With better salaries and improved working conditions, offshore outsourcing isn't the same dead-end job.
By JEREMY WIMPFHEIMERcall center 88(photo credit: )
very weekday night, as most city residents head for sleep, growing numbers of Jerusalemites are just starting their work days.
Fueled by the popularity of the international employment trend known as offshore outsourcing, more than a thousand Jerusalemites only get to their desks at 11:00 PM, prepared to service customers and clients who are on the other side of the globe.
In business parley, the term offshore outsourcing refers to "a management strategy that farms out non-core organizational activities to vendors that specialize in those activities in order to execute them more effectively."
According to Alon Peled, Professor of Political Science at the Hebrew University, who has extensively researched the impact of outsourcing in Israel, the trend became increasingly popular in the 1990s. Aided by a globalizing economy and technological developments, companies are now able to contract certain aspects of their operations to employers in other parts of the world.
Such offshore outsourcing, which in the past few years has been providing a large number of employment opportunities for Jerusalemites, involves those specific services which are sent by companies abroad across international borders.
Outsourcing operations now employ tens of thousands of people in countries across the globe. The largest numbers can be found in India, which is often sought after by multinational corporations to fill lower end customer service oriented jobs.
Companies that commission overseas services are usually motivated by cost-saving considerations. Yet employment costs in Israel, while between 50 and 60 percent lower than they are in North America or Western Europe, are much higher than they are in India. But academics and industry experts contend that Israel is an increasingly popular offshore outsourcing destination because it offers much more than cost-saving employment solutions.
According to Professor Eric Gould, who teaches economics at the Hebrew University, while India might posses a far larger pool of low-cost employees, "Israel is more attractive to companies because there is a higher level of English [than other outsourcing centers] and a stronger sense of cultural identity and independent creativity.
[This] makes working with Israeli based outsourcing companies more of an advantage." Industry analyst OffshoreITOutsourcing.com reports that Israel has attracted outsourced relationships with big-name corporations like Intel, Microsoft, IBM and Motorola, thus demonstrating the trust that multinational corporations have with the Israel talent pool.
Israel also offers financial incentives. In December 2004, the Israeli government, recognizing the local economic potential represented by offshore outsourcing, issued attractive tenders to encourage multinational corporations to open outsourcing centers in Jerusalem, including supplements of up to NIS 1000 per employee per month.
The tenders were awarded to four international companies. As a result, some 700 positions were opened up in the city for offshore outsourcers in 2005 and an additional 500 are expected over the course of 2006.
Jafar Sabbah is Outsourcing Cluster Manager for StartUp Jerusalem, a non-profit organization allied with Nir Barkat (head of the "Jerusalem Will Succeed" faction of the municipal council) and aimed at stimulating economic development and job creation in the city. It was StartUp Jerusalem, he says, together with the Jerusalem Development Authority, which helped secure the government tender. This, he emphasizes, was an important step forward in making Jerusalem a home for middle- to high-end jobs.
Sabbah is convinced that Jerusalem presents a distinct competitive advantage over other world cities and over any other city in Israel. He points to the city's diverse population, which ranges from ultra-Orthodox residents to east Jerusalem Arabs and also includes large numbers of new immigrants, most from English-speaking countries together with others who can speak many different languages.
He further notes that many of Jerusalem's residents have "a cultural affinity with the west, and that this is a crucial factor which doesn't exist to the same extent anywhere else in the world."
Ken Hahn, who worked for nine years as a senior manager for offshore outsourcing with America Online, an internet services provider that outsources certain call center operations to Jerusalem, agrees that Israel offers a distinct advantage over other countries that maintain outsourcing operations.
Says Hahn, who today is Director of Operations for IDT Global Services, Jerusalem's largest outsourcing employer, "In Israel there is a very noticeable American influence in the culture.
Whereas in India there is a desire to be westernized and people might watch 'Friends,' Israel has a real familiarity with America. Combined with a large talent pool, it makes it a good fit for companies looking to outsource."
Peled believes that the fact that large international corporations have chosen Israel for key services is proof of the respect which the world's biggest businesses have for Israel's local talent.
"Israel is trying to nurture its image and is succeeding and making a real name for itself. Whereas for low level outsourcing jobs like data entry you might choose to outsource to China or for entry level programming work you would choose India, when it comes to outsourcing central activities that that will dictate the future development of your company, there are very few places that you can feel comfortable doing it - but Israel is one of them."
In an effort to specifically generate jobs for Jerusalem's under-employed populations, the Israeli government's tender stipulated that at least 70% of the new employees hired by the four companies must be either new immigrants, ultra-Orthodox, or Arab in order to be eligible for the incentives. The tender further stipulated that employees hired under this arrangement receive salaries no less than ten percent above the national minimum wage. Sabbah says that most employees hired today are being paid much more.
Seven facilities in Jerusalem provide customer service, outreach or sales-oriented operations for clients around the world. StartUp Jerusalem estimates that the current average salary for employees is approximately NIS 8,350 per month before taxes. While certain call center projects offer base salaries considerably lower, outsourcing of operations in other business sectors, such as graphic arts or computer programming, can garner employees salaries as much as $60,000 per year (gross pay.)
