I wasn’t going to write this article.
I was comfortable with my stance on outsourcing, comfortable enough to recommend it and promote products, and profit from the affiliate commissions, from people who use the catch-call of $2-per-hour labor and the phrase – “they do the work, you get the money“.
I’ve begun the process of outsourcing to the Philippines. We’re currently running tests to find a good graphics person, then next up will be a coder, a VA and so on until I have a solid team of talented people, all of whom will cost under $1600 a month total to employ full time. I can’t even hire ONE Australian full time on that kind of money, let alone an entire team.
I decided to write this article and highlight this issue because it bothers me. The people who emailed me to explain that outsourcing bothered them and that I contributed to the problem by promoting the idea, are to be credited for this article as well. A friend who challenged me, who pushed me to look very closely at my attitude towards outsourcing and the bigger picture, is also due credit for pushing me to shine a light on the issue and change how I outsource.
Sometimes You Need To Challenge Accepted Practices
If you’re considering outsourcing overseas, or you already do, it’s important you read this article.
Over the last few weeks I wrote several articles on the subject of outsourcing. It’s fairly obvious that I recommended outsourcing as a great way to grow your business or even start a business, and enjoy true leverage through help from other people.
The basic premise behind the type of outsourcing we are talking about here, is hiring people from other countries where labor is comparatively cheaper than hiring from your local country. This is only true if you reside in a country with a strong currency and comparably high average salary, like the USA, Canada, Australia or countries in the European Union. People from wealthy countries outsource to people in poorer countries in Asia and Eastern Europe, where there are plenty of skilled individuals willing to work for a fraction of the cost of hiring locally.
When I first heard about this concept many years ago it sounded like a great opportunity for me as an Australian earning money online in US or Australian dollars. Then, as I grew more exposed to the Internet marketing industry, when people promoted outsourcing, using language like “you can hire people for $2 an hour” something bothered me. I didn’t understand how people could be paid only $2 an hour and that not be considered slave labor. I started to wonder if this was a form of exploitation.
During John Reese’s Outsource Force launch campaign, which I promoted in my last few blog posts, John released a video which used the phrase “$2 an hour” as part of the benefit of outsourcing. This, at least to a business person thinking about reducing costs and increasing profits, is a selling point and well worth promoting as a good thing.
My readers are a varied bunch of people who come from all walks of life, with all kinds of opinions, which is wonderful because you provide me with different perspectives on what I write about. In response to some of the emails I sent out promoting John’s launch, I received a handful of messages from people upset that I was supporting what they viewed as exploitation, especially around the concept of $2 an hour labor.
While sometimes I receive negative feedback in response to my writing, it’s not often that I feel a need to write a post to respond to an issue. This time, I do – and it’s because on some level I actually agree with the negative feedback, which tells me that it needs more open discussion.
What Do People Think About Outsourcing?
I’ve interviewed internet marketers many times where the subject of outsourcing has come up. It’s such a common subject, because nearly all successful internet businesses use outsourcing in some way. In fact, outsourcing is often at the heart of the success of online business because of the leverage available from cheap labor, and the ease of access to it thanks to the digital age.
Recall the interview I did with Adam Short from Niche Profit Classroom, where he explained how he uses overseas outsourcers to build his niche websites and earn as much as $90,000 a month in income. During the call I asked Adam to justify his use of outsourcing given the claim that it could be viewed as exploitation. He explained his argument, which I came to see as a reasonable point of view, because it is based on helping people in other countries, not taking advantage of them.
More recently I interviewed John Jonas, who specializes in outsourcing to the Philippines. Due to the negative feedback I had received about the idea of outsourcing in the past, I specifically challenged John during this interview to explain his take on the exploitation issue. He had the same argument as Adam, which as you will hear in the recording with Jonas, I agreed with and supported.
When my business partner Gideon Shalwick recently hired a full time Filipino at around $400 US a month, I had a long discussion with him about why it is okay to do this and why it is not exploitation. Just a couple of days ago as I write this article, I talked to Gideon again and asked him to reiterate his stance once more. We talked for almost an hour about the subject, and agreed that the situation is not ideal, but on an individual basis, we are helping the people we outsource to.
I also asked my assistant Angela for her take, which turned out to be interesting as she had been discussing it with her husband, who had a view that I should hire locally to support Australia.
I spoke to some of my other friends to get their opinion on the issue. I also have the feedback emails I’ve received from people in response to my recent articles and emails about outsourcing, as well as feedback in the form of blog comments, including comments from several Filipinos, who explain what it is like being an outsourcer living in their country.
My conclusion after all of this is that I don’t actually have one that sits comfortably with me 100%.
Clearly the issue is not black and white, however I have decided to make a change, and I’ll explain why now.
When Is Outsourcing Bad? When Is It Good?
