November 16th, 2008
Can flagging industries be replaced by BPO services?
I had a distressing conversation regarding the future of the US automotive industry today with a guy from Detroit. Their main concern these days is the widely-speculated acquisition of Chrysler by General Motors.
The expectation is that if GM buys Chrysler, it will only retain the Jeep and Minivan businesses, close all the other Chrysler plants, and lay off 75% of Chrysler’s engineering staff, for a direct loss of 90,000 jobs - not including ~6x more jobs at suppliers - throughout North America. If no merger happens, one or more of the “Big 3″ will go bankrupt, resulting in a total loss of all jobs - more than 120,000. One of his neighbors is putting his house on the market tomorrow, anticipating losing his job soon. Several other friends and neighbors expect to lose their jobs by the end of the year.
This reminds me of the situation in the UK in the 1980’s when the majority of the British coal-mines had to be shutdown due to unprofitability. Entire cities were left with mass-unemployment, leaving the British government with little choice but to invest in attracting new business and investment to cities. One of the most notable success stories has been the development of 650,000 call center and BPO jobs across many of these cities where old industries were dissolved. Many of these jobs are also in the financial services sector, supporting such businesses as MBNA and Sun Life.
President-Elect Obama is facing a massive task to redeploy workers in consolidating and declining industries, such as automotive manufacturing. As we discussed so animatedly recently, could creating BPO jobs we an answer? Could the USA become a competitive BPO location?
Phil Fersht is an acknowledged industry analyst and advisor across Outsourcing and IT services worldwide, having worked extensively in Europe, North America and Asia as an advisor in Business Process Outsourcing (Finance/Accounting, Human Resources and Procurement), IT Outsourcing, Shared Services and Offshore Services. Over the last 14 years, Phil has served on over 70 major outsourcing and offshoring engagements. He currently serves as Research Director for analyst AMR Research for Global Business & Outsourcing Services. See his full profile and disclosure of his industry affiliations.
