A short overview of offshore outsourcing: practical and ethical arguments for and against, from a small business perspective
Published December 25 2009, 11:08pm
Why read this overview?
It will enable you to quickly gain an understanding of the pros & cons of outsourcing to cheaper, foreign labour.
Download the 3 page overview PDF
Why did I write this overview?
Business ethics are an important consideration for me when deciding on new ventures. I feel that running a business ethically is the only sustainable way to do so, if you believe there is more to success than profit generation.
Next year I will have the opportunity to start a business in a year-break from my degree. A natural consideration for me is to start a web-development company. In order to potentially earn more and work less, it's tempting to outsource as much as possible to cheaper foreign labour, for example in India or China and act more as a manager than a developer.
Is this ethical? I wasn't sure, so I spent a day collecting as many opinions as I could find on the subject and have compiled a summary in a three page overview.
What do I think?
I've tried to keep my opinions out of the overview, so I'll present them here. I believe offshore outsourcing to be neither ethical nor unethical: it is a business tool. The morality is dependent upon the intentions of the business and the manner in which it is done. I now believe that for a small business, offshore outsourcing can be a win-win solution, so long as the company initiating the process is careful not to exploit the labour force, for example by ensuring fair wages and working conditions.
I do not have an issue with a small business providing work to an offshore contractor instead of a local one assuming their skills, qualifications and attitude are comparable (or the price drop justifies the drop in quality). We now operate in a global market and so in order to maintain a competitive edge I have no issue with a business hiring globally. If a local contractor wants to be paid a higher wage, they must offer a superior service, living in a First World country should not be a qualification in and of itself.
I'd like to add that I have some experience from the local contractor's perspective. During my previous gap-year I founded a one-man web development company and secured a high percentage of customers through online project bidding websites, in which I had to compete with extremely cheap (and highly skilled) Third World developers. I still managed to secure good contracts and if anything this forced me to diversify and use my full skill set to regain my competitive advantage. Yes, it was harder, but that's business!
Add to the debate!
If you have any opinions I would be delighted to read and respond to them. Please feel free to leave a comment below, I may even include it in the report if you are comfortable with that.