According to Sabbah, the tender also included additional provisions to ensure that the jobs would be offered to the 30,000 people currently receiving government subsidized welfare. While conceding that call centers, which require English and other languages and technical and language skills, are not a currently a realistic option for the non-immigrant unemployed, Sabbah says that initiatives by StartUp Jerusalem and the Jerusalem Development Authority are in the works to create jobs for people that have the lowest participation in the workforce. Included, he says, are plans for call centers to branch out to corporations in Arab-speaking countries that could directly benefit the city's Arab population. The Joint Distribution Committee currently offer courses specifically geared to the Arab and haredi communities, in an effort to better-prepare them to take on the types of jobs offered by offshore outsourcers.
IDT Global Services is one of the four companies benefiting from the government's tenure. Their brand-new, ultra modern facility is open at all hours of the day to service clients across the globe.
IDT hopes to forever change job-seekers' perception that outsourcing pays poorly and is less-than-challenging. Founded in the summer of 2002 under the name CSM (Customer Service Management) with only 20 employees, the company provided customer services for the IDT telecommunications corporation based in Newark, New Jersey.
In those early years of call-center work, it was the last option in any Jerusalem job search, especially for anyone with advanced education.
Today the company employs close to 1000 people, the large majority of whom work in call center operations for a diverse selection of clients in both the corporate and non-profit sectors. IDT is now well on its way to becoming one of Jerusalem's largest private employers.
Judy Lowy, who as the Director of Recruitment says she has heard the full gamut of negative things people have to say about being employed in a call center, believes that Jerusalemites are beginning to recognize the potential that the field offers for longer term personal and financial growth.
In a direct effort to respond to the perceptions that job seekers have, Lowy says the company has made specific improvements to the working conditions, including options for pension packages and related benefits to employees after a period of six months. She also claims that the company is making efforts to improve the physical conditions for workers by providing access to a gymnasium and workout room as well as a soon to be opened swimming pool.
Lowy says these measures have been put in place to demonstrate to the company's employees that "the call centers do offer the potential for a lot of growth and different professional opportunities."
However, employment at IDT or similar companies often does not provide job security or stability. Since IDT acts as a service provider for both short and longer term projects, an employee can be left without work when the project he or she had been working on is completed.
Lowy admits that while the company "cannot guarantee the [employee] will always get a new job, we will guarantee that for those employees it becomes our top priority to find them a new project to work on." Jerusalem-based offshore outsourcers, according to Sabbah, have demonstrated "a real effort to provide employees with incentives that display that these are quality jobs."
In so doing, the outsourcing employers have made a concerted effort to distinguish their labor practices from the more local manpower agencies that have come under repeated criticism for their treatment of workers.
Hana Zohar, Director of the Tel Aviv-based Kav La'oved workers rights organization, says that while she doesn't have any significant data on the condition of employees working for offshore outsourcing companies, she certainly does hope that the situation is different than in the manpower companies.
For employees working under manpower companies - according to Zohar, fully 25% of the Israeli workforce - "the manpower company together with the employer is positioned to benefit, often at the expense of the one actually doing the work. This situation leads directly to increased poverty in Israeli society and real emotional harm for the workers." Sabbah says that these types of conditions cannot be compared to employees of offshore outsourcers and that "as more companies come and the competition intensifies the benefits will only further increase for the employees."
As the company has grown, so too have the types of services with which employees are involved, and Lowy says that the company makes a conscious effort "to match the right people with the right projects."
While the work force at IDT is varied, including both religious and secular and younger and older employees, most were born in English speaking countries or are children of English speaking immigrants.
Lisa Poplack, 23, who has been living in Jerusalem's Katamon neighborhood for the last year and a half since moving from Queens, New York, works the 11:00 PM to 7:00AM shift with IDT, making fundraising calls on behalf of Jewish federations and major Jewish organizations in the United States and Israel.
She says that with a university degree in computers and hopes of continuing her studies, the job wouldn't have been her first choice upon arriving in Israel. "I don't know if I would want to make a career of it," Poplack concedes.
Yet she acknowledges that employment with people in similar social circles has offered her a good start in Israel.
The employees with whom In Jerusalem spoke agreed that these call centers are an accessible employment opportunity for those in search of a job.
But some feel that the work is "numbing" and others are troubled by the havoc that the night shift can wreak on their family and personal lives.
One former employee at the IDT call center, who asked that his name be withheld, observing that the work was "interesting and frustrating at the same time."
Saying that the familial challenges of working the overnight shift were most depressing, the former employee admitted that while with the right conditions the job "could be great for college students or young singles, it can be tough for anyone with a family."
Another worker, married with four children, who also spoke on condition of anonymity, says that he is tired all the time and feels out of touch with my family. "I never go to a meeting with a teacher or to see one of my kids' school plays," he said.