Before I talk about what I am going to do differently, it’s a good idea to lay out some of the biggest complaints people have about outsourcing overseas, so we know what we are dealing with and really take a deeper look at this issue.
I’ll also explain the common justification that most marketers use today to reason why outsourcing to cheap labor is okay, which you might explain as the good outcomes as a result of outsourcing.
Let’s begin the with the arguments against it…
- Outsourcing overseas means you are not hiring locally, which results in fewer jobs, or even lost jobs in your country.
- Outsourcing results in a flow of cash out of your country into another, potentially having a detrimental impact on your economy, causing local businesses, who employ locally, to lose business to cheaper overseas groups, and possibly even close up shop completely.
- Paying $2 an hour (or similar) is slave labor, even if workers are happy with their pay. People should be paid a fair wage based on the benefit you gain from them, not what the fair wage is based on the standards in their economy.
- If people work for you at pennies on the dollar, and you reap massive profits because of that – in other words, they do the work and you keep the money – it’s simply not fair. Why should one group do most of the work for enough money to survive, while another group becomes stinking rich?
We have two major issues at play. There is nationalism and the sense of separation of peoples based on geographical borders (the “us” versus “them” mentality). This is a belief that if you give to one nation (in this case hire people overseas), you are causing a loss to another nation (your country, because you don’t hire locally).
The other issue is fair pay for fair work, which is subjective. There are benchmarks and standards prevalent in every country, although that doesn’t mean it’s simple to know exactly what is “fair pay”.
One of the emails I sent out promoting Outsource Force talked about how I am looking to hire two Filipinos at a rate of around $300 to $500 a month for full time work. Later in that same email I wrote that I am offering half hour consultations, which I valued at $500, as a bonus for buying through my affiliate link.
Why is my time worth $500 for 30 minutes and someone in the Philippines worth $300 a MONTH?
You might claim that my time is more valuable because of my knowledge and position. It’s the same argument as to why a CEO of a company gets paid so much more than a mail boy in that same company.
(There’s an argument to say that pay scales are out of whack in Western countries too. Why does a professional athlete in certain sports earn so much more than a nurse or a teacher? But that’s a discussion for another day…)
To put it simply, we “value” certain roles greater than other roles. Sometimes this is justified due to the nature of the role requiring specialized knowledge, which could take years of study and practice to accumulate, or the responsibility for outcomes in that role is perceived as significant, thus due significant remuneration. Other times it’s the value society as a whole has decided to let something have, even if the justification might seem out of whack.
We often accept things, even if we don’t like them, because we don’t have the impetus to change them – there are other things in our lives we choose to focus on instead. It’s much easier to complain about something, than actually do something to change it.
So how can outsourcing overseas, when the pay rate seems so terribly small compared to the amount of time put in by the worker, be considered fair?
Even though $300 USD a month may not seem like much to someone living in a developed country, in Thailand, or Romania, the Philippines, or India, it’s above the average monthly wage. Sometimes as much as three times the average wage in that country, meaning this person is actually very well off when compared to others in their country.
That money affords the worker a quality lifestyle in their homeland. It may even provide enough money for them to support their family, which no one is going to argue is a bad thing. Throw in a few bonuses, some extra incentives for good work, and you have a situation where you feel like you are empowering someone and saving them from a situation where they might otherwise be earning half that money doing something like washing dishes.
That’s great right? You can’t argue against improving the quality of someone’s life, and in exchange you get a hard worker for your company?
In isolation, no, I don’t think you can argue there is anything wrong with helping people in a relationship where everyone benefits. The problem – which could be perceived as a moral one – comes from a situation where the value one person derives from the transaction is so much more than what the other person does. Of course, again we have the challenge of deciding how to “value” value – it’s different to everyone and a completely intrinsic judgment.
If $2 pays for a fantastic meal in Thailand, and the same meal costs $50 in Australia, yet the people who consume the meal all experience the same level of value – the satisfaction from a good meal – what’s the difference?
It’s also important to consider what people value. In Western culture we value “things” and focus on accumulation of material possessions as a means to feel good about ourselves, even if it is only a temporary satisfaction. In other cultures family, or community or faith are more important, and if your basic needs are met, there is no need to earn more money, it won’t result in any more happiness, and thus some people choose not to go after more money simply for the sake of material wealth.
However all of this assumes basic needs are being met, and in most countries where outsourcing takes place it is safe to say they are not – there is work still to be done to bring these countries up to developed standards.
Exploitation Or Just A Better Use Of Resources?
My friend Chris, when I asked for his opinion on outsourcing and whether it is exploitation, agreed with the topic definitely being a very “grey” issue, and came to this conclusion…
He views outsourcing not as exploitation, since the workers feel a benefit from their employment and are happy to do the work for what they are paid, however the business or person who does the outsourcing is taking advantage of a situation – a situation of inequality.
