Terrorism: An offshoring deal-breaker?

* We should consider a country's safety before awarding offshore outsourcing deals

In a recent newsletter, I wrote about Malaysia as a potential location for those considering offshoring - especially for organizations in the finance sector. That newsletter stirred up quite a bit of varied e-mail.

One gentleman with Malay experience wrote me to give me a good pros and cons list to consider (I'll share by e-mail with those interested in seeing - sans author info, of course). Another wrote to ask me when I was going to consider a country right next door - the Philippines - as an offshoring topic.

But the e-mail that resonated with me went like this: "Are we forgetting that the 9/11 terrorists had their big pow-wows in Malaysia? Are we forgetting the terrorist attacks in Malaysia? So we're supposed to move our financial interests to a country that allows terrorism, which they certainly do?"

This person has a tremendously salient point. In all the hubbub of examining countries in terms of ability to take over some of our corporate operations, cost-differentials, technical population, language barriers and so forth, the one question that may never get asked is the "T" question - how prone is this country to violent acts of terrorism? As a follow-on, one might ask this: Is it known that there are terrorists in the country and/or is there terrorism training going on?

I wrote this person back, asking if potential offshorers should also rule out Saudi Arabia, Spain, Israel, the U.K., Russia and other countries that are known to have terrorist activities happening inside their borders or that have a terrorism element operating in them. The U.S. would certainly qualify under both of those categories, would it not? And given its shaky relationship with Pakistan, even India could wind up being a target for terrorism.

As corporate leaders, there is no doubt we must pay attention to the bottom line. Certainly as capitalists "Maximize shareholder wealth" is the axiom we live by. But that does not mean we should shop for the best deal, regardless of the safety issues that may exist. Clearly, a country with known terrorists operating inside its borders is at best a place where we'll always wonder if today is the day the shoe drops and at worst a place that puts our people at ground zero.

I'm not sure what the answer is however. One could ask the U.S. Department of State (http://www.state.gov) and check with the U.S. embassy in that country for more information. Certainly a rigorous Internet search could produce some interesting information. Where else would you suggest someone check this kind of detail, apart from hiring a private company that specializes in such things?

There is one other thing for American corporate leaders to consider. Farmsourcing and sourcing locally to the continent (Canada and Mexico in the case of the U.S.) are viable alternatives in which companies are less likely to experience terrorist activities.

I'd like to hear your thoughts. Please e-mail me at mailto:bheldman@emausa.com

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