US Senate takes protectionist stance

Outsourcing? Not in our back yard

By IT-Analysis • Get more from this author

Posted in Business, 11th March 2004 11:55 GMT

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Opinion The US has taken another step to protect its jobs from the threat of outsourcing, writes Bloor Research analyst Bob McDowall.

Last week the US Senate approved a motion preventing companies from carrying out Government work outside the USA, unless it is in the interest of national security.

None of this is surprising in a US election year when the issue of jobs is more important than it is has been since the 1930s depression. Further measures are promised, including the requirement for call centre employees to disclose their physical location at the commencement of each phone call.

Equally importantly, as part of their SEC filings, some major US companies are reporting that the backlash against outsourcing may have an impact on their future profits. Companies as diverse as GEC and Gillette are warning that they would be unable to proceed with overseas outsourcing agreements involving back office, call centre and manufacturing activities.

They claim such steps would damage their reputation in the USA as well as rendering them ineligible for Government work or contracts from corporations concerned about the anti-outsourcing mood. While such filings are undoubtedly cautious in nature, the mood continues to harden against outsourcing as the jobs market remains stagnant - despite fiscal measures taken by the Bush administration.

Maintaining a domestic market for jobs is important. If corporations and Governments are unable to demonstrate that other jobs are created when jobs are outsourced there will certainly be a political backlash, to which all but the most obtuse Government administration will respond. Ultimate this ferment an increasingly ultra-nationalistic and protectionist environment, even in the USA.