Outsourcing: Why Not to Native American Reservations?

I met a fellow last week who teaches music to Navajo and Apache kids and teenagers. The stories he told me about the poverty (and resultant problems: alcoholism, domestic violence, etc.) on and around the reservation are heartbreaking.

With American companies outsourcing jobs to Mexico and similar developing nations, and building call centers in India, I’m curious as to why no one has thought to develop on the reservations.

The benefits are immediately apparent:
[li]Wide-open labor market, willing to work for lower wages.[/li][li]Good will generated among the general public (“We don’t make you talk to a guy in India! We hire Americans!”).[/li][li]Workforce speaks English as a first language (benefits those willing to open call centers).[/li][li]No need to send managers to a foreign country.[/li][li]Possible tax breaks.[/li][li]Good karma for investing in a place that really could use it, right in your own backyard.[/li][/ul]

There would be, of course, drawbacks, but IMHO they’re the same drawbacks you’d experience outsourcing to Mexico or India (unskilled work force, etc.).

So what’s the scoop on this?

Would the wages that you’d pay to reservation folk be similar to what you’d pay to people in India? I suspect that wages are a lot lower in India, and that’s a big part of the attraction.

I think two of the major drawbacks would be:

  1. Offering Native Americans lower wages than other Americans would be a public relations disaster and would bring accusations of racism.

  2. Due to a much higher cost of living in the US, even on reservations you couldn’t offer wages as low as in Third World countries.

When I was working at my previous job. The higher ups were complaining about the tax breaks that one (electronic) board assembly house was getting because they were on a reservation.

So basically they have done that. The big thing is that there are not very many people living on reservations. You can only setup small operations.

Not to mention regulations.

Much of the savings in off-shoring is due to a complete lack of regulations. No pesky safety requirements, overtime pay, etc.

That’s not gonna fly on the rez.

ETA: I think you could pay lower wages, just not as low as third-world wages. I know wages here in OK are lower than elsewhere, but nowhere near $1/day.

I guess something I’m unclear on is the wages of call-center/outsourced employees. Are Indian call center employees really only making $1 per day? What about Mexican factory workers?

I always WAG’ed that outsourced foreign workers made something like 25-35% of what a similarly-paid American worker would make.

I thought reservations were basically little nations unto themselves and thus exempt from OHSA and such?*

*DISCLAIMER: I’m not advocating that someone open up a factory on the Navajo rez and completely ignore all safety precautions because, fuck the Navajo; I’m just saying that maybe safety regulations there might only require 1500 pages of compliance instead of 3000.

I found cost reductions of about 85% by off-shoring production of my consumer electronics products to Asia, and I ensure our partners meet safety regulations we need to sell in North America and Europe and that their labor policies are fair for the local market. I would say an extraordinarily tiny portion, if any, of the savings is from lack of regulation.

Already being done. There is a pretty big call center on the Cayuse reservation in Oregon, I’m certain there must be others.

There are plenty of US-based outsourcing companies that other US companies contract with and still save money. Most of us get a paycheck every week from ADP without ever thinking “gee, my company outsourced the entire payroll operation to someone else!” but they did, and they often do for customer support, HR, etc.

US based outsource companies can still save money for their customers, not necessarily because their employees get paid lower wages, but often just because they specialize in that one service and they handle it very efficiently. They offer to do all the recruiting, interviewing, initial training, HR, quality control, facilities management, etc. for that entire operation, and it saves the hiring company a lot of money even if the outsourced employees get paid more than their own in-house employees would for doing the same job.

A software company for example, might write a software product, hire another company to write the documentation, another company to handle the technical support calls, and another company to handle the packaging and distribution, and all of them could well be US companies.

Which is a long-winded buildup to say: it would be up to the Native Americans.

If a given tribe initiated their own program and hired, trained, and made ready for employment a team of workers that offered some outsourced service to US companies they could certainly compete in the already existing markets.

But there is also a certain ancient wisdom about casino gaming that says “the house always wins” and some tribes are making a whole lot of money at it. They might not be interested in being trained to be outsource providers.

Even the big Indian outsourcing firms (Infosys and Wipro) have US-based operations that support US clients. Some of the staff is Indians working on H1-B visas and some is US citizens and permanent residents.

Some certainly do. Some certainly don’t. I worked at a big US company for many years and we outsourced some technical support first to a company based Dallas, and later to one based in Maryland.

The first vendor started opening call centers in India and even though they vowed they were keeping our group in the US, we switched to another vendor. We wouldn’t ever have sent the work to India, either directly or through another vendor. It was decreed as being off the table by the highest levels of management. So it just depends on the company.

There are quite a few outsource providers in many industries so YMMV but there are plenty who use only US employees and tout that as one of their selling points.

One of the issues is a tendency for skilled and trained workers to go where the money is. If you go onto the rez and teach a bunch of people computer skills, how long do you think it will take them to discover that they can move a few hours away and work off-reservation doing the same job for more money?

While typically true, this certainly isn’t universally true. Although some tribal languages are basically dead, others (e.g., Lakota) are thriving and there are people learning it as their first language.

Paying people less because they’re Native Americans is illegal discrimination.

No, not among the general public, but rather among those xenophobic patriots who may be part of the customer base. The rest of the world either won’t care, or will wonder why it is you think that workers in America are any more deserving of a job than workers in India.

Not all Native Americans speak English as a first language. English, however, is an official language of India, and there are more people there who speak it fluently than there are Native Americans.

Many managers would be less willing to live and work on a reservation than in a foreign country.

Why would these tax breaks be any better than those received by using foreign labour?

Karma does not exist.

In the general sense OSHA and Title VII don’t apply to Indian Reservation employers.

However two of the circuit courts the 10th and 8th have refused to apply OSHA and Title VII protections to Indian Reservations. The 9th and one other circuit court have applied OSHA to the Indian reservations. So right now the laws are conflicting.

Anytime you deal with Indian Reservations Law the waters get all muddy.

The real reason they wouldn’t pay less, as one poster said, is political. You simply can’t say Native Americans are worth less than the least paid Americans.

I mean to imply no such thing. Just that the labor market there would support lower wages. As a real-life example, the town of Shitville, MO, where my wife hails, is about to become completely devoid of employment opportunities due to the lead mines running out of lead. If an entrepeneur wanted to open a business there, he could pay significantly less in wages than he would in, say, here in central Illinois, simply due to the economy of the area. The reservations are no different.

Xenophobic or not, made in USA is a selling point for many goods. So if you want to engender good will among your customers, why not make it a point to have as much of your workforce as possible based in the US?

So what? Ever called XM customer service? I would 100 times over rather speak to a Navajo, even if English was his second language, than “Dave from Toledo” who is actually “Rajesh from Kolkata.”

You don’t have to live on the rez to work at a business on the rez. Live off-rez and commute. In fact, I’m pretty sure it’s difficult for non-Native-Americans to actually live on reservations.

I don’t know. Just guessing.

Of course it doesn’t. I just used the word “karma” as shorthand for “doing the right thing.”

Especially when 2009 tribal gaming revenues were over $26 billion.

Indian gaming is big business, quickly approaching the country of India’s entire outsourcing revenue, estimatedto be about $50 billion by next year.

Didn’t we outsource casinos to the reservations?

The reason why the outsource to India isn’t because of cheap labor, it’s because of cheap educated labor. This is generally not the case on the poorer reservations you’re probably imagining. There are some reservations that have good tribal schools and colleges where such a scheme might work, but these are generally in reservations that already have (comparably) good economies.

They really had ambitions for the town when they called it Shitville. :eek: