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Outsourcing IT? Why Not The Whole Company!

Forrest Christian Computers/IT 3 Comments

There have been a lot of articles lately about the dangers of outsourcing. BusinessWeek has one about the company that went under partly because all their business knowledge went overseas. There’s some stuff on CNN’s site, too, which is pretty interesting.

Big Insurance Group (BIG) has been offshoring IT for some time now. I think that they will end up sending the entire operation to India in a couple of years.

And when you think about it, why not?

In fact, why not send the entire insurance company overseas, having only those parts that are required to be here by federal and state law, and salespeople, of course. Your insurance adjusters would have to be local but the actuaries could be in India. As could your programmers and IT support staff. In fact, it makes very good sense to have one’s IT staff in India if that’s where all the people are.

Let’s think about all the different roles and whether they can be offshored:

  • Agents / salespeople: Can’t be offshored. But most of these are independent contractors who own franchises and not employees of the company. I believe that almost all State Farm and Allstate agents are contractors.
  • Telephone call centers: Offshored. There’s no reason why a telephone call center needs to be in the United States. All that they do is enter in data and read from scripts. I know that when I lived in Texas, I couldn’t understand people from the call centers in Chicago or NYC, and I’m sure that they couldn’t understand us. Until you can have a computer do all this (and that’s coming quicker than you think), having them all in India makes great financial sense.
  • Actuaries: Unless someone can think of a legal or regulatory reason not to, I say send these offshore. The Indians can do this work better and cheaper than Americans.
  • HR:
  • Although you will still need an HR representative at certain large, local facilities, most of the HR department can be offshored. We do most of our HR through web interfaces anyways.

  • Legal: Although it would seem like a strange thing to send overseas, can you think of a reason not to? Have India train lawyers in US law. Since they will not be practicing law in the United States, it won’t matter that they have not passed the bar here. Keep a barebones legal staff of very junior, bottom of the class attorneys in the States to sign documents, like you would keep a PE on staff at an engineering firm.
  • IT Operations (sysadmins, dbas, etc.): This is already going over so let’s just continue it.
  • IT Programmers: There’s no reason not to put the programmers in with the actuaries. Let’s keep them together. Plus, the Indian programmers are more consistent and thorough than American programmers.
  • Executive Management: Another piece ripe for offshoring. Although you may have legal requirements for keeping someone in America, this can be a figurehead with no real power. The executive staff should all be outsourced to India where they can be gotten cheaper and, let’s be honest, not as lazy as Americans. It’s about time that we recognized just how lazy our executives are and outsource their asses.
  • Well, that just about takes care of everyone in the company. The company itself would reside in India with only the slightest support staff to facilitate information transfer to the sales people and the markets here. If you have a mutual insurance company, you don’t even need to placate the markets which means you can move everything but the salespeople. And if you do away with agents and use independent assessors and adjustors, you don’t even need local salespeople. You can do sales entirely over the net with a chat/call center in India taking questions.

    There. I’ve just shown how there is no need to have an insurance business in America. Send it all to India. In fact, when you think of it, there’s no good reason to have almost any company stay in America. Newspapers can be outsourced: pasteup and layout can be done abroad, printed locally; reporters are only necessary for local news; sales and advertising can be substantially handled by offshorers; secondary reporting like headline writing and obituaries can be moved now.

    See! There’s no reason not to move all our jobs over to India right now. Except that now that India has all the jobs, the staff are getting uppity and demanding a “living wage”. Let’s move the work to Vietnam where they aren’t so picky.

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Comments 3

  1. Post

    If I were looking for information for some sort of legal action (which I take it you are), I would trawl the USENET and Yahoo groups. I’d pay special attention to the Yahoo! groups that are about stocks, and then move on to the others stock groups.

    There was recently a spat of attention to insurance companies and outsourcing, but I believe the company in question was that other, massive Illiois insurance company. I do not recall Allstate being mentioned specifcally.

    The best way to get this information is to have an Allstate customer call and ask the person who picks up the line. I think (but do not know for sure) that the call centers do have to make you aware of what jurisdiction they are under. This is subtly different than the country they are in but achieves your purpose. I’m taking for granted that a call center in American Guam or Puerto Rico wouldn’t be interesting.

  2. Off-shoring is one of the unexpected results of taking us off the gold standard. At least, that is a level of understanding I am coming too. Once there is no gold standard and we move to a basically unregulated federal reserve system, the amount of money in circulation grows continuously. Money that has no intrinsic value other than in our minds. Anyway, this system inherently creates inflation. Consistent inflation here results in everything costing more here results in tough business decisions results in off-shoring. Fairly intuitive, so I’m starting to buy in. What the minds behind no-gold standard & federal reserve system missed was the eventual death of the nation state and the emergence of regional economic hegemonies (eu & nafta are perfect examples). In the immortal words of Roland, “the world has moved on.”

    With some stuff I’ve read elsewhere, that’s where I am today. I an not smart enough however, to say where we’re moving to.

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