The ethics of offshoring: working conditions, wages and more

ethics of offshoring

When the concept of offshore development first started gaining popularity in the early 2000s, global businesses perceived it as the act of ‘taking advantage of cheap labour’. Almost two decades later, today, most organisations are able to see offshoring for what it really is — an opportunity to access skilled tech talents and scale at speed

However, on the flip side, some businesses are still concerned about the practical implications and ethics of offshoring. From job loss to low wages and low-quality output, the offshoring industry has been placed under a microscope for scrutiny. So what are the ethics of offshoring in 2021? Let’s dive deeper…. 

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Why do companies go offshore?

Before a company decides to go the offshore route and build a distributed team, it’s essential to understand the benefits of offshoring.

1. Access to large talent pools 

One of the primary reasons offshore development is gaining momentum is the sheer shortage of engineering talent in the West. In fact, according to ManpowerGroup, there will be a global shortage of over 545K software developers by 2026. In such a scenario, the reality is apparent — businesses in the West are struggling to keep up with their hiring needs. 

2. Cost-effective operations 

Another challenge that organisations in the West are currently facing is the need to stay cost-competitive. Let’s consider a company that is only operating in the UK.  The cost of hiring talented engineers, their payroll, establishing R&D units, and delivering the finished software product or service requires a massive amount of capital — money that the business won’t generate if they only hire locally. 
In these cases, going offshore can prove to be just the solution that businesses are looking for.

UK tech statistics

The ethics of working conditions

A common concern that correlates to the ethics of offshoring is quality. Some companies are still skeptical about the quality of software built by engineers in countries like India and the Philippines. However, the reality is quite different.

India produces over 1.5 million engineers every year, a number that is unrivaled across the globe. This means that finding talented, dedicated, and passionate engineers is much easier. Their premium education, never-say-never attitude, and grasping abilities ensure that they only provide the best software. The reasons why software projects fail are many, but going offshore, if done strategically, is not one of them!

The second concern is working conditions. Fortunately, gone are the days when employees in developing countries like India were holed up in dingy cabins working for 15 hours a day to meet deadlines. For instance, at The Scalers, we’ve created an ergonomic modern-day workspace specifically designed to bolster the team’s morale, increase employee retention, and positively impact the company culture. 

The ethics of patriotism

Another ethical question that arises when companies are looking to move their development processes offshore to another country is, “Am I depriving local engineers of jobs?”

The primary reason why companies are drawn towards the offshore development model is that they can scale quickly without compromising on quality. The fact that setting up a development center in the West is very expensive, coupled with the statistical data that there just aren’t enough engineers, is why offshoring has become so popular. It definitely doesn’t lead to a loss of jobs, as one would think.

Effect of Globalisation

Rather than companies having to choose between globalisation or patriotism, why can’t they choose both? It has been proven, time and time again, that globalisation always benefits a country’s economy. Wealth is not a zero-sum game where one country’s loss is another country’s gain. If going offshore means becoming more economically productive, in turn, producing better services and products, aren’t companies doing more good than harm?

What can you, as a business, do?

If the ethics of offshoring is something that concerns you or your local employees, the best way to deal with it is to communicate with them. Your employees may wonder if the offshore team will eventually replace them, and rumors may fill the void if you don’t talk to them about it. Instead, be honest.

Ensure that your local team is aware of the long-term plans for your business, the roles and responsibilities of your offshore team, and what that means for everyone involved in the development processes. This way, you won’t have to face any ethical implications in the long run.

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The ethics of wages

Other ethics of offshoring arguments are surrounded by the wages of engineers in countries like India. Because you can hire developers at a fraction of the cost compared to the West, businesses sometimes worry that maybe engineers aren’t being paid enough because they are either not as good or because the quality of work delivered is substandard.

Cost of Living Index

However, the reason why their payroll is significantly cheaper is the lower cost of living in India. For instance, consumer prices in the UK are over 219% higher than in India. Even groceries in the UK are priced 124% higher than in India. So, even if an offshore software development company in India can hire developers for anywhere between 25-40 €/hour, their disposable income is relatively high.

This means that they are paid well, and businesses are not hiring cheaper labour and compromising quality. High prices don’t always mean high quality. By partnering with the right offshore development company, you can gain access to developers that add value to your business without breaking the bank.

If you want to learn more about how offshoring can work for your business, feel free to reach out to us by filling out the contact form below. One of our senior executives will get back to you within 24 hours.