Outsourcing Update: Limits to What India Can Offer

Here is a story you will want to read.

Last year, after reading about Indian call centers in a magazine, Web.com CEO Will Pemble decided to "offshore" his Internet hosting company's customer service. This November, plagued by cultural misunderstandings and lost customers, Pemble brought all of Web.com's calls back from India to Brookfield, Conn. In the end, Pemble concluded, it was costing his company more to send work to India than to do it in one of the highest-cost states of the Union. Dell made a similar—if much more widely publicized—decision in November, routing calls from some high-end business customers back to Texas from its Indian call center in Bangalore.

None of this means that the great migration of service jobs to India and other low-cost overseas locations (see Where Your Job Is Going) is about to come to a halt. It is an indication, though, that there are limits to offshoring. The most obvious have to do with politics and public opinion: Corporations are having to tread more gingerly on the outsourcing front for fear of backlash from elected officials and customers. If the U.S. economy keeps strengthening, that backlash should fizzle. But CEOs are being forced to realize that while their shareholders may think it's swell that customer calls can be routed seamlessly to people in India making $2,000 a year, many customers are less pleased.

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