Horses Exclusive: Obama to ban offshore outsourcing

March 31, 2009 | Phil Fersht

Folks - I can exclusively reveal  - and you heard it here first - that President Obama will shortly be announcing a blanket ban on the offshoring of US jobs.  My government insider tells me that he will take the following measures:

  • Any employer seeking to replace US staff with an overseas employee will have to prove it was unable to source a US employee for the role for a period of 90 days, where the position was widely advertised on national media;
  • ObamaA task-force of leading US-headquartered outsourcing service providers, including IBM, ACS, CSC and HP, will be tasked with assisting US firms with their backsourcing initiatives, their fees being footed by a proposed budget ammendment that is likely to total as much as $50 billion;
  • Leading outsourcing service providers which are not US-headquartered, and have more than 50% of their employees based outside of the US, will have their US trading licenses revoked and will have 30 days to wind down their US operations;
  • All jobs that have moved offshore within the last 8 years, that are currently being performed for any US-domiciled organization, are to be replicated back to a US location within the next six months.  The US government will reimburse 20% of the reinstated onshore employee's salary to their employer upon completion of their first year of employment;
  • CEOs who fail comply with the ruling will face a disciplinary panel headed by Lou Dobbs. 

So the battle is on between the USA's onshore locations.  Who will win out?  Albuquerque, Detroit, Nashville, Jacksonville, El Pazo?  Love to hear your thoughts...


You're good sports!  And my sincere apologies to the service provider which called an emergency meeting with the CEO and executive team this morning as an result.  You will never live that one down...

In all seriousness, while this was intended as April 1st humor, the fact that so many people fell for this does get you thinking about how close to reality this wave of protectionism could get.  C'mon - I thought the Lou Dobbs reference would be the big give away :)

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT Services

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  1. dsinha
    Posted Mar 31, 2009 07:19 AM | Permalink Reply

    Needs a Snark tag.

    Would be interesting to watch the ensuing catastrophe, though.

    By the way, based on our 8-month due diligence on US locations for a delivery center, I think Raliegh, Austin, Buffalo, and Huntsville, AL would make the cut as well.

  2. Nandu Muralidharan
    Posted Mar 31, 2009 01:00 PM | Permalink Reply

    Some of the points you have stated above is not practical or feasible. Your first point is a distinct possibility rest doesn't make sense. If US does indeed go ahead(which i highly doubt) it will be the end of innovation in US and you might see lot of major companies moving out and setting up base elsewhere.

    • Revoking licenses of non-US headquartered outsourcing companies - Most if not all Fortune 1000 companies will be impacted and practically there are not as many people in mkt to backfill these positions

    • Moving backs jobs outsourced in last 8 yrs with 20% of first yr employee cost footed by US govt - who is going to pick the cost differential for year 1 and total cost for subsequent yrs? Last thing corporates want is increase in their costs in these tough mkt conditions. Also given the level of outsourcing and complexity of work done outside US. This is highly impossible. In addition back-filling those guys in US - no way!! There are way too many positions outsourced.
  3. S. Kishore Kumar
    Posted Mar 31, 2009 02:13 PM | Permalink Reply

    Nice one Phil. Until I saw Lob Dobbs in there, I thought you were serious!

    If the US govt is willing to make up the cost difference, of course all jobs can be back-sourced. And in today's bailout economy, anything is possible!

    I was watching the movie "Outsourced" recently and it brings out the cost difference neatly. There is a scene where an American buyers berates an Indian call center worker for selling him bald eagle replicas made in India. She offers to give him the phone number of an American company that make the replicas in the USA. The caller then asks the next logical question "Is their price point about the same as yours?". The answer? "$200 dollars higher"!

    With unlimited trillions at his disposal, Obama could of course flirt with hyperinflation and subsidise just about anything, but I don't think he will. After eight years with The Big Mistake, you guys hit the jackpot with Obama.

