Onshore or Offshore? – Michael Dennis, CBF

Onshore or Offshore?

A friend of mine is an experienced credit analyst.  He lost his job recently as a result of outsourcing.  He learned that his employer initially hired four people in China to do his job and asked me how this could be cost-effective.  I suggested the following:  Assume that your salary and benefits total $50,000 a year.  If your four replacements earn $12,500 a year or less and receive no benefits, your employer saved money by outsourcing your job.

While my friend wondered why he lost his job, I thought about how to prevent this from happening to others, and came to these conclusions:

  1. Nothing will prevent companies from exporting credit jobs meaning that nothing I suggest will guarantee your job will not be outsourced
  2. Many companies in America have been successful in outsourcing various credit related functions
  3. Corporations have an obligation to reduce costs when it is practical to do so.  Therefore, it is essential that your work is done effectively and efficiently, and that you find ways to do your work faster and better
  4. One clear advantage you have over outsourcing is your ability to communicate easily, directly and quickly with your customers, with your sales department and senior management.  Make sure you are doing exactly that

Knowing why companies decide to outsource is the first step in helping safeguard your job. The main reason companies outsource is to control costs by saving on salary and benefits. Performing your job in the most effective manner and communicating this effectiveness to management is one way to make them aware that potential cost savings associated with offshoring may not be attainable or ever preferable to the status quo.

Michael Dennis, MBA, CBF, LCM

Michael Dennis’ Covering Credit Commentary. Michael’s website is  www.coveringcredit.com

The opinions presented are those of the author.  The opinions and recommendations do not necessarily reflect the views of CMA, or their Officers and Directors.  Readers are encouraged to evaluate any suggestions or recommendations made, and accept and adopt only those concepts that make sense to them.

4 Replies to “Onshore or Offshore? – Michael Dennis, CBF”

  1. Your best bet when faced with the possibility of being outsourced is to make your presence with the company “value-added”, with something no-one else is likely to bring to the table. Excellent customer service skills, being highly responsive to the needs of both Sales and the customer, extensive familiarity with the business and/or industry, or an unusual and desirable set of skills makes it very hard for an employer to replace you with any number of less expensive alternatives

    As an example, my experience in commercial bankruptcy, both working for a bankrupt firm and being on an unsecured creditors committee, and lobbying Congress for bankruptcy reform, gives me a literally unique advantage over most candidates, where such a background is needed. If a job seeker has a similarly unusual or noteworthy background, they should try to figure out how to best use it to add value to the company. They will be much more interested in keeping that employee.

    It doesn’t guarantee you’ll keep your job if you do this, but if layoffs come around, that background may move you further down the list.

  2. I agree with Scott that you have to add value. You can have special training or experience or you can utilize the sizable advantage you have being at the physical location. A credit specialist has the means and certainly should have the desire to enhance his performance above the outsourced employee. A domestic credit manager is in contact with sales, with operations, with the customer as well as management. They know the culture of the industry and the country. They can fit pieces together that the outsourced employee cannot. They must take advantage of these information sources so their decisions are more accurate and insightful.

    To a degree, I think that some in management believe credit decisions can be based on purely black and white parameters. They do not differenciate between accounts receivable/payable that are more number crunching/matching than judgements required of a credit manager, which can obviously be more informed when they are nearer to the action.

  3. I agree with everything in the blog and in the responses. I would only add that individuals are sometimes reluctant to toot their own horns but that it is important that management knows the contributions you make to the company.

  4. Everyone is replacable in a organization including executive management!
    if you are outsourced go fact-finding & find executives in other countries that can provide better direction & leadership to the board & push for real leadership change.
    Any monkey can outsource to a 3rd world country & save money!
    Also, agree with all the above statements!
    Good luck!!

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