Dell Plays the Patriot Card

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Around this time last year, I wrote a short column describing an emerging trend in outsourcing -- namely, a counter-trend to the popular (and simultaneously unpopular) practice of sending work out to contractors abroad.

Among the companies I discussed in that piece -- Motley Fool Inside Value pick Accenture (NYSE: ACN), Nike (NYSE: NKE), General Electric (NYSE: GE), and the like -- that have become famous (or infamous) for their use of offshore outsourcing, one name stood out from all the rest: Motley Fool Stock Advisor recommendation Dell (Nasdaq: DELL). Although those other companies derive cost savings from doing substantial work overseas, you're unlikely to have much occasion to call a Nike shoe factory in the suburbs of Manila, or to ask an Accenture or GE techie in Mumbai to write you some code. But if your computer is a Dell -- and there's about a one-in-five chance that it is -- you'll probably be on the phone eventually with a gentleman in Bangalore who's trying to explain to you why your automatic coffee cup holder isn't working anymore (or why it's not an automatic coffee cup holder). Whether you can't understand the customer-service rep or just don't like offshoring in general, you might find the discussion irksome.

Perhaps not for long, though. The company whose name is nearly synonymous with Indian tech support now intends to double the size of its customer service center in . Oklahoma City. It may be a coincidence, or it may not, that Dell made this announcement on the first business day after July 4.

In explaining its prairie home expansion, Dell pointed to "the quality of the area workforce." But this Fool suspects that the low cost of living in Oklahoma -- and the competitive cost of labor -- had something to do with the decision. According to the U.S. Census Bureau, Oklahoma's median household income lies 15% below the U.S. average.

Given the options of again bucking the anti-offshoring tide and claiming a 20%-25% savings on operations abroad, or taking a domestic 15% savings plus a bonus of goodwill from its U.S. customers in general and its host city in particular, Dell made the obvious choice.

Dell's expansion is one more piece of evidence in support of the DiamondCluster International (Nasdaq: DTPI) survey results on offshoring, which we examined last month. And keep a close eye out for more news along these lines. If the anti-trend toward offshoring continues gaining strength, it will have implications not just for U.S. workers and their employers but also for companies like Infosys (Nasdaq: INFY) and Wipro (NYSE: WIT), erstwhile beneficiaries of offshoring.

Fearless of the flames, Foolish writers dauntlessly carry on the outsourcing debate in the following articles:

• Is the Offshore Sun Setting?
• Outsourcing Dons Pajamas
• GE to Sell "Outhouse"
• Outsourcing to the Heartland
• Thoughts on Offshoring and Outsourcing

Fool contributor Rich Smith owns no shares in any company mentioned in this article.