US firms farming out office work to places like Barbados
National Demographics Ltd., a data marketing firm, maintains its executive suites in Denver - and most of its clerical staff in Barbados. Barbados?Skip to next paragraph
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Three times a week, boxes stuffed with multicolored questionnaires are loaded aboard jetliners in Denver and shipped to the sun-dappled Caribbean island. There, 75 local workers tap the data into computers. Then the information on magnetic tapes is flown back to Denver.
National Demographics is part of an increasingly common - and controversial - phenomenon: the ''offshore office.''
In a small way, this change parallels the manufacturing situation of the past two decades. During that time many United States companies have set up factories in low-wage, developing countries, particularly in Asia.
Now advances in telecommunications and computers make it possible to farm out office work - such as data entry and word processing - to remote corners of the globe.
As information becomes the raw material of the future, the number of companies enlisting overseas employees to handle routine clerical tasks could jump dramatically.
In fact, some advocates see offshore offices not only as tools to help companies trim mushrooming office costs but as ways to bridge the technology gap between developed and developing countries.
But with high unemployment in the United States, any shifting of clerical jobs overseas is bound to stir controversy. Already a number of unions and office worker advocacy groups are watching closely.
''We are at the beginning of what could be a major trend,'' says Harley Shaiken, a technology and labor analyst at the Massachusetts Institute of Technology. ''Microelectronics is severing the geographic link between where the work is done and where the product ends up.''
In fact, farming out clerical services to low-wage laborers overseas is not a novelty. For more than a decade, magazine publishers, for instance, have shipped subscription lists to overseas plants for keypunching and eventual computer storage.
An estimated 40 companies in the US, Australia, and Japan now use offshore offices. Most are in Ireland, India, Taiwan, South Korea, the Philippines, and Barbados, and other Caribbean countries. Pacific Data Services, a Dallas-based company, has set up a 200-worker plant in China. National Demographics is expected to open a new data entry office soon, probably somewhere in the Caribbean.
Most of these operations still rely on traditional ways to transmit the information: Batches of data are airfreighted into a country, and magnetic tapes are flown back. Now, however, high-speed satellite technology is making it possible (and soon economical) to beam the information almost instantly from the remote work station to the home office.
Result: Industries from publishing to insurance to banking could shift to offshore offices their labor-intensive information-processing tasks, such as billing, claim-filing, and inventory-cataloging. American Airlines, for instance , is setting up a 200-employee ''clerical'' office in Barbados. It will bounce ticket and billing information back to the US by satellite.
Cheap labor, coupled with less expensive office space, is the raison d'etre for the offshore office. While data-entry workers earn from $5 to $15 an hour in the US, in some Caribbean or Asian countries they are paid $1.50 or less. American Airlines estimates that, even with transmission costs, it will save $3 million to $4 million a year with its remote facility.
There are problems, though. It can be hard to maintain control of an operation thousands of miles away. Language is a barrier in some places, which is why English-speaking countries of the Caribbean such as Barbados and Jamaica are popular with US firms.
Some say transmitting information via satellite or phone lines isn't economical yet. ''It is still too costly,'' says Norman Bodek, president of the Data Entry Management Association, an industry group. ''[But] as satellite costs come down and speed goes up, a whole new world is going to happen out there.''
The trend to offices overseas raises some sticky social questions. Most worrisome to many is the potential for displacing thousands of American office workers. Many clerical employees are already fretting about possible layoffs as a result of automation.
Thus far, unions have made few inroads in organizing US office help. But if they do step up office organizing efforts, as some claim they will, it could push more companies to launch overseas operations. ''If this trend is going on before workers are organized, what does this mean for the future?'' asks Janet Blood of 9 to 5, a national association of office workers. ''We are very concerned with the trend toward offshore offices.''
Some critics contend that offices in remote locations will lead to the practice of ''telescabbing'': If there is labor strife in one country, the work can simply be transmitted to another. Many unionists and office worker groups are concerned that the offshore offices could create a generation of ''electronic sweatshops.''
But company officials who run such operations argue that by use of offshore offices the companies often boost employment - both in the developing countries and in the US - through the resulting general business expansion.
Either way, sums up MIT's Mr. Shaiken, if the offshore office trend does become a boom - and some still doubt it will - it could become a ''contentious social issue in the future.''