The offshore sourcing of IT and back office services to distant locations such as India is transforming the world of business. But there are surprisingly few cheerleaders for such a high profile business practice - in fact most companies are unwilling to even publicly mention the 'o' word. This may be understandable given the storm of politics and nationalism that has surrounded the 'export of jobs'. But there is a secret weapon for the advocates of offshoring in this circuitous debate. At a time when shareholders and stakeholders are increasingly insistent on social responsibility, offshoring has impeccable ethical credentials.

Whether or not offshoring has been undertaken in-house or via an outsourcer like Accenture or India's Infosys, the basic proposition has been that it uses low cost workers as an alternative to EU or US labour costs. For critics, this makes it the latest manifestation of destructive global capitalism, exploiting workers both in the developed and developing worlds.

Many of the major offshore plans announced over the past 5 years have been greeted by union fears, naturally over the loss of UK jobs, but also over the potential mistreatment of workers in India and other developing countries. The view is that offshore competitiveness rests on overworking or underpaying staff in poor countries, with poor working conditions - small work cubicles, excessive shift lengths of 12 or 15 hours, and low wages typically cited as examples of exploitation.

But these fears of widespread worker exploitation do not stand up to scrutiny. Indian workers may receive up to one tenth of the salary of a western worker, but service sector jobs offered by multinationals typically offer the best employment conditions and opportunities in developing countries. Pay is an order of magnitude higher than non-service sector alternatives, and there are a range of softer benefits - for example the Indian outsourcer Genpact provides free transport, free meals and frequent staff entertainment for their call centre workers. It is hard to level allegations of worker exploitation against a firm like Infosys that receives well over a million willing job applications every year. And a recent report, by the Communication Workers of America (CWA) trade union, even noted that in many respects Indian call centres are better places to work than those in the US.

Offshoring is opening the doors to for employment and transforming people into professionals. McKinsey forecasts by 2008 IT services and back-office work in India will increase fivefold, to a $57 billion annual export industry employing 24 million people, which will account for 7% of India's GDP. In short, offshoring is providing workers in India and elsewhere with better and better paid jobs than would be available otherwise.

Every credible study of development underlines how developing economies benefit from the global sourcing trend in terms of income and employment generation. For UNCTAD, 'key benefits for host countries include increased export earnings, job creation, higher wages and the upgrading of skills,' with 'further positive spillovers in terms of raising the competitiveness of human resources and improving the ICT infrastructure^a* .' In other words, the global services industry is providing developing economies with a new route to development and technology transfer. Countries as diverse as India, Ghana and Jamaica are tapping into the global sourcing business and diversifying their economies away from agriculture and tourism.

Offshoring is also driving positive changes in infrastructure, the law and society. Countries are investing in new roads and airports, whilst property laws and data protection regulations are overhauled. Women's groups are also pointing to the emancipation of women in traditional societies. There will be challenges regarding environmental impact, and pressures on traditional ways of life, but in balance offshoring appears to be a catalyst for positive change in most instances. A telling point here is the silence of the NGOs - the firebrand critics of global business have, on this occasion, fallen silent.

So in principle, offshoring has a compelling ethical case - it provides good opportunities for development and employment. But companies should not leave the issue here. Maintaining an ethical set of work practices is an issue for vigilance and risk management, as failures in compliance can and do occur. It is up to businesses to make sure the positive potential of offshoring is realised, and downsides are avoided. Yet because offshoring is so often driven by the 'numbers', such non-financial issues can get ignored. All too often these aspects are dismissed as 'emotional' or 'soft', and therefore fail to receive appropriate management attention.

Quite apart from the case for behaving ethically on its own merits, failing to behave responsibly can cost businesses in terms of brand and reputation, goodwill amongst stakeholders, and customer and employee retention. To avoid these issues, companies should adopt and enforce ethically and social working practices throughout the firm - BT's set of 12 guidelines for ethical offshoring, as set out in its report, Good Migrations^b* , is a good example. These requirements apply equally to both 'in-house' and outsourced offshoring, although outsourcing poses the additional complexity if control and oversight of a distant third party.

So offshoring can be a great social boon for developing countries and workers - provided that companies continuously apply, review and enhance socially responsible working practices. If this is done properly, in years to come offshoring could be seen as a badge of corporate responsibility, not something to be quiet about.

About the Author
Sweta Patel is a senior consultant, specialising in BPO at Alsbridge, the premier consulting firm providing independent unbiased advice on outsourcing, shared services and offshoring. Sweta works on offshoring and sourcing strategies for clients across various industries, including feasibility assessments, location analysis and transition management. Sweta can be contacted at sweta.patel@alsbridge.com.


*a. UNCTAD, 'Offshoring - at the Tipping Point?'
*b

1. Consult with affected stakeholders before making a decision to offshore.
2. Clearly articulate policy and be honest and transparent about company decisions.
3. Limit or avoid involuntary redundancy.
4. Invest in retraining and skill development for affected employees.
5. Work with communities to help find ways to fill the gaps created by offshoring.
6. Work with suppliers in the recipient country to develop best practice and CSR awareness.
7. Set standards for suppliers, and monitor their implementation.
8. Train and develop new employees and provide growth opportunities.
9. Help employees deal with psychological and cultural issues that may be involved.
10. Listen to local stakeholders to understand their needs and perspectives.
11. Invest in community, to secure the company's long-term social license to operate.
12. Share technologies and skills to enable local people and companies to advance.