If you ask people who own businesses and outsource, would they pay what is considered an average wage in their country to get the same job done as they currently pay at much cheaper rates to someone overseas, they will probably say no, they won’t. You can’t afford to pay $4,000 a month to a local graphic designer for your business, so you don’t hire anyone, but you can afford $400 a month to an overseas outsourcer, in which case you do employ someone. In this scenario, at least someone gets a full time job, and your company grows quicker, allowing you to employ more people.
Let’s not forget, there’s nothing stopping an entrepreneur from the Philippines also hiring cheap labor from the Philippines (or India, or the Ukraine, etc) and reaping huge profits selling in American dollars on the Internet to a global audience, including Americans. Anyone with access to the Web has the same opportunity, it’s just what you do with it that counts, right?
Well sort of.
For many reasons, very likely due to the education system, values, culture, infrastructure, standards of living, and the economic and political environment, it’s much more likely that a person from a rich western country will start a business and outsource. People in third world countries face greater inherent challenges, and may simply not see entrepreneurship as an option to them. They don’t have the awareness of the opportunity on the same scale as people do in Western cultures and face more barriers to entry.
Here’s How I See The Problem
I look at it like this: On a micro level, outsourcing is helping the individual and those around him or her. It improves their lives, which is great.
On a macro level however, what we are looking at is one group of people who live in a richer country taking advantage of a situation that exists only because another country is poorer. On a macro level, the inequality is obvious – that’s why we have the label “third world country”. This means the standards of living are not the same, and we should be doing everything we can to ensure all human beings on this planet have basic standards like food, shelter and health.
This begs the question – does outsourcing help a country move away from third world status and raise the standards for everyone in that country?
I think the answer is yes it does, but it’s terribly slow.
I like using a projection based on what you might call a utopia of wage equality and financial opportunity, which could arise as a result of movements like outsourcing (others might call this globalization, but I think that label is difficult to interpret – it means different things to different people).
If enough money flows from one country into another, then the country receiving the money becomes wealthier. As it becomes wealthier the value of its currency becomes stronger and wages increase, thus outsourcing becomes less viable because it’s no longer “cheap labor” – it starts to move towards parity with developed countries.
The natural outcome as a result of this is for businesses to look for other countries where labor is still cheap. Eventually, given enough time, and believing in a world of abundance rather than scarcity, it’s possible to conceive that this process will help to equalize all nations, create a global currency of equal value and a global standard of wages regardless of what country you are located in.
This outcome may be a pipe dream, or even if it is not, we are not going to get there quickly.
The big fat reason for why this is?
Greed.
If people and companies prefer to hoard profits, which don’t forget is the purpose of a publicly owned company – to maximize profits for shareholders, most of whom live in developed countries – and this profit is made off the back of transactions based on inequality, like outsourcing to third world countries, then change is slow and one group benefits exceedingly more than the other.
How Can We Speed Up The Process?
The simple solution to this problem is to not be greedy.
That is such an easy statement to write in an article, but such a challenging concept to embrace fully and make part of your life. I’m greedy almost on a daily basis, yet I know I want this to change.
One attitude shift that I think is particularly powerful is to stop looking at the people in other countries as somehow separate from you. An American or Australian is no different from an Indian or a Filipino when it comes to basic human rights.
We are all human, and if the person living next door to you was starving and you have ample food, you’d offer some to them right? So why is this different when it comes to someone living overseas? Does the distance between you and them or the perception of differences based on race or nationality make it easier to discriminate? Yes it does, but it shouldn’t.
If you look at every human being as a member of your family that you care about just as much as you mother or father or sister or brother or daughter or son, then you wouldn’t allow yourself to be greedy while they suffered some kind of basic lack in their lives.
I’m not saying that people in the countries we outsource to are starving (although some are – and developed countries have problems too), but there is certainly an inequality that is not acceptable, especially if you continue to reap massive profits as a result of it, without doing more to give back than just taking advantage of it by paying a “good wage” based on current standards in that economy.
It’s critical that you adopt an attitude of abundance over scarcity. This process is about everyone having enough AND people enjoying wealth in exchange for passionate work. This is viable if you believe there is enough to go around if we learn how to distribute it without greed, or fear of loss.
You have to stop trying to keep up with your peers when it comes to accumulation of material possessions. Stop believing that by having more than what others have you will feel better. Avoid materialism, don’t listen to advertising and never attach your happiness to ownership of products – it’s an illusion that never lasts – you know that already. Understand that giving will make you feel good permanently, not buying things – you can’t fight this, it is part of your nature. Know when enough is enough.
One way to speed up this process is to take it on board as your responsibility to help the third world countries you outsource to, to raise their standards by reinvesting in, and supporting organizations that help people in that country.
The challenge is what proportion of the profits you reap from outsourcing, do you consider fair to return in support when it comes to helping people in other countries?
