A Kinder, Gentler View of Outsourcing

Forget the conventional notion of job outsourcing to emerging markets as just exploiting the world’s most economically vulnerable – a new study from a major labor group finds that many of these jobs aren’t bad after all.

The International Labor Organization (ILO) says that service-oriented jobs are of “reasonably good quality by local standards.”

These are jobs like call centers, data-processing shops, financial back-office operations and the like. Worldwide, it’s a $90 billion market and it’s growing fast.

Geneva-based ILO based its assessment on in-depth studies in South America, India and the Philippines. It found that the typical worker is young, well-educated and female.
Indian workers in these service areas make nearly double the average local wage, and in the Philippines, the pay is about 50 percent higher.

ILO did have some criticisms – many of the jobs require night duty to accommodate employers on the other side of the world, workloads can be onerous and stressful, and as a result turnover is high.

But “the bottom line is that this is an industry with the potential to offer a model for a future of good quality service sector jobs and high-performing companies in the global economy,” ILO writes.

India remains the leading destination for outsourced jobs from North America and Europe, but the consulting firm KPMG says China is now getting the biggest chunk of the business from Asia and the Pacific Rim.

A survey of companies across Asia found that more than 40 percent had a service center in China and 40 percent had contracts with a Chinese third-party service provider. Singapore and India ranked second and third.

KPMG says China’s outsourcing market grew from $7.5 billion in 2007 to $20 billion last year, and that it will more than double by 2014.

About Frank Holmes 265 Articles

Affiliation: U.S. Global Investors

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure.

The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories.

Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.”

He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies.

Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications.

Visit: U.S. Global Investors

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