Sometimes, America's corporate leaders seem to enjoy making things hard on themselves. Maybe they feel that is the only way to justify their enormous paychecks. On the other hand, maybe they are all just dumb as doorstops.
Faced with a snarling bear market at the turn of the millennium, its revenues dropping steadily and its profits eroding, Corporate America scrambled for a cure-all solution that would cut costs and shore up its earning power. The solution: outsourcing.
Companies such as AT&T Wireless
Well, guess what? You don't have to go to Mumbai to save 25% on your customer service reps. You can do that in Little Rock, Ark. Actually, there are several states where the median household income is roughly 25% below the average for the U.S. And companies based in high-wage states can find even more dramatic savings. In theory, a company like Lockheed Martin
While few U.S. companies are packing up their corporate headquarters and hying off to the boonies, Dell and U.S. Bancorp
Moreover, by sending jobs to rural America, instead of urban India, companies can become pillars of the community. Often, they are the biggest employers in the towns where they set up shop. Between the goodwill they create and the (locally) high wages they pay, some companies are finding that employee retention is easier in small towns, and turnover expenses lower.
If this theory continues to play out, the "local outsourcing" trend could catch on. And investors in the companies that most quickly realize they don't need to go abroad to save money will be the ones to reap the benefits.
Fool contributor Rich Smith owns no shares in any company mentioned in this article.