Some would say that simply choosing to outsource to a specific country is enough help. If a team of three full time outsourcers that cost you $1,000 a month helps you to make $20,000 a month in return, that’s just called good business right? You deserve to keep the profits and of course, your main focus is to make more. Once you make $20,000 a month, you want to get to $50,000, and then a million a year, then ten million and so on. There’s always more money to be made, and thus your profits should be reinvested towards continued growth.
Can you see a problem with this treadmill? There’s no endgame here and eventually the only purpose behind making more money is to make more money. Once you reach a certain amount, adding more millions really doesn’t matter, unless of course you are using it to help those in need.
I know as my truth, if you really drill down to our core motivations, the only real meaning you can derive from your human existence, is through helping and having an impact on others in a positive way.
Ask Yourself This Question
All of this comes down to choice, and your choice is based on your attitude. As you can tell, my own attitude has been in flux in regards to this situation, but deep down I’ve known something hasn’t felt 100% right, which is why I’m writing this article. You may or may not agree with me, that’s okay, but at least discussion is possible – change begins with awareness.
In my case, I’m going to commit to taking a larger chunk of the profits I make in part thanks to outsourcing, to directly support the countries I outsource to. I want to do more than just offer employment to a few people in that country, I want to help the entire population benefit in thanks for the benefits I gain.
The challenge I issue to you is to ask yourself whether, if you are outsourcing to cheap labor, you feel you are doing enough to help others with the profits you make. If you honestly feel good about the situation, that’s fine, keep doing what you are doing. If on the other hand, something is niggling at you, then consider what you are doing to give back.
I realize many reading this might be struggling to get by in the first place, and even finding $300 a month to outsource to just one full time employee is challenging enough. My intention is not to discourage you to outsource. On the contrary, whatever you can do to get yourself more quickly into a situation to help others is a good thing. Outsourcing can help your business grow more quickly, and as we discussed, it does help the people you employ. I haven’t changed my plans to outsource, only how I redistribute what I reap from it.
Just remember when you finally do break through to financial security – and that doesn’t have to mean you are a millionaire – you have the opportunity to support those who support you. If I have helped to plant that seed in you, then writing this article has been worthwhile.
Thanks for reading this to the end, good luck with your outsourcing and your business and don’t forget you always have the option to become part of the solution rather than just complain about the problem.
I value your feedback in particular on this subject, as I am far from in complete knowledge about the situation. If you have something to say, no matter what point of view you have about outsourcing or where you come from, please leave a comment.
Yaro Starak
Deal’n with issues
There are several answers to your concern:
1) If a Martian entrepeneur would give you the opportunity to double your income while doing the same effort, would you let it depend on your knowledge of the economy and salary standards on Mars?
2) The CEO of the company I work for makes about 1000 times what I make and we live in the same area. It is not comfortable for me to think too much about that, but to say I am exploited? You do not force your hiree to work, do you?
3) Our company does outsourcing with India on a big scale. Their price has gone up many times in sucession, since the Indian economy has been booming. We’re moving stuff to Eastern Europe now. The Belgian engineering jobmarket is suffering, because we’re too expensive. The global economy will steadily evolve into one market where the standards for an Indian, Polish or Belgian engineer are about the same. Your move is part of that and it is better for the Filipino than for the Australian, in this case.
4) Keeping labour local is a bit of a nationalist and not a capitalist argument. It’s a political issue.
Cheers
According to the Happy Planet Index:
http://en.wikipedia.org/wiki/Happy_Planet_Index
People in the Philippines are happier than in either Australia or the United States. Seems like they’re getting more bang for their buck.
I congratulate you for tackling this issue head on. After this, I think everyone would agree that bravery and sincerity to yourself are qualities you’d not compromise. Exploitation is an important, albeit a messy, issue especially nowadays when cyberspace breaks boundaries , patents and property rights. This topic was also one of the controversial subjects tackled during the international writer’s congress last February. Writers had been advocating for a set of standards and labor policies that will protect online writers from exploitation. What was resolved then is quite similar to what Yaro points out—let us not be greedy. There are existing fair trade regulations and this should be applicable too with outsourcing. Additionally, governments, whether in the wealthy countries, or the third world countries, should make laws that will give safety nets and protection to workers in the outsourcing business.
Yaro Starak’s thougts are that of a real concerned human being.These type of thinking and analysis is what takes the human race forward. I do not have any answers to the outsourcing phenomenon. But one thing that I noticed needs to be told here. The money making attitude of the IT firms that do the outsourced work of USA etc, has moved up a notch, by forcing its staff to work 12 hours to 16 hours everyday while they are paid the standard eight hour job salary. Thus the persons working in Indian IT firms have become some kind of a robot. As you all know, India does not have a working government and labor laws are never enforced. So the greed of Indian companies have made INDIAN IT FIRMS IN TO MASSIVE SWEATSHOPS
Dear Yaro,
this World we are living in is, aside from all the glitter on the surface, a brutal, instinct driven, exploiting and perverted world off our old brain parts, commanding every step we do.
