CANARIAS -- It's clear that out-sourcing sends jobs overseas, but could bringing them back to the mainland be a simple enough solution to the crisis? Some Spanish companies are choosing this year to start doing just that, moving the most commonly-outsourced IT, help desk, and call center jobs back to Spain.
Last month, Spain's second-largest company Telefonica began moving 4,000 call center jobs from Colombia to Tenerife and Las Palmas. The Canary Islands is the region with the highest level of unemployment at around 33 percent, compared with the national average of more than 23 percent.
In a press release entitled "Beginning of the end of off-shoring telemarketing," by the UGT Spanish workers' union, representatives from Telefonica first announced their intent to repatriate several Movistar customer service call centers from Latin America back to Spain "in an attempt to stem the loss of users unhappy with the service they offer this group of telecommunications."
This announcement followed a previous commitment by direct mobile and Internet competitor Orange that this would be "a twist to [its] customer strategy, internalizing a substantial part of these services in Spain with the aim of developing the service to their customers and increasing their overall satisfaction" to a center with 900 jobs in Asturias, a region in the north of Spain. This means now about ten percent of their customer services will be in the small city of Oviedo.
The seemingly-magnaminous intentions of better customer service and job creation in Spain are not the only reasons for companies looking to repatriate back to Spain. Many companies, especially telecom ones, had originally chosen locations in Latin American for their lower cost. There is such a desperate need in the Canary Islands, where a third of all its residents are unemployed, that there is more affordable labor now within the Spanish borders.
Spanish companies aren't the only ones looking to bring IT contracts back onto the continent. Often citing customer service -- people usually don't appreciate foreign accents over the phone -- this year has seen a strong trend away from off-shoring. Magazine Computer World talked about a move away from outsourcing so far this year, particularly seen in Europe. The article states the decrease in IT jobs is due to the debt crisis, as well as that "discretionary spending on IT in Europe is largely on hold." Where there is outsourcing, there are much smaller contracts, valuing usually less than $25 million. Just between the first and second quarters of the year, there was an 11.4 percent decrease in large (defined as more than $50 million,) outsourced IT contracts.
As Latin American countries maintain more stable economies and seek more autonomy from their Madre Patria, it presents another risk to the already struggling Spanish companies.
Often Spain's global view, besides Portugal and maybe Brazil, only includes other Spanish-speaking countries. What was once a smart move to target developing countries that share a language and many cultural and business habits has come back to bite Spain, as nations like Mexico, Argentina, Chile and Colombia are pursuing their own economic autonomy and success. These countries, which have greater natural resources and a greater ability to work both within their continent and to reach out to the Asian tigers, are now more stable economies, sometimes at the expense of Spain.
Spain is learning the lesson that when you set up shop in another country or when you allow a non-Spanish multinational to set up in your own country, you are accepting a risk. Either than they can leave, taking thousands of jobs with them or, as with the case of Argentina's YPF, the base country could decide to usurp company ownership.
From 1999 until last Spring, Spanish oil company Repsol had controlling ownership of Argentinean YPF. Last April, following a discovery of new natural resources, including the world's fourth largest supply of shale oil, Repsol's ownership was expropriated by the Argentinean government and YPF was re-nationalized. Without a day's notice, Repsol was told YPF was seizing control of all operations, claiming an equivalent to eminent domain over 51 percent of share holdings "of this vital resource," as Argentinean president Cristina Fernandez de Kirshner called it. It is still up in the air as to the repercussions of this move, as the IMF is supposed to put a price on Argentina's rapid acquisition, but it's clear that it has dramatically decreased the value of one of Spain's most important stocks, as Repsol cited a loss of over 100 million euros in result.
Sadly, most companies are not looking to move jobs to Spain, but rather to flee what they wrongfully see as a sinking ship. The actions of Telefonica and Orange stand in stark contrast with last month's promised layoff of 1,500 workers at Spain-based U.S. call center company TeleTech. This company that works with Vodafone's and Movistar's cellular services will be permanently removing jobs from Madrid, Barcelona, Valencia, and Toledo. TeleTech chose to exit Spain for countries "where wage conditions are even more profitable." Certainly, they must be looking outside of western Europe, since Spain has significantly lower salaries than their fellow EU members.
It's no secret that, even in the midst of serious economic turmoil, IT is the place to be. SmartPlanet talked to Dinora Gonzalez Zamora, a Java program analyst from Mexico, who has been working for various companies in Spain for five years now. "I think we have opportunities in the whole world. It isn't necessary to work in Madrid or in any important city." Gonzalez says that, for programmers, "it's really easy to find a job everywhere. The problem is only maybe the visa," she says, "and the money you want to get. For example, right now, I have offers to work in Germany and Finland. In Madrid, there are too many offers to work in programming. The problem here now is [salaries] are less than before. In Germany, the salaries go up." She continued to say that, "In Mexico and here, you can get the same salary, but Mexico is cheaper and you can save more money there than here."
There is no doubt that, since the housing bubble burst, Spain is desperate for sustainable, not one-off jobs.
One-time employment opportunities, like Euro Vegas, which, if approved, is supposed to indirectly create 200,000 jobs. However, most of the Spanish fear that, after the construction is finished, the hotel and casino jobs will then go to other E.U. residents. Spain has the lowest level of English in the E.U. Thus, while Spain is now the second most popular tourist destination in the world and this industry is a positive one that continues to show growth, many companies in the hospitality and tourism industries are looking for extranjeros, or foreign residents, because their employees must speak the international business language.
With Telefonica adding these 4,000 jobs in Canarias to their 2,000 created to turn Barcelona fiber-optic, poco a poco, long-term job creation could turn the tide of the Spanish economy.