Outsourcing and Call Center Blog

10 October, 2007

Is Outsourcing Ethical?

As I’ve stated previously, I get quite a few visitors who are searching for information on call centre and outsourcing ethics. I normally interpret this to mean that they want to run an ethical call centre but clearly many (if not most) really are thinking about whether it is ethical to outsource at all. You really can’t know about who is visiting or why, unless someone leaves a comment, but I imagine the people looking at this issue may be managers who are thinking of outsourcing and wondering if it is the “right thing to do” or maybe students assigned to write a term paper or participate in a debate. Who knows. But as a Westerner sitting in India and working at an outsourcing firm, well, I should probably say a thing or two about this, and I’ll try to keep it as personal as possible.

Free Markets & Competition
I haven’t always been a marketer, at university I studied economics and got my undergraduate and graduate degrees in that discipline. When I was studying economics, Milton Friedman had just won the Nobel Prize and was emerging as a force on the national stage, most of my professors venerated him as did I. This made me a bit of a free-market guy then. Now in my later years I have certain reservations about free-markets as well as capitalism in general but I do accept that we live in a society that generally favours both. I submit this as background for my belief that outsourcing really isn’t anything special, it is the free market at work.

For pretty much my whole career I have been in Sales or Marketing. In each of my positions my job has been to increase the revenues of the company that I worked for and I can’t think of a single time, even with Illinois Bell and with AT&T, where I didn’t have competition. The nature of competition is to beat the other guys. Say what you will about a pie that’s big enough for everybody, but that’s not what’s happening on the ground. Out in the trenches we are fighting for each project, to win each RFP and to succeed while others fail. When the other guys failed, I assume people lost their jobs. I know that’s what happened in my company in Sweden. Our sales guys failed to get new work because some other companies were offering to do the jobs better, faster and/or cheaper and a few hundred people who used to be working on billing projects were gone.

Winners & Losers
Now I’m with a company whose business is outsourcing. My main goal is to take all of Wipro and Convergys and Genpact’s business. If I am successful it means I will hire lots of new staff and they won’t. The losers in that game though really are the insourced staff who will lose their jobs because my company can do the work better, faster and/or cheaper. That sucks, it really does, I’ve been laid off before and it’s not nice. But it’s not a matter of ethics, it has to do with this system that we are part of called capitalism and the reasons aren’t personal they are economic. One of the sharpest people I’ve ever worked for or known is a guy named Mike Durance who is the CEO of a Canadian new media company. One time when I was working for him, I was probably complaining about having to fly coach class on an international flight at the time, he said, “the nature of business is to continually cut back and reduce costs”. Some people call this a race to the bottom, I don’t know.

Of course there are winners in all this. CEOs (like Mike) will increase their bonuses for reducing costs and that should benefit shareholders as well. As I understand the politics of America for the last 6 years or so the prevailing belief is that if wealthy people are made even wealthier, that’s good for everyone (reminding me that David Stockman who introduced us to this “trickle down” theory during the Regan administration is now under indictment and facing 30 years in prison. I wonder if that’s enough).

For the people who lose their jobs to outsourcing, it doesn’t matter whether their jobs went to India or Indiana, the impact is exactly the same. The remedy is exactly the same too. Americans are lucky enough to have this incredible economy and incredible creativity and amazing flexibility that, on aggregate, keeps creating new jobs in new industries for new people to flow into. You could try to block this whole cycle with some kind of legislation, but then you would get France and god forbid, no one wants that.

Ethics and Outsourcing
For me personally, I have to face the fact that I am a part of a capitalist economic system. This is not altogether bad, it’s the only system I’ve ever known and it seems to have generally been quite successful. Capitalism has done some wonderful things for a lot of people, just ask Bill Gates or Richard Branson or Roman Abramovich or my dad. My father’s father scratched and clawed his way through a tough life but his eldest son became a respected and successful professor of Chemical Engineering in large part because of a system that rewards hard work, ambition, creativity and flexibility and is relatively blind to social class. As part of that capitalist system my job is to make more money and jobs for the team that I’m on at the time. Right now that team is in India and if anyone thinks it is unethical bringing greater wealth to this country that by some accounts has 836 million people living on less that 50 cents a day then I’ll plead guilty to that.

To me, of greater ethical importance is how my company treats its employees and how the country I am in deals out social justice. Frankly, I am less comfortable on these issues than I would like to be. I came here to learn and one thing I have learned is that we in the West have a respect for the intrinsic value of human beings that is not universally shared. I have seen this on the streets of Delhi and in the news and I’ve also seen how it permeates the workplace I am in as well. I am left with the feeling that if we in the West export some of our values about respect for the individual along with a few jobs we will have made the world a better and more ethical place.

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7 Comments »

  1. Greetings from the far east of the western world.

    Outsourcing can be a great stimulant to productivity. There’s nothing like a hint dropped by management that your job may be outsourced to India or the Phillipines to motivate worker performance.

