I have been outsourcing to lower wage countries for about 5 years now. Only recently have I started to read about people with reservations of sending work overseas, particularly when their own citizens are facing increasing unemployment levels. Some people also feel in is unethical to pay overseas workers such low fees. I would like to address some of those ideas.
First of all, anyone who establishes long term relationships with professional outsourced developers will realize that the world is not falling to some inhumane subsistence wage. Quite the contrary all talented, professional workers wherever they are located soon start to earn world class incomes. I have seen this scenario play out many times. Low cost outsourcers in countries like India or the Philippines start by offering their services at ridiculously low rates; sometimes only a few dollars per hour. Workers who consistently over-deliver quality work, on-time can steadily increase their hourly rates. There are plenty of workers living in third world countries making first world incomes. It is not unusual for a talented worker to make five to ten times their starting wage in only a couple of years. I have seen it happen with several of my developers. Western income levels are not going down as much as poorer countries’ incomes are increasing.
A few dollars per hour may seem like a criminal wage in America, or other richer countries but in many developing countries this can be well above average. Anyone who has traveled through countries like China, India, Thailand or the Philippines understands the extreme levels of poverty many people have to endure. Even professional careers often only pay $300 or $400 per month. You are not taking advantage of people, you are giving them great opportunities to earn more income and expand their skills.
Another key issue is the entire idea of the nation state. It is important to understand that the concept of nations and countries was only invented a few short centuries ago. We live in a world where it is possible to live and work anywhere. Outdated notions of national boundaries only serve as barriers to the interconnected world we live in. The idea of countries was fabricated in order to better manage trade, commerce and taxes in market oriented economies. I think it is important to start recognizing the fact that we live in a global network based world. Hiring locally or the government equivalent of industry subsidies may protect local producers temporarily but at the cost of disrupted natural trade flows and harming the poorest people of the globe. Consider the fact that in some countries parents are forced to sell their children in order to survive. They are not barbarians, they truly have no other choice. How desperate would you have to be to give up your children?
Most people have no problem buying low priced goods from Walmart, or eating a diet largely comprised of processed food made in distant countries. We all want lower prices. In fact, we demand lower prices. Where do you think those low priced goods come from? They are all produced in factories where workers are earning just dollars a day in harsh conditions relative to developed countries. Purchasing those products does far more damage to the workers, environment and your own health than outsourcing work on the Internet. Think of all the oil consumed in transportation, chemicals used in production, and generally abusive working conditions of overseas factories. I am sure that an overseas Philippine data entry clerk making $2 per hour is better off than most other workers in their own country. In fact, it is impossible to abuse overseas workers. If they are unhappy with the working conditions, all they have to do is stop answering their email.
Don’t forget that those that earn more income want to spend it as well. They buy western fashion, listen to western music and drive western cars. Economists call these multiplier effects. Every extra dollar spent actually generates about $5 in total benefit. The dollar you pay, goes towards salaries and profits of others, who in turn spend the money and generate more salaries and profits, and so on. This is basis for all the global economic stimulus packages being implemented in the world.
The outsourcing revolution is bringing millions, maybe billions of low income people onto the world stage. Teenagers in New Delhi can effectively compete for web development projects with companies in America. The Internet is truly revolutionizing how we live and work. Age, education, experience, race, and nationality no longer matter. Purchasers only care about your ability to deliver on your promises. That is amazingly liberating.
What everyone should really be angry about is all the squandering of opportunities in the world. Far too many people in richer countries have grown up in times of extreme abundance. We have become fat and lazy in an era of increasing convenience and decreasing costs. We all expected the good times to continue forever. Well they have ended. If you want to be rewarded for your work, you have to create real value for your fellow citizens. Those citizens are not limited by the artificial boundaries of nations, but by the one planet we are all fortunate enough to inhabit. Hire the inexpensive worker in the Philippines. With the money you save, strive to create more value in your own company. That will help your customers create more value in their own lives and maybe the lives of the customers they serve. We do not live in a zero sum world.
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Of course, there is potential for those who excel at their work. I wonder, though, how many outsource workers get dropped by those hiring them when they try to put up their rates. What do you do when that happens? Do you continue using them because they’re good? Or look for someone else because, after all, costs are one of the main motivations for outsourcing?