Many companies fail to factor in hidden costs when going offshore and overlook the higher productivity, more stable workforce and quality talent found in the United States, said Gary Griffiths, a panelist for a recent global outsourcing forum hosted by the Association for Services Management International in Atlanta.

“Too many companies are making the wrong decision by going offshore for cost reasons only,” said Mr. Griffiths, president and CEO of Fremont, Calif.-based Everdream Corp. “If a company’s only motivation for going offshore is cost, it may be surprised.”

According to Mr. Griffiths, productivity at offshore operations can be half of that expected in the U.S. Also, labor turnover at offshore operations can exceed 70 percent, he said.

In addition, costly vendor training may not fully offset cultural habits that conflict with a company’s established policies and procedures, Mr. Griffiths said.

Everdream has moved all of its offshore call center operations back to the United States from Costa Rica, he said, because the quality of service provided by his company deteriorated, due in large part to cultural issues that influenced the vendor’s corporate culture.

While offshoring will continue to be a big part of the global economy, the driving force should be about finding new talent and not perceived cost savings, he said.

“If the U.S. can fill your requirements, it’s silly to go offshore,” he said.

According to panelist Richard Guenther, vice president and general manager of maintenance support services at Unisys Global Infrastructure Services, a subsidiary of Blue Bell, Pa.-based Unisys Corp., offshore jobs will always be counterbalanced by customer service jobs in the United States.

“Technicians can be located anywhere, but there will always be demand here for customer-facing skills,” he said.

The panelists, who also included Steven DeLaCastro, partner and national solution leader for outsourcing services at Atlanta-based Tatum Partners LLP, said the biggest threat to the American workforce is a deficient education system.

Mr. Griffiths, who said he is much more concerned about the impact of low education in the U.S. than outsourcing, asserted that only 60,000 engineers graduated here in 2002, while China graduated 300,000 and India 1 million.

Two-thirds of the engineers working with Everdream are foreign-born and three-fourths of new job applicants are foreign nationals with work visas, he said.

“If we didn’t have them, we would be offshoring now,” said Mr. Griffiths.

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