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The ethics of offshoring: Working conditions, wages, patriotism

When the concept of offshore development first came to life in the late ’90s, many businesses across the globe perceived it as the act of “treating people like things.” However, in today’s global scenario, more and more companies are building offshore development teams in tech nations like India. This has led stakeholders to voice concerns about the ethics of offshoring and the practical implications of offshore outsourcing.

Ranging from job loss to low wages to low-quality output, the offshoring industry has been placed under a microscope for scrutiny. However, the thriving IT ecosystem in India talks of a different story. In this blog post, we’ll discuss the ethics of offshoring and the implications of offshore outsourcing for businesses, specifically in the West.

The ethics of working conditions

Before a company decides to go the offshore route and build a team in a foreign land, it’s essential to understand the benefits of offshoring for the business.

Why do companies go offshore?

The primary reason why offshore development is gaining momentum is that companies need to stay cost-competitive. For example, consider a company operating in the UK. The cost of hiring talented engineers, their payroll, establishing R&D units, and delivering the finished software product/service requires a massive amount of capital – capital that the business just cannot generate.

The sheer shortage of engineering talent in the West is another problem in itself. In 2020, it is estimated that over 1 million engineering jobs in the US are expected to be unfilled. Businesses in the US and Western Europe are struggling to meet their in-house hiring needs.

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In such a scenario, going offshore can prove to be just the solution that businesses across the globe are looking for. On the flip side, a common concern that correlates to the ethics of offshoring is quality and the culture gap between the countries. 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 are 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 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 offshoring strategy framework is so 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 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 globalization

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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 the economy of a country. 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?

So as a business, what can you do?

If the ethics of offshoring is something that concerns you, or your in-house 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 in-house 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.

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 as 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.

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 162% higher than in India. Even groceries in the UK are priced 101% higher than in India. So, even if an offshore software development company in India can hire developers for anywhere between 25-40 euros/hour, their disposable income is quite high.

cost of living index

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This means that they are paid quite well, and businesses are not hiring cheaper labour and compromising on quality either. High prices doesn’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. We’d love to help you out.

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