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Sallie Mae (SLM)
Sallie Mae Will Ship Some Jobs Back to the U.S.
As companies across the United States continue to ship jobs overseas to capitalize on cheap labor and materials, Sallie Mae, the nation's leading provider of student loans is choosing another approach. Sallie Mae operates under its parent company SLM Corporation. The company announced on Monday that it would bring some of its outsourced jobs back to the United States, which will result in the creation of 2,000 U.S.-based jobs. Sallie Mae has operations in 20 cities across the U.S., and manages $180 billion in education loans and serves 10 million student and parent customers. The economy is still far from a total recovery, so why is the company choosing to bring these jobs back during this time? Is the company setting itself up for another upset? Will these jobs end up being eliminated as soon as they return to the U.S.?
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The news from Sallie Mae was definitely unexpected and left some spectators confused. In the midst of surging unemployment and news of major layoffs, any sort of report on job creation is always a breath of fresh air. The company did not release many details about the plan, but it did say that over the next 18 months 2,000 jobs will be added in its call centers, information technology and operations support across the country. The company has struggled over the last few quarters as credit markets became practically frozen, which prevented the company from approving and providing student loans. The current economic conditions have severely hurt the company's business and shares in the company have fallen 39 percent this year. Taking this all into consideration that still leaves the question of why they have decided to move these jobs back to the U.S.? In a statement released by Chief Executive Albert L. Lord, he stated “The current economic environment has caused our communities to struggle with job losses. They need jobs, and we will put 2,000 of them into U.S. facilities as soon as we possibly can.” Sallie Mae's reason behind this decision seems valid, but they may be in store for a rude awakening if the economy stays the same or gets worse.
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Unfortunately if things become worse, Salle Mae will be left holding the short end of the stick. The company's business revolves around credit markets so if they remain tight or become practically frozen again, the company's primary business will suffer. If that occurs, then job cuts will likely follow. Sallie Mae must be confident that a turnaround is on the horizon and they will not have to deal with this type of situation. One other point to consider is that the company may be trying to show American citizens that it is committed to helping this country reclaim the fame and glory that it once had. Some companies have been working overtime to show the American people that they are committed to helping the country get back on the right path. If these companies, including Sallie Mae, are able to truly help the economy they may be able to improve their own businesses because people will be committed to helping companies that helped the economy recover.
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Only time can really tell if Sallie Mae's decision was the right one for the company. Although, the idea of returning jobs back to the U.S. is always a good one, under the current circumstances it may not be the most logical one. No one wants to be hired only to have the position eliminated or shipped back overseas in 3-6 months. However, Sallie Mae should not have a problem filling these 2,000 positions despite what people may know about the current credit crisis. Shares of Sallie Mae rose 46 cents, or 8.6 percent, to $5.81 in premarket trading.
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