Offshoring at breakfast By Robin van Koert "Dutch banks are now also moving highly skilled work to India", informs the morning paper. A short while later, the radio news mentions an increase in job losses in the ICT sector as a result of offshoring. In the meantime, the television shows images of shiny office buildings and colorful cities in faraway countries. Facts, analyses, hype and doom saying tumble over each other at a rapid pace. How does a manager make the right choice? Or do the media take the decision? The 2004 presidential elections in the United States confirmed the importance of offshore outsourcing as an economic phenomenon. Reporters and politicians used the media to paint a picture of offshoring as a, mostly Asian, bogeyman. Emotions colored the discussions, because the number of jobs that have moved or are under threat of being moved is very small in comparison to the number of jobs, which disappear and are created annually. However, the tone had been set. The population was concerned; trade unions and members of Congress demanded protective legislation and companies worried about their image. Perhaps it is an example of the power of the media? News coverage in the Netherlands is more nuanced. Although specialized publications have been reporting on offshoring for years, the national media only seriously started paying attention to the subject last year. Compared to articles on the other side of the ocean, the comments in daily newspapers such as De Telegraaf, De Volkskrant and NRC Handelsblad and in weekly magazines such as Elsevier Magazine and Vrij Nederland were mostly neutral and informative or positive. In addition, the Ministry of Economic Affairs and the Netherlands Bureau for Economic Policy Analysis (CPB) point at the advantages of offshoring. Therefore, no Dutch media headaches for Indian, Chinese and other foreign service providers, but does the news in newspapers, via radio and television and on the Internet play any role at all in offshoring decisions? According to Girish Ramachandran, Regional Director Northern Europe for India's Tata Consultancy Services (TCS) in Amsterdam, only in a limited way. 'The decisions by competitors and the advantages gained are the main motivations for offshoring', is how Ramachandran puts the role of the media in perspective. 'Furthermore, decision-makers use analyses and reports from consultancies such as Gartner, Forrester Research, McKinsey's Global Institute and IDC', he adds. Seminars, conferences, business and personal contacts complete the primary information sources. The media are part of the secondary sources and managers certainly distinguish between the different types of media. Ramachandran explains that newspapers and magazines are most influential, followed by websites on the Internet. Television and radio make up the rear. Nevertheless he estimates the influence of the media to be rather moderate. Offshoring decisions are made on the basis of competitive and economic considerations. However, entrepreneurs subsequently do have to choose an often unknown and faraway country. Therefore, image is a very important competitive strength for offshoring destinations. Yet, who or what determines that image? According to the American PR consultancy Edelman, the image is determined mainly by journalists within influential media in the economic powerhouses such as the United States, the United Kingdom, France and Germany. They paint the picture of a country in a sequence of news reports, columns and feature articles. The media in other countries also uses the information and opinions. In addition, the media in well-known offshoring destinations such as China and India play a role, for example The China Daily and The Economic Times. Researchers from Edelman interviewed more than sixty journalists, amongst others from the Wall Street Journal, the Financial Times, Le Monde and Der Spiegel. As was to be expected, India and China are favored by the journalists. Over 80 percent of them have faith in the economic future of both countries. Rather surprisingly, however, they also have a positive view of Brazil's future. Under the leadership of the leftwing president Da Silva that country is implementing long overdue economic reforms. Russia, on the other hand, is heavily criticized. The autocratic government is seen as the main problem. Therefore, the vast majority of those interviewed have an extremely negative outlook on the future of that country. Poland, however, is doing rather well. The main factor being the positive impression of the business climate, as is the case with Brazil. The Czech Republic and Hungary were not included in the survey, but both countries receive favorable press comments in the Netherlands. Ultimately, the media created image is only a piece of the decision-making puzzle. Opinions and knowledge of colleagues, friends and experts are much more important. Personal experience also plays a role since, depending on the observer, the reality of a country leads to different impressions. 'Newspapers, magazines and the Internet may well have an important role to play in the choice for an offshoring destination', concludes Ramachandran. It is crucial for decision-makers to understand how news reports and feature articles influence their decisions. The media can relatively easily present a tempting image of a country. However, the competitive strength of a company is not a mirage or a media construction. For decision-makers only the bottom line counts: to make a profit. For that purpose, make-or-buy decisions have to be made with some regularity. Information comes from several sources, including the media. Offshoring or not offshoring is not the result of pretty pictures on the news or powerful headlines in the morning paper. Journalists do not decide, but they do color the picture of a country. They do not make the decision, but perhaps they do influence the choice of a destination. Robin van Koert, 29 March 2005