U.S. Congressman Makes Desperate Effort to Penalize Offshoring of Call Centers

SOURCE: AP
In an effort to slow the exodus of U.S. telephone work to overseas services, Sen. Charles Schumer is introducing legislation that would impose an excise tax on companies that transfer calls with American area codes to foreign call centers.

The measure would also require telling U.S. customers that the call is being transferred and to which country.

Companies use call centers to give customers technical product support, answer billing questions or provide other information. They often use several operators.

The fee would be 25 cents for calls transferred to foreign countries. There would be no fee for a domestic call center. Companies would have to report quarterly their total customer service calls received and the number relayed overseas.

“If we want to put a stop to the outsourcing of American jobs, then we need to provide incentives for American companies to keep American jobs here,” Schumer said last week. The New York Democrat said the excise tax would “also provide a reason for companies that have already outsourced jobs to bring them back.”

In a survey of American economists in 2006, Robert Whaples found nearly 90 percent agreed the U.S. should eliminate remaining protectionist tariffs and trade barriers, like the new one Schumer is proposing, that there are lower costs and a net gain from free trade. Most also agreed the U.S. should not restrict American employers from outsourcing work to foreign countries.

For American consumers, Schumer said his measure would also guarantee they know where their personal information is being kept, whether that’s a bank account number, credit background or medical history. He said come countries do not have to adhere to consumer protection laws similar to those in the United States.

The most popular countries for outsourcing of U.S. call centers are India, Indonesia, Ireland, Canada, the Philippines, and South Africa, most with an ample supply of English-speaking, low-wage workers. American companies use them to cut costs.

From 2001 to 2003, the United States lost 250,000 call center jobs to India and the Philippines, according to Technology Marketing Corp., a Norwalk, Conn.-based company specializing in call centers and telemarketing.

However, a 2007 Cornell study found that most call centers serving U.S. customers were operated in the United States. The report, with 40 researchers from 20 countries, examined center management and employment practices in Asia, Africa, South America, North America and Europe, covering almost 2,500 centers in 17 countries.

The study found most centers, except India, served domestic markets. Two-thirds were in-house for companies serving their own customers and had lower turnover rates than subcontractors. Also, turnover, ranging from 25 to 50 percent annually depending on the sector, steeply reduced productivity.