    In the west ( Canada in my case ) we have been indoctrinated to believe that call centre workers are the new sweat shop employees of India and the Philipines etc. This is because we have seen so many destitute people in the media trying to survive and raise families on meagre allowances in those and other countries.

    This type of person is an ideal candidate for abusive employers who demand long hours, few breaks, lower pay scales, inadequate work spaces, few holidays and stringent work performance. Employers who are almost totally focused on profit and who have few cares about the quality of life of their employees. It’s terrible image and I know it does not fit you or many others I read in the blogosphere. Nonetheless, the image of oversees call centres are as I described above.

    North American workplaces are for the most part rid of those types of employers and workplace rules are covered by Government legislation. The battles to instill adequate pay for work took place in North America the last century and it was a tough one. The prosperity that followed is now one of the reasons we are losing many of our work opportunites to oversees providers.

    I admit that in some cases North American workers have become unpoductive and demanding of benefit packages disporportionate to their value to the job required. Call centre workers however do not get rich. Most of them are one or two pay cheques away from financial problems. the ones I know ( and there are many ) are ordinary people trying to provide a decent living for themselves and their loved ones.

    Is very disconcerting to realize that no matter how hard you work or how committed you are to making the company a success your job can be arbitrarily taken away from you and shipped around the world because of the strength of your country’s currency or the availability of cheap labour in a foreign market.

    The world is a great marketplace. Adjustments will always be necessary to accommodate market conditions. People who recognize that, embrace change and can adjust accordingly are happier people.

    Bring on competition I say. If we lose a contract to price or cheap labour in other countries we will ultimately replace it with another.

    best wishes,

    Mike

    Comment by Mike — 13 October, 2007 @ 5:13 | Reply

  2. Hi Mike,

    You bring up a number of good points here that I want to comment on.

    Like most indoctrinations, there is some truth in what you’ve been told. Frankly I think the idea that employers are, “almost totally focused on profit and…have few cares about the quality of life of their employees” is fairly accurate. Fortunately for the employees there is quite a bit of competition for their services and there are a lot of multi-national firms like Convergys and IBM in this business now who bring some of the standards of treatment we are more accustomed to in the West. Generally speaking this combination means that the agents are being treated pretty darned well.

    In our centre, most of the international agents are university graduates or studying at college level and are making a pretty good living here. Bearing in mind that people don’t leave home, sometimes even after marriage, their call centre salaries give them a considerable amount of disposable income. The better, longer-tenured agents could make the equivalent of 35-40K USD when you take into account the difference in cost of living here.

    I’m sure there are some more sweat-shop like centres. The domestic operations here run on a much tighter budget and the conditions are not nearly as good. Moreover, I think some of the smaller outbound centres are much more boiler-room, just as they would be in the West actually.

    You say, “Is very disconcerting to realize that no matter how hard you work or how committed you are to making the company a success your job can be arbitrarily taken away from you and shipped around the world…” I think that’s right on both counts, it’s a fact and it’s disconcerting. But having a monogamous relationship with your company went out of style with paisley-print ties didn’t it? Companies simply will not return loyalty, they can be expected to make business decisions that benefit the shareholders, and decisions to benefit employees only to the extent that they benefit shareholders.

    Yet even in business people are definitely worth being loyal to. I mentioned Mike Durance in this entry. If Mike called me tomorrow and said he needed me to be on a plane, I’d be on a plane. That’s a relationship that I expect to have the rest of my life and it has value and I assume I’ll be making deposits and withdrawals from it for years to come. There’s no company that I could have that same arrangement with, nor would I get the same benefit from it if I did.

    Well I’ve gone on and on here completely off topic so I had better just stop. I do appreciate your comments especially as they are always insightful and stimulate new ideas for me as well. Cheers.

    Comment by shamrin — 13 October, 2007 @ 15:17 | Reply

  3. Hi there, i am planning to offshore our company to India. I would like to discuss it a bit with you in private, if you are okay with it. Please email me at gdhillong@gmail.com or you can call me at 604-835-1513
    thanks
    Dhillon

    Comment by Dhillon — 29 March, 2008 @ 5:56 | Reply

  4. Dear Mike,

    I wish I knew how to contact you, because I would very much appreciate learning more about the conditions in foreign customer service operations centres. If you could possibly email me at phoebeow@interchange.ubc.ca, that would be fantastic. I was on the phone with an operator from Epson and any mistake he made he would apologize over and over again for, which led to me to Google customer service outsourcing with unsatisfactory results.

    Thanks very much,
    Phoebe

    Comment by Phoebe — 7 May, 2008 @ 3:52 | Reply

  5. usługi informatyczne…

    Trackback by usługi informatyczne — 4 May, 2010 @ 10:01 | Reply

  6. Hi,there are many good points that you share with us. this is also very beneficial for the business too.

    Comment by BPO PROCESS — 9 May, 2010 @ 10:11 | Reply

  7. Hi,there are many good points that you share with us. this is also very beneficial for the business too.
    brad

    Comment by BPO PROCESS — 9 May, 2010 @ 10:15 | Reply


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