There is no altruism, no equality, and even though words like that and ‘fairness’ exist – in the end they are just justifications in retrospect.
First of all I can state that I agree with EVERY single sentence you wrote and every conclusion you made. From the perspective of a moral, intelligent and humble person that cares for the people around him you formulated naturally upcoming thoughts about this topic – Thoughts everyone will have who thinks about this topic a little bit deeper than: “I like money. I want to grow my business *robotrobot*”
BUT – I would go further than this and I might sound harsh in the following or offend people but: **** you.
I am more radical: You conclude that this is, finally, after a good amount of consideration: a grey area. But in fact – thinking about the underlying principles have even made you donate something of your profits that come from outsourcing, back to the countries you’ve outsourced to.
I say: Your conscious, HUMAN, loving and thinking brain parts have discovered the inhuman, suppressing and exploiting matrix that lies behind the process of outsourcing to grow/help a business. This produces a conflict that troubles your unconsiousness which in return puts effort in to place to reduce the influence of this conflict troubling you.
What then became a grey area due to contemplating different arguments (more so: fake arguments) ACTUALLY is the same substantial and core problem: simply hidden behind some finely tuned mind-made thought-architecture that puts a bandage over the openly bleeding wound and makes it easier to justify the behaviour and look at it.
Looking at the so described “slow process” of “making countries equal” due to outsourcing is just not looked far enough ahead and the proliferal vision isnt turned on yet. Again: a self defense mechanism OR one just doesn’t know it better.
You CAN NOT create VALUE in terms of ‘more money for everyone’ EVER!
ALL YOU EVER DO ist just DIGGING HOLES.
And that comes down to the physician law of energy: energy can not be lost, nore can it be created. Energy is there and from the beginning of time it is simply going from one form into another.
Which brings me to some points you stated which ultimately led to the “grey area” definition:
“Not being happier, when you have more than your neighbour”
FALSE – our brain does reward us instantly with dopamine! – it is very hard work I guess to control yourself to the point of being completely free of any of our inprogrammed greed-programs.
Also interesting: your argument, that:
“what fulltimes outsourcers get in some countries is more than the average wage there”
…and that is used to justify outsourcing as “good” because you are supporting someone in a poor country to get rhicher.
…
Well guess what you are in consequence merely doing: You are making them rhicher than their neighbours – and now before I roll out that thought lets go back a bit.
Let’s think of the first reason which people are on your blog, or really any other internet-money-something-blog or REALLY any other money-something-something:
Because they are greedy and JEALOUS of their ‘neighbours’ who posess more and better. Which motivates and drives them to enforce powers to overtake them. In our small example they now start a business and grow it by outsourcing, overtake their neighbours and now are happier.
Back to the phillipino who gets payed more than what the average wage is in his country now: He gets rhicher than his neighbours and thus more jealousness and greed is created.
And finally though: You have digged a hole somewhere else!
On that note: It is funny how on the one side we say things like “money wont ultimately make us happy, giving is the real rewarding experience” and on the other hand we can use an argument just as “outsourcing is making poorer countries rhicher” (and thus, concluding: “happier” (?)) for the “PRO” side of this discussion, isnt it?…
)
Which is again proof for our brain just making things easier for, well, you (I dont outsource other than buying Nike products
Which somehow leads me to a final conclusion:
Everything in this world is natural – even we humans, thats why we call our surroundings ‘nature’.
Jealousness, greed, exploitation and inequality are natural and have indeed brought our human race to where it is right now – with all the ‘good’ and ‘bad’ equally.
At the end it is just about being smarter and or stronger than others. And everything is about SEDUCTION… not much room for humanity.
Marketing and business is nothing more than seduction: I mean, look around you. EVERYTHING is seduction. Your blog seduces strangers to “opt in”, so you can build “a list” right? Cause that is good marketing. Youre showing off how it is “easy” to make your first 1000$ online, everyone wants to have it: its attractive and so: you seduce someone for YOUR PERSONAL EGOISTICAL AND SELFISH needs. And ‘profit’ of course.
To be honest: I could plain out just puke when I see websites like “Niche Profit Classroom” where someone is selling a method how to create stuff that youre not interested in, do that very often, than use “sneaky little mind tricks” behind your PC screen in the hopes of that there are enough dumber, uneducated and more confused human beings than you are (thus: weaker individuals, which you, as the stronger/smarter human being, can exploit), are buying them with the hope and deep need for a better life so you can “MAKE UP TO 90,000$” *ding ding ding*
I mean,… come on..
If it were working so well (still) than why were you selling it? I mean – seriously…
Bu at the end: you know what? I dont care!
Cause: It is just how it is.
