An Open Letter to Accountants: On the Ethics of Employing Offshore Staff

12 Aug 2019  |  
Tags: Outsourcing
A Case for Ethical Outsourcing

I recently stumbled upon a swarm of comments fired onto a LinkedIn post by fellow accountant, Mark Telford. It wasn’t meant to be a debate. All Telford did was openly admit to outsourcing accounting services – the rest was an interesting, sometimes fiery exchange between Telford and accountants from all over LinkedIn.

Whatever name it goes by “outsourcing, offshoring, building a global team,” it ends up unleashing a furious debate that plunges and soars between topics like cheap labour, poor quality to net job creation and economic growth.

But – What’s all the fuss?

“Cheap” is not why I fell in love with India. It promised way more than that – so much that when I returned to England, I convinced my wife to move to India for a couple of years. It was hard to not fight back against the home-grown objections to outsourcing accountancy work to India because I could see the potential that lied within the brightest CAs I employed.

It saddens me to know that outsourcing is now the bugaboo of every presidential campaign in the US and some British political campaigns too. If you think topics like death penalty or legal marijuana are too hot to touch– outsourcing is already bursting into flames. It is laden with inflammatory accusations on hindering moral action, quality of life and the loss of jobs in the west.

But, in the face of statistics, a lot of these ethically charged accusations blow up in the smoke. When I started QX in 2003, there were only a few companies that practiced offshore outsourcing but over the last few years, it spread like wildfire with some of the world’s largest companies offshoring its services abroad: IBM in information technology; UPS and FedEx in Logistics; Lenovo in computer manufacturing; including Nike and Apple. I’m sure if you look around your room, anything from your computer to shoes could be a product of offshore outsourcing – and yet no less in quality or longevity.

I was never able to put a finger on the double standards of how we look at outsourcing until I came across a 2012 Harvard Business Review piece that correctly summed it up – “offshoring and outsourcing today are like sex in the Victorian era: repressed or criticized in public discussion, much practiced in private behaviour.”

Here’s a hard fact though: outsourcing has been a sleeper hit across all industries and is discernibly popular. But is something so widely practiced across premier organisations unethical? From 15 years of running an accounting outsourcing firm in Ahmedabad India, here’s my take on the some popular ethical dilemmas most people have about offshore outsourcing:

The Blue Collar, White Collar Debate

Adding financial insult to an ethical injury, companies who outsource (publicly) are often thrown under the bus for underpaying offshore employees.

Pop culture media has made things worse – somehow, offshoring wafts up the image of malnutritioned Indian workers slugging under a parched terracotta roofs in the middle of an overpopulated city. But that isn’t reality.

Low wages, poor working conditions and labour is what most people associate with developing countries. Since outsourcing was formerly, mostly carried in these regions, it’s looped under the same labels – just by association.

In short – it’s a branding thing.

I think this is where the ethics play a part to combat stereotypes. The Scalers surveyed the software development outsourcing sector in India and came up a rather logical argument that’s often over looked: Low wages is not an absolute concept, but a relative one. To reiterate in the language of accountants, despite earning a fraction of his British counterpart, an Indian outsourced accountant’s cost of living is low and his purchasing power strong. Ethically, they are paid more than the current market value of their job in the Indian Accounting Industry.

Despite the geographic distance or the gap between economies, rearranging where and how work is done doesn’t change the nature of the work from being a white collar job to a blue-collar one. In fact, on a brighter note – In India, it’s actually helping toward improving the overall diversity in the white collar jobs by boosting job prospects for Indian women.

A Bargain for Quality – is it?

On the contrary, QX was named after quality and excellence because I wanted it to stand for standard of work we’re producing for our clients.

If Microsoft was branded to be the philanthropist of the business-verse, companies who chose to outsource are often unjustly branded to be the cheapskates; or corporations that are willing to sacrifice their quality for cutting down costs.

Since outsourcing is predominantly considered a cost-saving measure, there has often been an expectation of low quality output to outsourced work. But on the contrary: a University of California research shows that quality is one of the biggest factors for companies to keep outsourcing their functions.

Employing offshore talent is not always about parlaying local talent to stock up on savings. Most businesses are looking for a partner to rely on for producing quality and error-free back end work without having to worry about it, while they can focus on client servicing and business development.

 

Overall Productivity or Loss of jobs

Over the years, there have been hundreds of studies suggesting that global outsourcing has been a net job creator for the markets in the west. It was evident that as a result of shifting work overseas, more jobs were created back home than were lost– as reiterated by the 2010 WSJ piece that talked about the positive effects of outsourcing on the US economy.

Hence when debating the ethics of outsourcing in regards to employment, jobs that are outsourced should not be thought of as lost but instead “freed up” for more productive ideas and positions. Moreover, when taking a hard look at the facts – in many countries like the UK, the dire need to outsource often arises from the talent shortage spread across the industries.

But to go back to Telford’s post on outsourcing: Employing Offshore staff is as ethical as going non-vegetarian or dairy-free – it doesn’t violate the basic human rights of either the employer or the employee. I think the only thing perpetuating injustice is pre-conceived notions. Outsourcing has always been scooted down to the extreme ends. Either mildly sugar-coated as a “global team” or harshly antagonised as “corporate sweatshops.” But, when looking at it objectively, one can easily see that the grey areas it lies in, is full of hyperbole, fear and hostility like all things that are foreign to the west and are a subject to acceptance: diversity, immigration and climate policies.

 



About Chris

I am an ICAEW qualified accountant and the Founder-Chairman of QX Ltd. I started with just five staff members at a small office in Ahmedabad, India but I now lead “a family” of over 1200 people across India, UK and the US. When I am not working, I am probably on the plane because I travel voraciously between my offices spread across the globe. I recently moved to New Zealand with my wife, Catherine, who is a professional printmaker, and three boys.