Let Customers Choose

Overseas outsourcing is a growing trend among U.S. businesses because it allows faster and cheaper processes, shortening cycle times and lowering prices for many products and services. However, American corporations must balance consumers' demands for better, faster, and cheaper with their needs for transparency, privacy, and control.

While overseas outsourcing is an efficient way for Internet-based companies to offer faster service to customers, at E-LOAN we believe that we cannot force these efficiencies on our customers without their consent. Accompanying the rapid growth in overseas outsourcing practices is intense public concern over patriotism and privacy. E-LOAN believes that consumers should have the power to decide whether the benefits of "offshoring" outweigh the negatives. Thus, we feel that the right approach for financial services companies such as ours is to disclose offshoring practices and allow customers to opt out if they prefer to have their products and services processed domestically.

Such a strategy has many benefits:

• It provides consumer control and flexibility. At present, only 15 percent of our customers are opting out of overseas outsourcing. However, this rate may change as the perceived costs and benefits of outsourcing change. As offshoring becomes more common, perhaps even fewer consumers will opt out. Conversely, if the U.S. unemployment rate increases and more jobs are transferred overseas, consumers may start showing more solidarity with labor and rejecting the lower prices and time benefits associated with offshoring.
• It encourages accountability. Disclosure encourages U.S. businesses to be more accountable for vetting their outsourcing partners. American businesses should determine the following: Are overseas workers employees of the outsource partner or does it use subcontractors? Is data actually being sent overseas or is it only being viewed from a domestic data source? What are the privacy and security policies of the outsourcing partner?
• It eases the possibility of an inadvertent anti-consumer backlash. Allowing customers to opt out of overseas outsourcing practices separates the labor issue from the disclosure issue, setting up a possible clash between consumer power and labor power.

E-LOAN's privacy policy specifically addresses overseas outsourcing, as do our loan applications. We disclose our practices so consumers feel comfortable doing business with us. We understand the benefits of consumer trust, and that's why we believe our program is not only good for privacy, but good for business.

Tess Kolaczek is privacy manager and Chris Larsen is CEO of E-LOAN.