Dont hate the player, hate the game. And the game in this instance is called life, will for survival, evolution and surviving of the fittest.
I think to conclude everything: Play the game hard cause you can only play it once,… but dont lie to yourself: Exploitation, manipulation and seduction of “weaker” beings than you (everyone) right now are is part of it.
And the only thing you make better by “donating to a charity, helping the country you’ve outsourced to” is yourself.
And that is no different to: buying yourself out of it. But you know what: even that isn’t really an atack because again: I dont care because it is human – and I do the same.
PS:
I’m 22 years old, from germany (sorry for typos, bad language etc.) and the only thing in this entire “thing” I’ve lately stumpled upon that was good enough to seduce me to put money into it has been “The 4 hour work week” which has in consequence and because of endless internet research also brought me to this blog for example.
I whis everyone the best of luck to become a happy person.
Kind regards
Dear Yaro,
Your blog entry was quite lengthy. Whew.
But IMHO, outsourcing to another country, as long as you follow the laws in that country (especially meeting the minimum wages. etc) is not bad at all. You are giving jobs to the people there. You are not putting a gun to their heads to work for you. Its a contract that both parties enter into, FREELY.
Besides, standard of living is cheaper here in RP than in Australia.
So go ahead, outsource. Hopefully in the Philippines. We’ll love you for it.
While you’re at it, visit the country some time. Great beaches around these here parts.
He explained his argument, which I came to see as a reasonable point of view, because it is based on helping people in other countries, not taking advantage of them….
If someone who lives in Australia and earns $4,000 per month, outsources work to someone in India and pays them $400 per month… Due to different costs of living, is it possible the person in India can afford a lifestyle beyond that of the Australian who pays them?
If you are outsourcing to someone who is working for themselves and can bid and negotiate their own contracts then it is hard to imagine how it can be a bad proposition for them and their community.
Rather than outsource work overseas, should we just donate money to them and create unskilled welfare states?
Yaro this is an amazing post. Really great to hear your feelings and thoughts on this particular subject. I have to wonder if a post like this is worth more to you and your business than actually pitching John’s program as an affiliate. I guess with out one you wouldn’t have the other though, I am curious to see which one truly pays off for you in the long run.
Yaro, I absolutely loved reading this post. Few people in this industry are willing to discuss the moral implications of outsourcing, and especially at such a personal level.
For those who read Honey’s comment earlier, which was fantastic, I’m one of her employers at the job hiring site easyoutsource.com (I’m in Chicago). I agree with her that you need to pay your employees a fair rate. A person working for you oversees has the same basic motives as a person working for you in the United States. An employee may put on a happy face because he wants to keep his job, but he definitely does not want to be working 15 hour days at $2/hr just to support his family. If you treat people with respect and pay them what you know they are really worth you will get happier, more enthusiastic employees and you can go to sleep at night knowing you’re doing the right thing.
On the topic of money, I couldn’t agree more with you that chasing money just for money’s sake will take you nowhere. It’s such a hollow motive. The purpose of earning money should be first and foremost to let you comfortably live and enjoy your life (and possibly support a family), and once you’ve made enough to reach that goal, the best thing you can do with your time is to give back to the world. Trying to earn enough to start a successful charity seems like a far more powerful motive than trying to earn enough to buy a fancy car. Look at Bill Gates and Warren Buffet. I have no doubt that they are happier now, focusing on distributing their billions around the world, than they were when they were singly focused on accumulating more wealth for little added value to their lives.
Hi Yaro,
Alexis your french buddy from Paris told me about your blog, I read your blog profits blueprint ebook yesterday it was a very helpful reading and I am really pleased to find out today that you are concerned with the well-being of outsourced workers. There is more in life than just making money (and don’t get me wrong, I wanna make money, but not only
) Cheers
As entreprenuers we can create more value by employing more people who are happy to be employed.
Think about where many of our clothes, TV’s and other goods come from. They don’t pay western labor rates in China.
Abide by laws and be kind to fellow humans and accept that some things are not able to be defined into one answer.
Outsourcing exploitation? While I agree with some of the points mentioned by Yaro, on the other hand I believe outsourcing is a way to create indeed value (as some commenters said) and it is difficult to judge from our point of view… for people in poorer countries the money they get is really going to make THE difference…
Allow me give you a slight perspective from one who has lived in the so-called Third World. I was without a job for many years. Didn’t know where the next meal was going to come from and even went for days without a decent meal. Most jobs you will get in some countries are legal slave camps. You only get paid enough to be able to come back the next day and put in long hours of hard mostly manual work. Yet you cannot complain lest you lose that job and your family starves – at least it does put not so good food in their mouths.
