When Thomas Magargal called his credit card company a few months ago and wound up talking to someone in India, the 55-year-old retired firefighter from Spotsylvania County, Va., says he was at a loss to understand the person on the other end of the phone. He demanded to speak to an American operator and eventually got his business done. But when Magargal recently heard another of his credit card companies had joined the trend of sending call center jobs to India’s cheap labor market, too, it was the last straw. Magargal canceled his Capital One credit card and began agitating on behalf of its laid-off Richmond, Va., workforce.
“CAPITAL ONE makes millions of dollars here,” he says. “What is the logic in giving work to foreign countries when the majority of callers are in the United States?”
The job losses in Virginia are part of a national trend, according to Paul Saffo, who studies the impact of trends in information technology for the Institute for the Future, a think tank based in Silicon Valley. Saffo says in the past two and a half years, U.S. companies have been outsourcing their call center services to countries where labor is cheap to get the returns that will satisfy their investors.
In India, where the wages are about $200 a month, call centers now employ more than 140,000 people. And about 60 percent of this $8.4 billion industry is derived from U.S. corporations. By some estimates, by 2006, call centers will provide more than a million jobs in India.
TRIMMING COSTS
Hamilton Holloway, a spokesman for Capital One, says the company does outsource some of its operations to India but disputed the idea that jobs were eliminated as a result. Holloway says Capital One is only shifting the Spotsylvania operations to its main office in Richmond, Va., a 45-minute commute.
InsertArt(1956527)The company’s 650-odd workers in Spotsylvania have been asked to decide by mid-August whether they want to switch to Richmond and get $5,000 as transition allowance or leave the company and get $3,000.
But employees say that as recently as a year ago, more than 1,200 employees worked at the Capital One center that is now closing down.
One worker, who would speak to MSNBC.com only on condition of anonymity, says the company has been on a campaign to force employees to leave voluntarily, in part by setting new performance targets that are unrealistic.
Holloway, the Capital One spokesman, says workforce numbers did go down through attrition but denies any deliberate effort to force people out.
The company decided it needed to “reduce operating expenses and consolidate the company’s resources after evaluating our resources based on the company’s business,” Holloway says.
HARD TO FIND JOBS
The loss of so many jobs in a predominantly rural area has many people angry. The local newspapers are filled with unhappy letters to the editor. Many people wonder what they will do to make ends meet.
Experts classify the credit card jobs like the ones at Capital One as medium-skilled. Simple transactions and telemarketing are low-end, while sophisticated IT help desks, data processing and legal consulting are the high skilled ones.
Rosemary Batt, associate professor at Cornell University’s School of Industrial and Labor Relations, says such jobs employ 3 percent to 4 percent of the U.S. population, with salaries ranging from $20,000 a year to $60,000, depending on skill level.
She also notes that technology has made these jobs footloose and low-paying because they are difficult to unionize.
While the Communications Workers of America has about 100,000 members working in call centers run by big companies, the vast majority are non-union jobs, which pay about 15 percent less.
A GLOBAL PULL
Steffanie Wilk, assistant professor at the University of Pennsylvania’s Wharton School of Business, says these call centers, whether in the United States or abroad, tend to migrate to economically depressed areas with an educated population.
“Companies can close down a center at a flick of a switch and shift their computers to other places,” she says.
In the early years of the telecommunications industry, these call centers went to the South and to cities like Phoenix in the West and the Dakotas in the Midwest. Eventually they migrated to English-speaking foreign countries with well-educated workforces and lower wage costs — Ireland and Australia and now India — where some of the largest call center outsourcers are now located.
These jobs fall under different categories, and the exact figures on job losses in the United States are not available. Officials at the Department of Commerce said they did not have the job figures and are trying to analyze the impact of outsourcing of call centers. However, Bureau of Labor Statistics figures show that since January 2001, 35,000 jobs have been lost in telemarketing bureaus alone.
Chris Slevin, a spokesman for Global Trade Watch, a consumer advocacy group founded by activist Ralph Nader, says the loss of these jobs should really be looked at in terms of foreign trade.
“When most people think about trade, they think of tariffs and quotas on trade in goods,” he says. “Today’s trade agreements are increasingly focused more on the service industry, which includes the trade in actual people, workers and granting foreign companies new rights and privileges within the boundaries of other countries.”
There have been attempts to bring legislation to prevent outsourcing of these jobs. The New Jersey state Senate passed a bill in December 2002 seeking to restrict outsourcing of jobs in government contracts, but the state Assembly has so far not voted on it. A bill that requires people who handle calls to identify themselves and their location was introduced in the Assembly in May.
Saffo, the analyst from the Institute for the Future, says such legislation is out of step in a globalized economy, but he expects similar bills to come up even in Congress.
“Any knowledge work, including law clerks, software, secretarial work, is fair game in cyberspace,” he says.