Forbes Magazine reported back in a November 2006 cover story that First American Title was selling more than $5.8 billion dollars a year for title insurance in a story called, “America’s Richest Insurance Racket” Read the full story here: http://www.forbes.com/forbes/2006/1113/148.html
Reporter Scott Woolley extensively interviewed Parker Kennedy, head of First American. Forbes noted that thanks to computerized record-keeping, the cost of searching for a home’s ownership records online has fallen to as low as $25. The average cost for claims on title insurance policies was running approximately $74 per policy. Although Forbes concluded that everyone should agree that this is a pretty lucrative business, and title companies are fat and thriving, First American’s Parker Kennedy claimed that “Nobody is cutting a fat hog,” whatever that means.
So why is this relevant to the off shoring of jobs? According to Forbes, Kennedy attributes his profit margins to several things including the efforts his company has made to deploy technology and move jobs offshore. Forbes noted that in 5 years, First American closed 48 out of 50 offices in California replacing people and paper with databases and offshore data entry clerks.
Kennedy says, “In the old days, if you wanted to double your business you had to double your people. Now you can double your business and increase your staff maybe 10%.”
The Forbes article suggests that off shoring of jobs has been part of First American’s long term business strategy aimed at adding to the huge profit margins they enjoy.
Given these kinds of profits, do you think it is really necessary for them to continue their policy of sending jobs offshore?
We’d love to hear your thoughts.