He continued, "I don't go to the movies with my wife. We don't go out with friends. We've been in the country for three years, and I feel that my wife knows a lot about Israeli life, but I don't know very much at all. I don't go to the supermarket, I don't take care of the car - those are all things that have to be done during the day, when I'm asleep.
"It puts all the responsibility on my wife, and that creates stress between us, too," he continues. "But it's a decent salary, a nice place to work - and right now, I don't have many other options."
Even while call centers continue to employ the largest percentage of outsourced employees in Jerusalem, a wide array of professions and skill and salary levels are positioned to become part of the industry.
Outsourcing2Israel.com, a Jerusalem-based non-profit, was established to provide people from many professional backgrounds with the chance to tap into the outsourcing pipeline, while still offering salaries equal to or higher than the Israeli average.
The service's founder, who spoke with In Jerusalem on condition of anonymity, says that being non-profit offers distinct advantages to the employee, "By not having the corporate worries and overhead involved with ensuring my company makes profits, our only bottom line is that the employees make money."
While still a fledgling operation only two years into its existence, Outsourcing2Israel.com claims to distinguish itself from other outsource providers by providing only high-level services including hi-tech, programming, web development and content management services.
Advances in communication, coupled with the developing nature of certain professions, have also allowed outsourcing to begin to benefit many professional sectors that one would have traditionally thought to have required an on-site presence, such as the legal and medical professions.
Outside Counsel Solutions, a subsidiary of IDT Global Services employs a team of 21 attorneys who regularly service American based clients from the comforts of their Jerusalem offices or even their homes.
Dov Schwell moved to Efrat with Nefesh B'nefesh in the summer of 2004 and now works with Outside Counsel Solutions. Suggesting that changes in certain sectors of the legal profession have made such an arrangement possible, Schwell says, "The practice of law has evolved in such an extent that I almost never met clients [in the United States.] So being in Israel is surprisingly similar from a professional standpoint to what I was experiencing in the US." The Israel-based lawyers are able to offer firms in America the same level of service from American certified attorneys, yet at considerably reduced rates, Schwell believes that there is little reason that the model couldn't potentially benefit olim from other western countries, too.
Outsourcing has made a dramatic impact on the medical field. Patients admitted into one of many American hospitals now outsourcing services to Israel, are probably not aware that the doctors reviewing their x-rays are seated more than six thousand miles away.
Dr. Sandor Joffe, a radiologist who moved from Teaneck, New Jersey in 2003, needed only a high-speed connection and the prospects offered by outsourcing to hold onto his position and salary with a respected New York hospital system.
Because he is still directly employed by the company, Joffe's arrangement is different than the more-common offshore outsourcing model. Yet, it demonstrates the technological advances that allow employers to farm out services to providers a world away and points to additional options for Jerusalem-area residents.
Seated in a Beit Shemesh apartment alongside two other radiologists who are similarly employed, Joffe works five days a week from 7AM to 3PM accessing film and x-rays that are delivered directly to his computer screen.
Like his counterparts in the legal profession, Joffe says that the nature of his field means that, "other than the fact that I'm not actually seated in the hospital surrounded by colleagues, there is very little difference in the practical aspects of the job."
The rapid growth of outsourcing is now being credited as an important factor in facilitating and even encouraging aliya. By removing one of the leading obstacles of acclimating into Israeli society- the challenges of finding gainful employment - the availability of outsourced jobs with higher paying salaries can allow many families to seriously contemplate the prospect of life in Israel.
Chaim Waxman, a retiring professor of sociology at Rutgers University and the author of American Aliya, is currently studying the employment trends of North American immigrants to Israel. He believes that globalization and a changing Israeli society has led to many changes in the aliya process and that outsourcing is one major manifestation of a trend that makes moving to Israel even more feasible.
Baruh (not his real name), who provides computer services for IDT, says that three years ago, when he first began working there, he was concerned about working only with other "Anglos." Now, however, he has changed his perceptions about what successful integration into Israel society really means.
"When I first came, I wanted to be more Israeli than an Israeli-born Sabra - whatever that means," he adds with slightly self-deprecating humor. "I thought I had to speak Hebrew perfectly. I was upset about working in a place that's like a 'little America' and even celebrating the 4th of July.
"But now I feel like an Israeli. I make a living here and I pay taxes. I stayed here when things were rough, when 'the situation' was awful. That's being an Israel, even if I am working with other Anglos."
But the night shift hours make it impossible for him to attend ulpan and learn Hebrew. "I wish I knew Hebrew and that is a draw-back. But I am making friends and forming a community. And I can get along in English." In the relatively short time since offshore outsourcing has come to Jerusalem, and even though many employees view call center positions as temporary or stop-gap employment, the trend has been largely viewed as an important component for the future local labor market and the overall economic growth of the city.
Jafar Sabbah believes that increasing the number and types of jobs available to Jerusalemites is very feasible. The job-participation rate in Jerusalem is barely 50%, Sabbah says, compared to upwards of 80% in many cities in the west.
"We definitely have a margin to work on, but if we continue to provide the right incentives and training, we are confident that we can reach it... Offshore outsourcing will soon become a core industry in Jerusalem."
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