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From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.
Tired: outsourcing manufacturing. Wired: outsourcing corporate roles.
According to the Wall Street Journal, employers are increasingly finding cost-savings by hiring remote workers from other countries for roles in payroll, finance, and other jobs that had previously been confined to the company headquarters. Johnny Taylor, CEO of SHRM, told the newspaper that he’s saving 40% in labor costs by hiring tech workers in India.
“There’s very little reason to think, from a cost and benefit standpoint, there wouldn’t be a rather sizable opportunity to offshore [corporate] service jobs in a similar way to where we had offshoring of manufacturing,” Jason Schloetzer, associate professor at Georgetown University’s McDonough School of Business, told HR Brew.
“For those roles that don’t require a lot of collaboration, they’re remote-able and they’re offshore-able. It just seems to me to be inevitable,” he added.
ManpowerGroup VP Dave McGonegal previously explained to HR Brew that the nature of global hiring is changing. It’s not just about cutting costs, says McGonegal. Now it’s also a strategy that helps companies find the best talent.
Schloetzer says that this can also apply to high-demand roles in programming that command very large salaries in the US, but are not as high-paying in other countries, and in some cases, contract freelancers can get the job done for a much lower cost.
“If I can outsource [a] programming job…I can easily post that to a freelance website, and within 48 hours, I can have a range of talent for actually similar talent for a range of prices,” he explained. “Why wouldn’t I do this?”
Even as layoffs hit a variety of leading industries, savvy hiring managers working everywhere from Big Tech to small startups are seemingly rebuilding their workforces with talented employees from countries outside of the US.
Evidence is mounting that office jobs are being outsourced.
- The Wall Street Journal spoke with a programmer in Mexico City who doubled her salary with a job from IBM, a McKinsey partner in India who has noticed “Western firms” hiring more accountants and risk analysts, and Stanford economist Nicholas Bloom, who said that around 10%–20% of US service support jobs including HR and payroll could move overseas in the next decade.
- Also from WSJ: A firm in Austin, Texas, outsourced 90 roles across engineering, product design, project management to Mexico in the last year, reaching 20% employee presence outside the US, and expects that figure to grow.
Companies are motivated to look outside the US because of the increasingly restrictive and messy immigration process. Today, a candidate for an H-1B visa may be better off working remotely from their home country. The candidate may prefer to stay home, and if the employer benefits from not having to deal with immigration, desk space, benefits, and renewing visas, all while paying a lower wage for the same work, that’s a win-win.—AK