The Right to Offshore Brings the Responsibility to Do So Ethically

Offshoring is increasingly seen as a right to access global capability and capacity. With rights come responsibilities, and more and more organizations are acknowledging their Corporate Social Responsibility (CSR) to their local and global communities.

Consider these ISG top 5 questions for ethical offshoring.

1. How do we justify offshoring? Economically, the global service delivery model leverages comparative advantage, global communications and labor arbitrage. Ethically, it requires consideration of Article 23 of the Universal Declaration of Human Rights, which states that everyone has the right to work, the right to work for equal pay, the right to remuneration that ensures human dignity and the right to join a union. Utilitarian philosophers may say that offshoring is ethical because it is the greatest good for the greatest number; pragmatists may argue that “everyone does it, so should we”; economists may posit the law of comparative advantage, suggesting that work should flow to where it is done best. Practitioners must balance the economic and ethical considerations for the short and longer term.

2. Who has the most right to a job? Jobs are not only moving offshore, but jobs in-country are being impacted by FIFO (Fly In, Fly Out) workers. Global service delivery does not deny a person a right to work, but it may deny a right to a particular job. As jobs and work move around the world, global organizations and individuals have a duty to create new jobs where we have comparative advantage to attract and retain work.

3. How do we reconcile unequal pay for equal work? Pay is tied to skills and experience, cost of living, personal and trade union negotiating power, and supply and demand. All other things being equal, it is ethical to pay equally for equal work regardless of race, gender and location. When things are not equal between locations, it is ethical to adjust pay, not necessarily relative to the same work in a high cost country, but to the same work within the same country. Organizations have the ethical responsibility to support just and favorable remuneration that supports human dignity in communities where they work.

4. What about the right to join a trade union? Unionism in the West has helped to establish worker protections, and union membership in the East is growing. Unions have a role in strengthening negotiating power and supporting the right to work on just and safe terms. The right to join a union and freedom of association are fundamental human rights that should be considered.

5. How can organizations be a part of the solution? Organizations need to consider how to use their market power to create more just remuneration, safer workplaces and greater transparency of global service delivery even when sub-contracting to local firms. To take a hands-off approach and say that it is someone else’s responsibility is not acceptable. Nor is it enough to simply institute CSR measures in the supply chain or audit rights as part of the contract. Collaboration between the client and service provider on ethical sourcing of managed services in various locations is considered a better way to help deliver common business objectives and invest in sustainable practices.

ISG helps organizations work through the opportunities and impacts of a global delivery model. Contact us to discuss the triple bottom line that is right for your organization and your community.