Looking back on 2004, one of the most interesting and controversial trends we've seen has been the growth of companies' use of "outsourcing" to maximize shareholder profits and keep themselves competitive in the international marketplace. All year long, hardly a month has gone by without Reuters (NASDAQ:RTRSY) announcing a fresh shifting of jobs from the U.S. or U.K. to India. GE (NYSE:GE) made a bundle of cash from its own interpretation of the trend, moving low-value-added work to a Bangalore-based subsidiary, saving on costs there at first, and then finally making a killing by selling off the venture. It worked so well for them that, back in April, IBM (NYSE:IBM) decided to join the fun, buying itself an Indian subsidiary that was already working with several U.S. companies, including Motley Fool Stock Advisor pick Amazon.com (NASDAQ:AMZN).
But as popular as these moves have been with corporate management, and as necessary as they are for any business that wants to remain competitive against business rivals who are already outsourcing, the trend has not exactly received universal acclaim from the general public. Workers who feel the trend puts their jobs at risk decry the practice as corporate profiteering. And customers of businesses that set up customer "service" shops in countries where the English language is, well, something of a foreign concept have also made their displeasure felt. Another Stock Advisor recommendation, Dell (NASDAQ:DELL), has slowed its own rush to Bangalore in response to corporate clients' complaints about the quality of service they've been receiving from the subcontinent.
These companies clearly have a public relations problem. But, at the same time, they face an undeniable business need to cut costs if they're to compete against foreign companies who outsource. Yesterday, CNET ran a story on how some companies are experimenting with a novel solution to the problem, one that can cut costs while keeping American jobs at home. Literally.
CNET termed the latest trend "homeshoring," but what it really boils down to is "telecommuting." It's basically an elegant solution and a win-win proposition for all parties involved. When a company hires an employee to work from home, the company saves the cost of renting office space. What's more, telecommuting is a highly prized "job benefit" that can increase employees' job satisfaction and reduce employee turnover (and related costs). Finally, it makes little difference whether an employee taking reservations for a JetBlue Airways (NASDAQ:JBLU) flight out of JFK lives in New York City or Kansas City. And hiring workers to do a job in a low-cost U.S. state allows JetBlue to save on salaries without shipping jobs to Bangalore.
For the employee's part, telecommuting offers more job flexibility than he'd have in an office. It lowers the cost of buying workplace attire, as no one's around to see whether he's answering phones in his pajamas -- and even better, no one cares, as long as the work gets done. And let's not forget the extra hours that working from home adds to one's free time every day, hours that don't need to be spent commuting on subways and highways, to and from an office.
Throw in the fringe benefit for society at large, in getting all those workers off the streets, getting their auto emissions out of the air, and keeping the gasoline they'd have been using from tipping the U.S. trade account deficit the wrong way, and this looks like a solution that just can't be beat.
Fearless of the flames, Foolish writers dauntlessly carry on the outsourcing debate in the following articles:
- GE to Sell "Outhouse"
- Weighing Outsourcing's Impact
- Energy Crisis Spurs Outsourcing
- Outsourcing to the Heartland
- Thoughts on Offshoring and Outsourcing
Amazon.com, Dell, and JetBlue Airways are all leaders in their respective industries -- in no small part because of their savvy use of workplace trends such as outsourcing to reduce costs. And that's just one of the reasons they were all picked to become recommendations of the Motley Fool Stock Advisor . Want to know the others? Subscribe today without risk for six months.
Fool contributor Rich Smith has no position in any of the companies mentioned in this article.
