Geography Reference
In-Depth Information
Internationally, this trend has taken the form of the offshore office. The primary
motivation for offshore relocation is low labor costs, although other considerations
include worker productivity, skills, turnover, and benefits. Offshore offices are
established not to serve foreign markets, but to generate cost savings for U.S. firms
by tapping Third World labor pools where wages are as low as one-fifth of those in
the U.S. Notably, many firms with offshore back offices are in industries facing
strong competitive pressures to enhance productivity, including insurance, pub-
lishing, and airlines. Offshore back office operations remained insignificant until
transoceanic fiber optics lines made possible locational flexibility on an interna-
tional scale. Such functions may be either subsidiaries of multinational firms or
they may operate under contract with U.S.-based businesses. Inputs, usually
documents or magnetic tapes, are sent by air to offshore processing facilities
(e.g., via Federal Express). After processing, generally a few days at most, the
results are returned via satellite or dedicated telephone or fiber optic line. Thus, the
capital investments in such operations are minimal and they possess great flexi-
bility,
maximizing
their
ability
to
choose
among
locations
based
on
slight
variations in cost or profitability.
Several New York-based life insurance companies have erected back office
facilities in Ireland, with the active encouragement of the Irish Development
Authority (McGahey et al.
1990
). Often situated near Shannon Airport, they move
documents in by Federal Express and the final product back via satellite or one of
the numerous fiber optic lines that connects New York and London. Likewise, the
Caribbean, particularly Anglophone countries such as Jamaica and Barbados, has
become a particularly important locus for American back offices. American Air-
lines paved the way in the Caribbean when it moved its data processing center
from Tulsa to Barbados in 1981; through its subsidiary Caribbean Data Services
(CDS), it expanded operations to Montego Bay, Jamaica and Santo Domingo,
Dominican Republic in 1987. Mullings (
1999
) explored how women employed in
Jamaican back offices deployed a variety of tactics to cope and resist simulta-
neously the low wages, oppressive working conditions, and lack of occupational
mobility they offer. In Asia, Manila has emerged as a back office center for British
firms, with wages 20 % of those in the U.K.
Data entry functions have been supplemented by the diffusion of other types of
jobs to the global periphery. The animation of cartoons such as the Simpsons, for
example, has migrated to India. American high school kids can email Indian tutors
for help with their homework (Lohr
2007
). Some U.S. video game players, seeking
to skip the easy and boring early stages of online role-playing video games,
outsource this stage to hired, often impoverished, Chinese players known as 'gold
farmers', allowing them to advance rapidly to the later, more challenging, stages
(Barboza
2005
). More serious is the out-migration of higher skilled jobs. Radio-
logical skills such as reading X-rays and PET scans can be done by Indians at a
fraction of the cost of American physicians, as firms such as Cyberteleradiology
attest. So too can tax preparation, which Indian accountants handle cheaply and
competently. Increasingly chip design and software debugging have moved to
India as well, as have editing and proof reading functions. Such trends indicate that
