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Outsourcing moves closer to home

A new trade agreement with Central America to take effect Jan. 1 tempts more US companies to try 'nearsourcing.'

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A lot has been written about the outsourcing of high-tech and customer-service jobs to lands overseas. But the latest threat to job security in the United States, some argue, lies right next door, south of the border.

Touting Central America as the "new Asia," pro-business and investment organizations across the region are all talking about the benefits of "nearsourcing." It's the same thing as outsourcing - that is, sending jobs to lower cost locations outside the US - but closer to home: It's South rather than East, near rather than far. And it's increasingly attractive to US firms.

Lured by the ease of working in the same time zone a mere three or four hours' flight away from headquarters in the US, such companies as Dell, Sykes, Sitel, IBM, Proctor & Gamble, and Western Union on the service side and Sara Lee/Hanes, VF Corp., and Russell Athletic on the manufacturing side have been moving business into the region.

Central America received just over $2 billion in foreign investment last year, up from an annual average of $633 million in the first half of the 1990s, according to the UN's Economic Conference on Latin America.

To be sure, the numbers of US jobs - manufacturing and service alike - that are going to Central America is minuscule when compared with those being outsourced to Asia. The number of jobs currently outsourced to India alone ranges between 400,000 and 700,000, says market-research company Forrester Research in Cambridge, Mass.

But with the Central American Free Trade Agreement (CAFTA) scheduled to take effect Jan. 1, interest in Central America is increasing, says Eric Jacobstein, a trade expert at the Inter-American Dialogue in Washington.


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