The Coming Skilled Labor Shortage

HDEP International is an outsourcing company. Our business is to provide our customers with a well-organized, well-trained and reliable labor source in a less expensive location overseas. As we are a labor intensive company, we watch the labor markets in both the United States, where our customers are located, as well as in our offshore locations, where the production staff is located.

We believe that both the United States and some offshore locations will experience a skilled labor shortage in the coming years. There are a number of trends that make this almost inevitable and over the next year we will outline the trends and their anticipated impacts in different regions of the United States as well as in the offshore locations.

The shortages we are focusing on are “skilled” labor shortages. We define skilled labor as people who have at least two years of college and the ability to process information and make informed, intelligent decisions based on a set of facts. For the title insurance industry we include escrow officers, abstractors, indexers, searchers and examiners. The title insurance industry’s work is complex and fraught with liability, and employees must examine title evidence and ensure that liabilities are cleared. A missed mortgage or lien could result in hundreds of thousands of dollars in claims; an incorrectly evaluated property lien could result in a lawsuit and its emotional distress to the homeowner, plus the cost of the lawsuit. All of us in the title industry know and understand the risks.

And yet, we are constantly under pressure to do more with less at a lower cost. The predicted result – higher claims – has come to pass.

As experienced employees in the title insurance industry begin to retire, who will take their place, especially when there are promotion-laden opportunities in other industries in hip urban settings? Some of our customers have already begun to see the first wave of retirements and begun to expand their work with HDEP International. Many of them are in tight labor markets and have lost younger employees to alternative careers, either locally or in a nearby metropolitan city. These customers understand that it takes up to 18 months to train an examiner, and understand the intense supervisory and training costs that accompany the effort.

Offshore outsourcing has always been about lowering costs. As that was the primary motivation for outsourcing to offshore locations, new suppliers attempted to gain customers by offering even lower costs. We believe that the lower cost differential as a competitive edge for offshore suppliers is at an end. Skilled labor shortages are also developing in many offshore locations; wages will rise, employees will begin to move from company to company at ever higher wages. And with higher employee churn, product quality will suffer.

Sustainable outsourcing companies are going to separate themselves by offering high quality output reliably. They will have to be honest with their customers about turnaround times and annual price increases. As the labor shortages will be widespread both in the United States and overseas, offshore outsourcing will continue to be less expensive than domestic production, but the competitive advantage will belong to companies that can produce outstanding products.

HDEP International is considered the “gold standard” for title production and title plant development – accurate, reliable and trustworthy. We will continue to build on the qualities that have allowed us to serve this industry for the past 30 years.