  4. Robert Quinton
    Posted Mar 31, 2009 02:29 PM | Permalink Reply

    Excellent April Fool's!! You had me going up until ... Lou Dobbs :)

  5. Oscar Houghtsource
    Posted Mar 31, 2009 04:08 PM | Permalink Reply

    B*stard! April Fools to you, too! LOL.

  6. Foolhardy but not Foolish SSC Director, Europe.
    Posted Mar 31, 2009 05:04 PM | Permalink Reply

    Is this right up there with the famous spaghetti trees on Panorama, and an early Aprils Fools?! But, yes, you almost had me there for a second! Ha!

  7. dontbelievethis
    Posted Mar 31, 2009 06:45 PM | Permalink Reply

    April 1st ?

  8. ajay
    Posted Mar 31, 2009 09:20 PM | Permalink Reply

    Good One, Phil.

  9. Jonathan
    Posted Mar 31, 2009 10:35 PM | Permalink Reply

    Good , Apil Lou Dobbs day joke ...........

  10. awallafashagba
    Posted Mar 31, 2009 10:40 PM | Permalink Reply

    April fool right!

  11. Jeff
    Posted Mar 31, 2009 10:42 PM | Permalink Reply

    Happy April 1st to you as well!

  12. Are you Kidding Me
    Posted Mar 31, 2009 10:47 PM | Permalink Reply

    Lou Dobbs to head up the disciplinary panel? I guess its a nice way to pull an April Fool's Day joke IMHO;-)

  13. Richard Crespin
    Posted Mar 31, 2009 10:48 PM | Permalink Reply

    If this is true -- and the Lou Dobbs panel makes me doubt it -- it will spark a trade war. Under what executive authority? Surely this needs legislation.

  14. Mark Bradley
    Posted Mar 31, 2009 10:49 PM | Permalink Reply


    Sending you my doctor bill, as I'm pretty sure that I had multiple heart attacks while reading this. Along with a bill for a replacement laptop, since I spit my morning orange juice all over my current one. Especially pointed on the Lou Dobbs bit, since he has made it his part of his personal mission to target my organization.

    Well done sir...

    • Mark Bradley
  15. Morgan
    Posted Mar 31, 2009 10:55 PM | Permalink Reply

    I am hoping that since this came to my inbox on April 1st it's Phil's version of an April Fools Day joke!

    I have a sneaky suspicion that his British sense of humour is at work here.

  16. R A Jakobson
    Posted Mar 31, 2009 10:58 PM | Permalink Reply

    Nice April Fools bit ... but I'm guessing that a lot of people who are unemployed here in the US will not take this in the spirit it was intended.

    But my thanks for trying to make the day a bit nicer for us all.

  17. Hawk
    Posted Mar 31, 2009 10:59 PM | Permalink Reply

    April Fool's Day!

  18. Ray Siebert
    Posted Mar 31, 2009 11:06 PM | Permalink Reply

    April Fools? Ray

  19. Jon Simon
    Posted Mar 31, 2009 11:24 PM | Permalink Reply

    Phil: Thanks for the breaking news, as always. The Lou Dobbs portion of this sounds odd...almost comical. One would assume that the low-cost "On-Shore" locations with the best scalability and logistics capability will capture the moajority of the spoils...that tends to favor the southern-most cities (weather and travel logistics). Although, the political nature of the initiative (if you can call it that) will send favor and influence to cities like Buffalo and certian Midwest locales.

    -Jon Simon

  20. Doug Gattuso
    Posted Mar 31, 2009 11:31 PM | Permalink Reply

    Phil, how do you think this will apply to nearshore/NAFTA countries? Do you think the administration using "offshore" as a collective term, including all outsourcing from the US? Or, will they exclude Mexico & Canada as nearshore NAFTA trading pertners?

    Protectionism defined.....

    Regards, Doug

    FYI - I had a PeopleSoft delivery center years ago (100+ FTE's) in Huntsville/Athens AL...worked out very well...great source of technical resources...favorable economics...

