outsourcing

Outsourcing Drive Thru Jobs

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Photo: LWY

Here’s something may be a shock to you: when you pull up to a fast food, you might be talking someone in a call center thousands of miles away! It turns out numerous fast food chains have been experimenting with this over the last five years. If you are at a Wendy’s you might be talking to someone in Delaware, Jack in the Box to the Phillippines or Texas, or McDonald’s to India.

These companies claim the benefits are shorter wait times and less mistakes due to a further division of labor where each person can focus on one menial task. Well, maybe they don’t say it quite like that. It is hard to tell the extent to which this system is currently deployed in the United States – after a flurry of news stories about this experiment 4-5 years ago, the fast food companies have not informed the public how it has gone. My suspicion is that they strategically expanded the program nationwide to select franchises, specifically ones with multiple drive thru lines or notoriously hard to understand operators.

Is Outsourcing Jobs Overseas Really a Problem? Depends Who You Ask

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Photo: Till Krech

Thousands, if not millions of Americans have lost their job overseas. Due to the recently flattened world, companies are now able to find workers in remote countries eager to work longer hours for significantly less pay.

Why do companies outsource jobs?
It’s simple – money. Companies have the goal of making money, not employing the most Americans as possible. Sometimes these conflict. If the business can make more money by laying off unnecessary workers or outsourcing jobs overseas, we have seen time and time again that they will.

Is this wrong?
No, it is not wrong. The company is simply responding to incentives – specifically, the management of the company is responding to incentives. The more money the company makes, the more money the executives make. These executives are often extremely removed from the lowest paid individuals who see their jobs outsourced – the management sees the pros but not the cons.

What is the result?
A report by McKinsey showed for every $1 of labor outsourced overseas, the United States receives $1.12 back (in addition to 33 cents retained by the country that does the work). So by outsourcing we are able to boost our production 12% without actually working!

Overall this sounds like a win for the United States, but in reality maybe it’s not – those simple numbers do not tell the whole story. Instead of $1 being dispersed amongst the poorest, $1.12 goes into the pockets of the richest! Outsourcing is a very efficient way of redistributing wealth – the poor in the US lose $1, the poor outside the US gain 33 cents, while the rich in the US gain $1.12!

Why outsourcing will not be stopped
Corporate executives are the ones who make the decisions for the business. They are also the ones who benefit the most from outsourcing jobs. If we expect outsourcing to stop, we have to change the incentives so that the negativities of outsourcing are felt.

Of course, the people who have the ability to change economic incentives are politicians – politicians that are buddy-buddy with the corporate big wigs and the associated lobbyists. Thus, until outsourcing becomes a compelling issue, nothing will change.