Dive Brief:

• Waste Management is terminating 120 jobs from its Phoenix billing center (equal to 6% of its Arizona labor force) and outsourcing them to India, just 18 months after the company consolidated operations in Phoenix and relocated many employees there. The move will cut Waste Management's labor costs for those positions by an estimated 75%, according to Arizona Daily Star.
• Waste Management of Arizona said the business decision "is about optimizing our back office processing functions" including data entry and billing, as reported in the Star. The move begins this month and workers who stay on through the transaction will earn $2,000 to $8,000 in retention bonuses as well as severance pay. They may also have the opportunity to assume other positions within the company.
• Waste Management stated that an average transactional processor costs $45,000 in the US compared to $10,000 in India.

Dive Insight:

This decision follows a downward trend for North America’s largest solid waste corporation. Waste Management’s approximate 40,600 employees worldwide represent 2,100 less workers than two years ago, coupled with an annual revenue decline from $14 billion in 2013 to $13 billion in 2015.

"These are always difficult decisions, and we’re doing what we can to encourage affected employees to apply for other available positions within the company," spokeswoman Janette Micelli said in an email statement, as reported in the Tucson Daily Star. She added the move will result in "a lower cost (for labor) with demonstrably improved efficiency and better quality."

There are arguments on either side of the fence as to whether outsourcing is a good business practice. Proponents believe it assists poorer countries while saving American companies in labor costs and ultimately cutting customers’ costs. Opponents say the only benefit is to companies' bankrolls while coming with an expense to loyal workers' job security.

Outsourcing within waste management is not an uncommon move for the very reason opponents support it; cutting costs and improving efficiency. Though it is more common for companies and municipalities to outsource jobs within their own regions, claiming it not only improves their bottom line, but strengthens the area's local economic base. Still, the question of employee loyalty has come up before, even fueling lawsuits over lost benefits and pension rights.