At night you are too exhausted to even make love to your spouse, in a one-room shack that is living room, kitchen and bedroom, all in one. Yet, the business owner for whom you work lives in a mansion somewhere in an exclusive neighborhood. While your body aches from hard work he is merrily playing golf at some fancy resort while you are slaving away to make him richer. At night he (sorry ladies, but it is usually a he) is out whore-mongering though he is “happily” married. He has a couch in his office and can take a nap whenever he is too “tired” from all his hard work. He gets business through bribing government officials and in some cases decision-makers in the private sector with whom he plays golf.
No, not all Third World employers are like that. Some of them are real entrepreneurs who got rich through the right channels and some do treat their employees fairly, even very well. And, ironically, it is not foreign entrepreneurs that are bad, it is usually the opposite. In fact, many people are happy to work for foreign investors as they usually pay better and are more humane.
I was able to get myself out of the legal slavery by use of a gold mine that I had been sitting on all along – the ability to use paint and a brush. I would sell my paintings to the same foreigners for what I now know to be pea nuts since I live in America. But those pea nuts gave me and my family a decent livelihood: a decent house, food, clothing, school fees and uniforms, and even some nice savings. I was better than most and equally happier.
Now, decide for yourself whether I was “exploited”.
Sincerely,
David
Paying $2/hour is slave labor? Have you ever been to and LIVED in a country like Philippines or India? Just because it is so in the developed countries doesn’t make it so in the developing world.
I’m an Indian, and believe me $2 per hour is actually a LOT of money for people here.
Plus the amount of money to live comfortably is a lot lower in PH & India than in the US, Aus, or Canada. I know for a fact that you can live like a king in India with only $2,000/month. Heck if you live in India, you can hire full-time domestic help for only $200/person.
By outsourcing, these people are getting more than they would have from local businesses. My friend in India has a PhD in law (a more specific category under law of course), you know how much he gets paid by his employer? $1,500 full time! Imagine that, $1,500/month for a frickin’ PhD!
Hey, if you have a problem with the idea behind outsourcing and want to support local businesses, well be my guest. One less competitor for me to worry about…
Internet marketers have a wonderful opportunity: they can either learn to use outsourcing to the benefit of their business AND their Virtual Assistants, or choose to forever rely on solely their own efforts and their own time.
Which will YOU choose?
Whew! That was lengthy!
I’m a Filipino and I don’t really mind being outsourced to as long as the other end makes me feel “equally treated”.
I’ve written an article or two about this matter, I can’t really blame first world countries for seeing our situation as an opportunity. If I were in the same position, I’d do the same.
However, having worked on different outsourcing companies, there are the good and the bad. Some companies would insist on making us feel “virtually part of the team”. That means that if there’s a programmer here and there’s a programmer there, even if the programmer on the outsourcing country gets a higher pay, we should be treated equally, our opinions should also be weighed on equally. There is no power over one another because we are “the same”, although like Sponge Bob, the only difference is… I’m cheap.
Now I don’t mean to do any sort of advertisements, but if you have time please read an article I wrote about a month ago entitled “5 Common IT Outsourcing Mistakes Companies Make” by Lamia. I’m confident that it will be number one in google so I don’t have to post a link.
ALL business is exploitation of a large base of people at the bottom to make the small group at the top rich. Period.
@TruthIsQuick
If we continue to think like that then that would keep us from getting successful in life. Yes, there is some truth to what you are saying but there is also some truth to what Yaro says that he is trying to help. These helped people should then learn from example and not just work for someone for the rest of their lives.
I’ve written an article in the past called “becoming rich by eliminating guilt” which you can google and I hope you find useful.
Finally someone with the guts to say that the primary purpose of outsourcing to cheaper labour countries is greed – bottom line and boosting profits. It’s got nothing to do with philanthropy.
As a virtual assistant here in Australia for over 10 years, I’ve watched the increase in off-shore contractors. I’ve written a number of articles asking people to simply be careful – and to know WHY they’re outsourcing to cheaper countries in the first place. Outsourcing off-shore can have great benefits – particularly if you’re looking at overseas expansion and having someone with local knowledge of business practices, laws etc is a great benefit. But also be careful because how do you know the person you are paying $2/hour to is actually doing the work – and not giving it to a team of people working in extremely poor conditions for 2c/hour.
Morals and etiquette are also very different country by country and it’s important you understand that you may be putting your intellectual property at risk. Issues of confidentiality are critical and overseas contractors know it’s very difficult to follow up legally if they do something wrong. It’s happened to me.
I’ve never felt personally threatened (in a business sense) by off-shore providers. They service an end of the market that put simply I don’t want nor do I need. My clients appreciate the service I provide and are prepared to pay for it because they see me as a partner in their business – not a cheap means to boost their bottom line.
Great article. And I applaud your desire to put some of the profits you make off the back of these cheaper labour country operators back into their country.
Cheers
Lyn Prowse-Bishop
I am wondering whether this debate has lost its focus? Surely outsourcing even to Australians at a higher rate should not be confused with employing a person at that rate. Using a VA for example only costs the purchaser the time of that person completing that job with no added costs like holiday pay. I hope this debate has not been lost in the cross fire that is all….
