Is outsourcing exploitation?

A cobbler in Mumbai, India at work / Vivtho (english wikipedia), Vivek ThomasA few weeks ago I received
an email from a friend in Mexico. It was a PowerPoint presentation of
the conditions “beneath human dignity” in which people in Mumbai
are subjected to in a shoe workshop. Everyone overseas expects to see
such things after watching the Oscar-winning film Slumdog

The presentation had been
made by a businessman there after a trip to India. He had come here
thinking of outsourcing the shoe making process for his company to a
top-quality producer in this country. Apparently, he decided not to
go ahead and went back home. His email was intended to spread the
message that outsourcing means exploiting poor people.

I beg to differ.

It is true that many people
in Mumbai work under conditions which, in other countries, would be
considered sweatshops. And it is true they do it for an extremely low
salary -- just a couple of dollars a day. But it is very far from the
truth that giving business to those companies is cooperating with

First of all, it is a fact
that the quality of the products and services is generally high. Thus
the companies outsourcing get the benefit of high quality at a good
price. As New York Times journalist Thomas Friedman put it in
his bible of globalisation, The World is Flat: "Rule
#6: The best companies outsource to win, not to shrink. They
outsource to innovate faster and more cheaply in order to grow
larger, gain market share, and hire more and different specialists --
not to save money by firing more people".

By outsourcing they are
getting someone else to care for a process which does not involve
their core business. In this way they will be able to concentrate on
innovation and marketing. This applies to outsourcing in any field:
shoe-making, software and web-development, call centers, etc.

Now, what about the people
working behind the outsourcing? Just imagine that company X, which
employs 50 of these shoe makers (mochis as they are called
here) goes out of business:

Each of these mochis would then have to set up his own shop as other thousands of mochis in the city do. He would be sitting in a corner protected from rain and sun with some rags as a
roof. The “shop” is barely 3 by 3 feet and perhaps just 4 feet
high. They are very efficient, working with both arms and legs (thus
they need to be sitting on the floor), and don't charge much...
perhaps Rs. 10 US$0.20) for a 15-minute job. Hopefully he will get
enough clients so as to make 2,000 or 3,000 Rupees ($40 to US$60)in a

This is not really too bad,
but the guys in the outsourced workshop are better off. It is true
they still sit at the floor and work in a cramped space. But this is
how they learned their job in the first place. Besides, those fellows
have a stable job; they have accommodation (the workshop itself);
their salary is secure and thus their children can go to school...
The accommodation factor is very important, even though they may not
get to see their family for the full week. Otherwise they would have
to spend about four hours a day in jam-packed public transport and
spend a few precious Rupees in the process.

I have used shoe
manufacturing as an example, but a very similar line could be drawn
for other labour-intensive manufacturing processes, or even for
services where professionals work.

Contributing to those
businesses as clients is certainly not cooperating with something
against human dignity.

However, what is against
human dignity is maintaining the status quo instead of improving
things. The point is that those shop owners, the producers, should
help their employees to improve their standard of living. Employers
should take care that their workers are getting a fair income, that
their children are able to attend school, that they are able to spend
some time with their family, they improve their skills, that salaries
are not delayed, that their debts are not overwhelming, etc.

At the same time, of course,
the business has to run smoothly and make a good profit. It is not
easy, and unfortunately, at times it doesn't happen. Bosses want to
retain their employees at the lowest possible cost, not helping them
and not giving them an opportunity to develop.

Here is where a
conscientious client can put some pressure to ensure that the boss
takes care of his employees. This is already happening. Many clients
demand that their providers improve working conditions and quality of
life of employees. A proof of this is that now outsourcing
to India is now more about high
rather than cost.

Rodrigues is the manager of a company in Mumbai for the coordination
of outsourced projects. email: [email protected]


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