The ethics of offshoring

Much is written in the media about the ‘slave wages’ and sweat shops of Asia. This concept is outdated and virtually irrelevant when it comes to skilled ‘white collar’ roles offshore.

When it comes to offshore labour, there are two key ethical concepts that tend to concern both Australian employers and the public generally: the ethics of working conditions, and the ethics of low wages.

Generally speaking, Australian employers show the same behaviour offshore as they would show in Australia. They run offshore teams because it makes business sense to do so, not because they have a diabolical urge to oppress the poor. They therefore spend money on wages and work environments that are conducive to getting a high quality result, and more often than not this means paying above market rates for wages, and utilising A-grade office environments.

Without exception, all the many hundreds of offshore offices of Australian companies that I have personally inspected have been A-grade working environments by Australian standards.  Not crowded, well air conditioned, comfortable chairs, standard work hours, and regular breaks and holidays which comply with the local employment laws.

This is necessary to attract and keep good staff offshore, just like Australia. These roles are not just answering phones in call centres; they are all sorts of skilled positions, like accountants, paralegals, construction estimators, web designers and skilled administrators. If they don’t get treated well, there are more grateful employers to hire them. If they pay too low, skilled employees will leave and get another job.

The ethics of low wages is another major concern for many.

It is actually the cost of living which determines whether someone is well-paid at a certain wage, not the wage itself. One dollar varies in buying power tremendously between different countries.

One example is the cost of an ordinary can of the soft-drink “Fanta”. I have recorded the price of this product in many locations around the Philippines and in Australia. On average in Australia we pay around $2.00 for a can of this drink. A Filipino pays around 20 cents. It’s one tenth the price. That is just one example, not everything is one tenth the price, but rent is often about that same ratio.

A Filipino administration worker earning $A9000 per year may sound low paid – that’s just $173 per week! However, a little research will reveal that a typical dual income family on this wage can afford high quality accommodation, sends their children to private schools, and has a live-in cleaner and cook. In many respects their lifestyle is similar to ours, and in some ways, better.

Every time I run an Easy Offshore workshop, the Australian business owners in the room lament that they wish they could afford a weekly cleaner, let alone a full-time housekeeper or a nanny.

It’s also not unusual to see a couple on these wages supporting their extended families of ten or more people who may not have full-time employment themselves. Not only is their “low” wage ethical in terms of buying power, but it actually benefits ten times the number of people that it would in Australia.

This is where the ethical concern of slave wages gets entirely flipped around to show that the opposite is usually true.

In countries such as India and the Philippines, income earned by working for foreign companies (on ‘low’ wages) is creating a degree of distributed wealth which has never been seen before.

Where wealth was formerly concentrated in the hands of a tiny social and political elite, the jobs that Australian businesses create overseas are having a massive positive effect on social welfare, health, education and every aspect of society. The respective governments of these countries are actively encouraging this sector as a key part of growing their countries out of general poverty.

So should business managers feel guilty about hiring offshore because they might be exploiting their foreign workers? Or should they feel satisfied that in a very real way they are helping a developing nation to fix its poverty?  Should they feel guilty that they are not hiring an Australian employee? Or should they feel good when their staff member expresses genuine gratitude for the job and enjoyable work that they have?

It could easily be argued that the $9000 spent in offshore wages has a far greater humanitarian impact than the $60,000 in equivalent wages spent here in Australia. Is one human life as good as another human life, or should Australians value Australian lives over any other? If there was another good job waiting for the Australian employee, would it matter as much? Would we feel differently if we didn’t believe something was being taken away from us?

Ethics are by their nature a very subjective issue based upon our experiences. If we do not widen our experiences to understand the new global business world, then we run the risk of making dangerous assumptions about global changes which may radically impact our businesses. Every single director and CEO who goes and sees these offshoring hubs for themselves is transformed and comes away with the realisation that every business is now global, and that global resourcing need not compromise ethics.

Scott Linden Jones built several businesses in the IT industry since 2002. He is the founding adviser at Easy Offshore (www.easyoffshore.com.au), providing offshore educational and implementation services to Australian businesses. In 2012 he authored a book on globalism called The Third Wave.