Outsourcing - An Ethical Perspective

Dr. Purushothaman
December 13, 2013

For many, the term Outsourcing is synonymous with corporate irresponsibility. The media loves to focus on the horror stories such as the garment workers in Bangladesh, the Nike workers in SE Asia or the Apple workers in China. For organisations caught up in these scandals, significant damage can be done to their reputation and brand. But there is a positive side to the story.

It is now fairly well accepted that outsourcing is not just an inexpensive labour arbitrage tactic, but also a strategic business decision. It’s about growth, global expansion and adding values. However, ethics and outsourcing continue to be burning issues for many businesses, government and the general public in western economies.

In April Time magazine quoted, “the horror of Rana Plaza finally made global consumers wonder about the true cost of a T-shirt manufactured halfway around the world for $5″. Also in April CBC News ran a story about the Royal Bank of Canada (RBC) who were trying to save money by hiring foreign workers when its own employees were capable of performing the same service.

The public backlash from this coverage caused the company to issue a public apology and implement a new policy that its suppliers must, not hire foreign workers from outside of Canada, when performing services on behalf of RBC, where a worker eligible to work in Canada is available and able to perform the service”.

Recently, we have seen how call centre workers in the down stream supply chain in the Philippines have been treated by unscrupulous operators, whose clients have included charities and church groups back in the USA

It's important for organisations who are concerned about their reputation and brand to engage with decent service providers and outsourcing partners who are competent, provide a quality service and are professional and ethical in the way they conduct their business.

Don't be cheap

One of the major causes of failed outsourcing relationships is not being able to identify the right provider for the organisation's outsourcing requirements. It stands to reason that providers who charge bottom of the barrel prices are likely to be running sweatshops that are exploiting desperate and underpaid workers.

As well as the likely damage to the client's reputation if reported in the media, the quality of the work will be low, and there may be other issues around security, mismanagement of resources, environmental etc.
Good service costs money! Customers expect a certain level of service from an organisation and when the actual experience doesn't match their perception they become unhappy with the organisation. For example, if you were going to a five star restaurant for an expensive meal to celebrate a special occasion, the level of service you would expect would be very high compared to going to a fast food outlet for lunch, where your service expectations would be very low.

The challenge with call centres is that customers expect a certain level of customer service commensurate with the brand and if you have skimped by using ‘cheap as chips' service providers then don't come crying when it all goes wrong and you start losing customers.

This will most certainly impact on the quality of products and services being delivered to the client's customers. Reduced quality of products and services means less sales and ultimately reduced profitability and we all know how that ends.

Social Responsibility

According to a recent white paper and research from Telus International, (www.telusinternational.com) by responsibly and ethically employing hundreds of thousands of people, BPOs are shifting the social landscape in developing countries around the world, while the industry is recognising that success can no longer be defined by bottom-line concerns alone.

When evaluating a perspective provider you need to look at what they do to help the local communities they operate in. Are they involved with projects that address basics like housing, education and clean water? You will find that successful BPOs with quality reputations will be socially and environmentally responsible organisations.

Focus on Quality

Quality, control and cultural differences are issues that will never go away when one talks about the risks of outsourcing. Cultural differences between the West and Asian countries are huge, and are often a cause for worry in an outsourcing relationship.

But these can be bridged by understanding the cultural sensitivities and how they can affect the outsourcing relationship. This needs to be done early in the relationship to avert any issues that can crop up later. Ensure your provider has strong programs for cross cultural training and coaching in place.

Work environment and security

Poor working environments and unfair HR practices are often cited as a consequence of meeting the West’s outsourcing demands. In some cases this may be true but all quality BPO Service providers adopt ‘best practice’ when it comes to HR management and provide their staff with comfortable and modern working environments.

Organisations will continue to outsource many of their functions to stay competitive in a fast paced economy. They will hire specialised companies with domain expertise drawing on local and international expertise to handle tasks better and more cost effectively than they could themselves. Hopefully, outsourcing will finally be viewed in a more balanced perspective and still make the significant contribution it has on reducing poverty and raising the standard of living in a number of developing countries.

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