an adequate supply of graduates.”

Some companies aren't focusing their recruiting efforts on Ivy League schools either. Indeed, The Bill & Melinda Gates Foundation has been frequenting community and 4-year colleges because they want “to encourage more 20-somethings to get a post-high school degree or certificate before starting a family … The foundation's overall higher education goal is to double the number of low-income adults who get a degree or certificate beyond high school by age 26.”

Why is this important to Mr. and Mrs. Gates' philanthropy?

While the press releases and reports focus on social and charitable benefits, I can’t imagine that Microsoft hasn’t recognized the potential shared value that would come from increasing the number of students who move from every walk of life into college and onto career, and in turn increase the number of Seans who have a need for (and a way to pay for) new computers and occasional MS operating system upgrades.

In the end, of course, business has a choice in how they want to invest in their human resources. By no means, as an IT professional do I love the fact corporations have looked into solutions like outsourcing to save costs, and in turn crippling the purchasing power of and confidence of many qualified American workers, even as the cost of living in a city like Chicago shows no signs of slowing down.

The more I read and the more I think about it, though, I can’t help but believe there are creative solutions out there, rooted in simultaneously solving our economic, workforce development, and education crises, all while creating long-term shared value for some brilliant business mind.

Maybe I'm crazy to pitch “urbansourcing” and a support-system that includes a closer look at tutoring/mentoring?

Or maybe it's the next big trend.


Tutor Mentor Connections said...

I think one of our challenges is that when we say "tutoring/mentoring" this signals something less to corporate leaders than what it means to us at Cabrini Connections. Based on my observations of different web sites of tutor/mentor programs, the term "tutor/mentor" means different things to various non profits, too.

One of the goals we have at Cabrini Connections and the Tutor/Mentor Connection is to create a "learning organization". By this we mean that our students, volunteers, donors, staff and leaders are learning from information and experiences that others have built up over many years.

Through the T/MC we have been putting my 35 years of knowledge on the Internet. We've also been linking to web sites of more than 2000 other organizations, so we make available the collective knowledge of a universe of experts.

This information points to what corporations and foundations are doing, not just what tutor/mentor programs are doing. It also points to research about poverty, drop out rates, etc.

Thus, a learning organization would be one where a growing number of members were reading, reflecting, sharing and using this information to innovate solutions to problems, new products and services and more efficient ways to help kids through school and into careers.

Over time this could lead to a convergence of thinking and new actions that help kids from inner city neighborhoods move to jobs and careers.

In this Role Of Leaders PDF we show strategies companies might adopt to build learning teams that use this information to improve their future workforce, and their current workforce.

From this engagement of employees as learners who learn from their service, as well as from a wide range of information shared on the T/MC library, corporate leaders can build an understanding of the "places" where tutors/mentors connect with kids as the key part of a comprehensive, non-school strategy intended provide learning and enrichment that may not be offered in the school day, and an extra level of adults committed to helping youth who are in first grade or middle school today be corporate contributors when they are in their 20s and beyond.

When this happens the maps we create will be a valuable tool that begins to show a growing number of corporate sponsored learning centers that engage youth and employee volunteers in life-long learning and career development activities.

Anonymous said...

The only problem I have with that is urban areas like Chicago, Detroit and Cleveland have worked hard to price themselves out of the market. The tax burdens they impose are incredible. Not only does the worker pay higher taxes (I worked in Cook County for a couple of years), but don't forget how the tax system really works: THE EMPLOYER MATCHES THE EMPLOYEES TAXES!!!!. Each dollar the cities take from a worker's paycheck is two dollars the company could have paid them. Sure, different cities do things to temporarily cut companies a break, but the employees still get the shaft.

If you want to see Sean and others have a chance (and I do), you need to get the cities to cut taxes. It's that simple. What happens when you raise taxes? The money goes elsewhere. Lower taxes and it comes pouring in. JFK got it. Too bad it is out of fashion to think long term.