Michele
Somewhere in the comments on this page someone mentioned how outsourcing has created a new source of work, allowing many in places such as the Philippines to stay home with their family. This being a huge improvement over having to leave their family in search of work in other parts of the world.
Well the other day I received this submission/story to my site. It is an inspirational yet sad story about an absentee father, who had to leave his family to find work. It is told from his young daughters perspective:
http://www.familyhistoryproducts.com/dads-propellers.html
Many of my site’s readers have really enjoyed this story. I’m sure you will too!
Michael
Growing to love this site Yaro – thanks! Yeah in the past we seemed to have nothing but bad luck with outsourcing, but I’ll keep your article (and links) bookmarked when we reopen those doors. Re: the exploitation issue, yeah I agree with many of the responders in this post – ultimately it comes down to ‘is everyone happy’ in the end. And besides, work well done usually means repeat business, right?
Yaro, yes I must agree with TruthisQuick about how he said that all successful businesses generally are, are the large base of small people at the bottom to make the small base of people on the top rich
Sad… but this is how society works. Let’s be happy for the internet so that we don’t have to put up with that!
“An employee may put on a happy face because he wants to keep his job, but he definitely does not want to be working 15 hour days at $2/hr just to support his family.”
Absolutely. Yes, people who are desperate will agree to work for less than what they should be getting but then they have to work overtime more and more just to make ends meet.
Hi Meily,
I don’t think anyone expects an outsourcer to work 15 hour days.
They are human too and often become good friends.
$2 an hour is a low figure I think. I have paid up to $8 an hour to some people and they are over the moon about it.
If the employer does exploit these wonderful people (outsourcers) then shame on them and all I can say is Karma is a wonderful thing and always comes back to bite you on the rear.
Also, I think this is just a small part of a much bigger issue.
As yaro stated it is not about the outsourcing offshore, it is about peoples moral code.
Look at Rupert Murdoch or other very rich people. They incorerate in offshore tax havens because they don’t want to pay tax in thier own countries which in turn could go to good use IE: homeless people, disabled services etc..
In the end, if I had a choice of 1. closing my business down because I could not afford the labour in my own country ( which does no one any good ) or outsourcing.. then I need to take the second option. At least I am making a difference in someone elses life as well as improving my own.
would you work for 2 dollars an hour? precisely
If I lived in a 3rd world country and $100 a week meant that my family could eat.. then yes I would. Keep in mind that the avg monthly wage in 3rd worls countries is $500 or so a mth.
What a facinating and thought provoking article. As a business that delivers an outsourcing service in the UK, for UK rates, we are constantly up against competition from overseas. However, the clients that work with us chose a professional virtual assistant service such as ours, as they value the partnership we form with them. This professional, proactive relationship offers far more than the simple outsourcing of a project or series of tasks.
So the question is, did you outsource THIS article?
The myth of six-figure membership sites and profit-building blogs was interesting 5-6 years ago, but as more and more people try to build these “niche” sites, it becomes clear that most of the content on the web is junk. People don’t even write their own stuff. Comments are left by other niche marketers just trying to get their link out there. Thanks to all the ebook marketers and so-called SEO bloggers, the internet lacks quality and authenticity. It’s all a pile of BS.
Hey this is just what I was looking for! Great article Yaro! I can has my URL posted now?
Nope, I never outsource my own articles on this blog because I enjoy writing, that is why I started blogging in the first place.
Yaro, this may be silly, but I’m in bit of a rush. If you don’t mind me asking what Business are you apart of? And is it Australian? Just trying to compile some research about business ethics for an assignment and I would like to use your opinions as a specific example. Regards.
I run my own business Jez, it’s called the Blog Mastermind Partnership in terms of a trading name if that helps. And yes it is Australian.
Dear Yaro,
The question “Why is my time worth $500 for 30 minutes and someone in the Philippines worth $300 a MONTH?” is a fallacy, a “complex question”, naive and rhetorical. It is a question of an economy that is merely more than a myth enforced by plenty abstract power of policies, PR and advertisement, and less abstract power of police and military force behind it.
Regarding your topic: outsourcing is not an exploitation on any level only and only if you always vote for and support strong pro-immigration politics!
Best regards
S
Shame on you, families are starving because of outsourcing.
They live in their cars if they are lucky enough to have one.
Wages are not keeping up with inflation, families have to choose to eat or stay warm. In Canada the number of jobs outsourced has caused suicides, and mental illness to grow. Sure Canada has health care but no one can afford the meds, so what is the point. So next time you play golf or sleep in your warm bed think of all the peoples futures you have ruined and will ruin, by your greed….
Remember Scourge….
The next time you outsource sleep warm in your bed thinking of all the lives you are helping in the country you outsource too.