  21. Doug Brown, Co-Author THE BLACK BOOK OF OUTSOURCING (Wiley Publishers 2005 2008)
    Posted Mar 31, 2009 11:44 PM | Permalink Reply

    Hi Phil - Is it April's Fools Day or Analyst's Fools Day??? Enjoyed the humor. Doug Brown

  22. JT Pedersen
    Posted Mar 31, 2009 11:48 PM | Permalink Reply
    You Win! You're the first April Fools posting I've read today.

    ) JT...

  23. Ravi Ramanathan
    Posted Mar 31, 2009 11:56 PM | Permalink Reply

    Nice Try Phil!

    Especially since it is an all fools day today (April 1st) that you have posted this fantasy.

    You know that those points that you mentioned will never sell with businesses that depend on IT for enhancement especially a 90 day window to advertise, wait and then source! Who has the luxury of waiting that long for core IT projects to be staffed!

    Ha ha, good one though, I nearly fell for this gag.

    Ravi Ramanathan

  24. sgupta
    Posted Apr 01, 2009 12:03 AM | Permalink Reply

    Phil, you never know. There might actually be more truth to this that we think right now. We'll definitely see increased scrutiny and some policy changes. The lowest cost US cities with some Federal 'relief' support can become reasonably cost competitive and it's definitely a good talking point for CEOs during these times.

  25. John
    Posted Apr 01, 2009 12:12 AM | Permalink Reply

    Nice try. With all the government intervention I almost believed it. Happy April Fools....

  26. Tony
    Posted Apr 01, 2009 12:14 AM | Permalink Reply

    My recent government conversations hinted that back-sourced employees must join the UAW or similar union.

  27. Charles Clark
    Posted Apr 01, 2009 12:26 AM | Permalink Reply

    Is this an April Fools joke?

  28. Bill Budde
    Posted Apr 01, 2009 12:43 AM | Permalink Reply

    Heavy handed ...

    Enforcement of existing labor laws (with real penalties) would be chilling enough; the first bullet point.

    The tax code could be revised to force capitalization of IT expenses from offshore sources to (effectively) increase taxes on operating income.

    The penalties are just not meaningful enough to curb the appetitite that labor arbitrage satisfies today.

  29. Jim
    Posted Apr 01, 2009 12:44 AM | Permalink Reply

    I believed everything up to Lou Dobbs.

  30. Amit Sharma
    Posted Apr 01, 2009 01:13 AM | Permalink Reply

    My Dear friend...this would be termed as protectionis and Obama is fiercely against it...please stop make uneducated guesses and write to spread positive energy...there is enough speculations because of some idiots shooting from their hip.

  31. Chris Sciacca
    Posted Apr 01, 2009 02:09 AM | Permalink Reply

    Well played.

  32. Andy Spence
    Posted Apr 01, 2009 02:47 AM | Permalink Reply

    Funny! I can still hear the sounds of nervous laughter ripple round the globe from Bangalore to Albuquerque....

  33. Matt Perez
    Posted Apr 01, 2009 03:31 AM | Permalink Reply

    Actually, I thought it was an April Fool's thing until you mentioned Lou Dobbs. That's when I started thinking it was serious...

  34. Rejo
    Posted Apr 01, 2009 03:53 AM | Permalink Reply

    Mann.. I alomost had a heart attack..before I read Lou Dobbs

  35. Bill Huber
    Posted Apr 01, 2009 11:58 AM | Permalink Reply

    I propose Blacksburg, VA. We have a major university with an excellent engineering program, fresh air, great pickers and fiddlers and folks already know how to talk Southern for every satisfactory call center experience.

  36. Rosemary Coates
    Posted Apr 02, 2009 04:50 AM | Permalink Reply

    Phil...this is just too funny! You had me going for a while!

    Rosemary Coates

  37. Gary
    Posted May 15, 2009 11:15 AM | Permalink Reply

    I sincerely hope that Obama does ban offshoring and our congress passes very tough laws and evokes penalties for moving USA jobs overseas. There are other cost effective alternatives right here in the USA. Protectioniism is a term used by those that can't see the benefits of a strong America and live in the past. I for one will be making every effort to make sure America is first.

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