Wednesday, June 6, 2007

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Score one against the Blinder-Friedman hypothesis

One of the difficulties with the Blinder-Friedman hypothesis is that it can't really be tested right now (though perhaps this is where Blinder and Friedman disagree. Friedman already thinks the world is flat, whereas Blinder just thinks it will be much, much flatter over the next few decades).

Nevertheless, one would expect the industrial organization of call centers to closely resemble the future according to Blinder and Friedman. These were the jobs that everyone was yammering about disappearing a half-decade ago. Does this sector look flat?

Thanks to Cornell University's Industrial and Labor Relations school, we now have some data... and most of it does not support the Blinder-Friedman hypothesis. From the press release:

Contrary to what many people think, most call centers serving U.S. customers -- service centers in remote locations that handle telephone and Web-based inquiries -- are operated in the United States, not in India or other overseas locations.

So said Rosemary Batt, the Alice H. Cook Professor of Women and Work and professor of human resource studies at Cornell's ILR School (industrial and labor relations) and a lead author of a report on the largest-scale study to examine call center management and employment practices in Asia, Africa, South America, North America and Europe, covering almost 2,500 centers in 17 countries.

The study, "The Global Call Center Report: International Perspectives on Management and Employment," was a collaborative effort involving more than 40 scholars from 20 countries....

The large majority of centers around the world -- except India -- serve their own domestic markets and consumers. There is no common global face to call centers, since they tend to take on the character of their respective countries and regions based on that country's or region's laws, customs and norms....

Two-thirds of all call centers are in-house operations, serving a firm's own customers. Subcontractors operate the remaining one-third of centers. In-house centers across all countries have lower turnover rates and higher quality jobs than subcontracted ones.

From the executive summary:
The mobility of call center operations has led many to view this sector as a paradigmatic case of the globalization of service work. And we find that the call center sector looks quite similar across countries in terms of its markets, service offerings, and organizational features. But beyond these similarities, we find that call center workplaces take on the character of their own countries and regions, based on distinct laws, customs, institutions, and norms. The ‘globalization’ of call center activities has a remarkably national face....

Call centers typically serve national rather than international markets. Eighty-six percent serve their local, regional, or national market.

If the world is getting flatter, it's happening at a rather glacial pace.

posted by Dan on 06.06.07 at 09:18 AM


Fourteen percent of call centers serve international markets? That's amazing evidence of service globalization given all of the countervailing incentives *not* to outsource calling centers.

I think if you want to argue this is "glacial," you need to provide some evidence about the rate of change over time.

posted by: Daniel Nexon on 06.06.07 at 09:18 AM [permalink]

I agree with Mr. Nexon: this report does not address the main issues that anti-globalists have: that jobs are leaving the country at a (fill in adjective) rate. There was no comparison (that I could see from a brief reading) of the past, present and future location of American-oriented call centers.

posted by: Klug on 06.06.07 at 09:18 AM [permalink]

This reminds me of Gene Weingarten's piece in the Post magazine called Hack for Hire in which he parodies outsourced journalism.

As for the rate of change, do we expect a slowing rate, as the "low hanging fruit" are picked, or a quickening rate, as people master the learning curve?

posted by: Bill Harshaw on 06.06.07 at 09:18 AM [permalink]

I'm just praying to whatever gods will actually listen that this completely moronic invention of Friedman (i.e. "world is flat") will die a mercifully quick death.

Words mean things and we can argue about the actual concept without propagating a moron's misunderstanding of the term "level playing field".

I mean, dear god, this is supposed to be an educated forum for discussion. Can we at least pretend to be educated human beings?

It's just simply embarrassing.

posted by: Azael on 06.06.07 at 09:18 AM [permalink]

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