THE Virginia-based Sallie Mae, America’s biggest student loan provider, will shift 2,000 positions from its offshore facilities in India to US cities. By seeking to consolidate its resources in the US as part of a reverse offshoring measure, the firm is likely to incur almost $35 million on higher labour costs every year. Sallie Mae manages $180 billion in education loans and serves 10 million student and parent customers through its subsidiaries every year.
The company’s centres in Pune, Bangalore and Philippines offer loan origination, servicing and collection services. “For 37 years, we have been dedicated to help America’s students enhance their lives through an investment in higher education,” Albert L. Lord, chief executive of Sallie Mae said in a statement. “The current economic environment has caused our communities to struggle with job losses. They need jobs, and we will put 2,000 of them into US facilities as soon as we possibly can.” Sallie Mae expects to hire these employees over the next 18 months.
SALLIE MAE WITHDRAWS
Obama said he can save $4 billion by making loans directly to students, ending subsidies to middlemen like Sallie Mae and leaving them to survive on higher-cost private loans
Offers Democrats what they want:
Jobs in their districts
ALBERT LORD, Chief Executive, Sallie Mae
Sallie Mae to fire its contract workers in India and Philippines and ship 2,000 jobs back to several US sites
The move will cost Sallie Mae $35 million a year, compared with hiring contractors in Asia US cos trying new model
ACCORDING to the US department of labor, unemployment rate during Dec 2008 rose from 6.8-7.2% with two million workers losing their jobs between Sept and December. Apart from Sallie Mae, many outsourcing services providers are attempting to offer a compelling alternative to customers seeking to offshore jobs to cheaper locations including India, where a software project can be delivered at almost half the US costs.
For instance, smaller US firms such as Rural America Onshore Sourcing and Xpanxion are attempting to build a sustainable rural outsourcing model in the US at a time when offshore locations like India are facing a backlash and unemployment rates have touched an all-time high.
Xpanxion, an Atlantaheadquartered software firm, which shifted its software testing work from Pune to Nebraska a few years ago is among a handful of such firms seeking to create a more comfortable and cost-effective alternative to offshore outsourcing. Customers such as NCR, Coca-Cola and Goldleaf Financial Solutions are outsourcing software projects to Xpanxion. At a time when political lobbyists such as Senator Chuck Grassley are leading a campaign against offshore outsourcing by American firms, some customers might prefer to outsource smaller projects to local providers and avoid being seen as supporting the outsourcing of US jobs.
However, Indian offshore companies say such initiatives are yet to become mainstream, and that many medium-sized to large customers continue to send more projects to India. “Sallie Mae’s move seems more like a nationalist initiative, and not something to be worried about as many customers still want to bring down their operational costs by outsourcing to India,” a senior executive at a top Indian tech firm told ET on conditions of anonymity.