Despite President Donald Trump’s push to bring back American jobs, offshoring work to countries such as India is alive and well – and in some Charlotte industries such as retail and banking, it’s a trend that’s increasing.
Moving work overseas has cost local jobs at employers such as Lowe’s in recent weeks, raising angst in the workforce at the Mooresville-based retailer. But experts and the companies themselves say it’s a way to cut costs, stay competitive and better meet customers’ needs.
Offshoring is a trend that has persisted for years, and it’s showing no sign of slowing, especially in industries under pressure to increase profits, said Brady Teague, a principal overseeing IT recruiting at the staffing firm TalentBridge in Charlotte.
“You can hire a programmer in Charlotte for $60,000 to 80,000 a year, or you go to India and get the same quality of service for $60 a month,” Teague said. “Where are you going to put the person?”
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Here’s a look at recent moves:
▪ Earlier this month, Lowe’s laid off about 125 tech workers, mostly at its Mooresville corporate office. The company disclosed that it was moving many of the IT functions to its office in Bangalore, dubbed “The Silicon Valley of India.” The move followed an effort in October, when Lowe’s cut 96 corporate IT positions in a “streamlining IT process.”
▪ Last month, Wells Fargo’s chief financial officer announced the San Francisco-based bank, which has a large presence in Charlotte, is looking at moving some work offshore.
The CFO, John Shrewsberry, said the plans are part of a centralization project at Wells, which is pushing to change its corporate structure following a sales scandal that erupted in September. Shrewsberry did not disclose how many jobs will be affected or where they will be sent. A Wells Fargo spokesman wouldn’t comment.
▪ Retailer Ralph Lauren earlier this spring cut 107 jobs in Kernersville, Greensboro and High Point. The company has not said whether the IT jobs were moved offshore, though it has said that some of the eliminated jobs were outsourced to a third-party vendor that has offices all over the world, including in India.
For other companies, such as Charlotte-based Bank of America, having offshore operations is not a new practice.
Bank of America has continued to operate a roughly 13-year-old group known as BA Continuum India whose functions, according to the bank’s website, include supporting business process and IT. So far this month, the bank has advertised for more than 140 jobs in cities like Mumbai, Hyderabad and Gurugram. Roles range from software engineer to human resources consultant.
Bank of America CEO Brian Moynihan, who took over in 2010, in recent years has noted moves to bring overseas jobs back to the United States. In December, he told the Observer the bank had shifted 5,000 positions from outside the U.S. and planned to continue the efforts.
“We have a global business with employees around the world,” Bank of America spokesman Dan Frahm said. “We are not moving positions from the U.S. to accomplish that. In fact, we have repatriated several thousand positions to the U.S.”
More roles going overseas
As more tech jobs in the U.S. become “commoditized,” or more routine and transactional, corporations see the offshoring of those functions to cheaper markets as a way to reduce costs, said Teague, the TalentBridge principal.
He said demand for IT jobs in the U.S. is “off the charts,” but that it’s more specialized. Workers in all fields, he said, have to invest in their skill sets to stay competitive.
“The idea of putting your head down doing the same job every day for 20 years, that’s gone,” Teague said.
A 2016 analysis by Deloitte found that outsourcing is spreading beyond traditional IT jobs, saying “outsourcing is not only alive and well, but it is growing.” Areas beyond outsourcing include human resources and finance, Deloitte said.
Companies are moving work overseas in different ways. When Lowe’s, for example, moves IT work to its offices in Bangalore, the workers there are Lowe’s employees. In other cases, companies shift work done by their own employees to third-party vendors overseas that take over IT and other functions.
One example of that is the Observer’s parent company McClatchy, which outsourced some technology functions to India-based Wipro, resulting in the layoff of about 120 U.S. workers.
Lowe’s has dozens of job listings for its Bangalore office, which opened in 2014. Several former employees who reached out to the Observer say they were tasked with training their replacements, although Lowe’s has repeatedly denied that this takes place. Lowe’s says its India office accounts for far less than 1 percent of its U.S. workforce of 246,000.
“Today, we continue to invest in American jobs and are actively looking to hire more than 12,300 positions across the U.S., including 725 in North Carolina,” spokeswoman Colleen Penhall said.
Teague, who has been in recruiting for 20 years, said the tendency to offshore could be driven also in part by President Donald Trump’s expressed desire to dismantle the H-1B program, which some Charlotte firms use to temporarily fill developer and programmer roles with foreign workers brought to the U.S. on visas.
But Trump also has publicly criticized companies for moving jobs outside the U.S. or planning to do so.
“I think the unpredictability of where Trump throws the power of the bully pulpit is always going to be an issue, and companies are probably having to retool their public relations efforts and deal with the consequences,” said Michael Bitzer, a Catawba College political scientist.
Kenny Colbert, president of Charlotte-based human resources consulting firm The Employers Association, said U.S. companies are facing growing pressure to offshore jobs. A desire to cut costs is one factor, but the bigger driver is a jobs market that’s at about full employment, he said.
“I dare say that a lot of companies are taking a hard look at offshoring,” he said. “As long as there’s a 5 percent or less unemployment rate, I think you’re going to see this continuing.”