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Is outsourcing offshore ethical?
November 22, 2018

Is outsourcing offshore ethical?

Written by: Mark Engelmann

One of the more common misconceptions about outsourcing offshore is that it’s taking advantage of people in countries such as the Philippines. That the practice is unethical, with visions of sweatshops springing to mind. Is it different to countries like Australia or the U.S.? Culturally, yes, but the ethical treatment of staff is a no-brainer for those leading the way in the outsourcing industry.

Offshoring to the Philippines

From a Philippines perspective, the outsourcing industry has had a significant impact on the local economy, thrusting the country into the global outsourcing spotlight. The offshoring industry now employs approximately 1.5 million people in the Philippines, becoming the country’s biggest source of private employment. Not only that, but the Philippines has steadily increased their share in the global outsourcing market, currently claiming an estimated 13% stake (and growing!). This industry growth has helped to stabilise the local economy, with more skilled workers contributing to the economy.

The growing preference for BPOs located in regional provinces and cities, such as the Clark Freeport Zone (read more about Clark here), has also secured better employment opportunities for those living outside of metro areas, such as Manila. The outsourcing industry remains key in establishing, maintaining and increasing regional development. Colliers International found that BPOs and KPOs occupy approximately 45% of office spaces in regional areas.

Wages in the BPO sector

The Philippines’ BPO sector is a highly desirable industry to work in. Wages paid to Filipinos in the outsourcing sector are competitive internationally, sitting at the lower end of the scale. However, staff in the industry are typically paid more than double the national average and are often provided the added benefit of membership with a Health Maintenance Organization (HMO). While the government-run PhilHealth exists to cover some medical costs for Philippine citizens, its coverage often falls short. HMO is similar to private health insurance in Australia, except premiums are paid by the employer, which is crucial in easing the financial burden of costly medical expenses in the Philippines.

It’s important to understand cost of living and lifestyle comparisons when evaluating the seemingly low wages paid to Philippine staff. Australia and the U.S., the cost of living in the Philippines is pegged, by some, as being up to 70% less. It’s also critical to recognise that when you pay a Filipino, you aren’t usually supporting just one person. It’s not unusual to see a whole extended family relying on that income, including parents, grandparents and siblings. Wages are used to prioritise health initiatives and fund higher education opportunities, even for extended family members. It’s also common for Filipinos to hire nannies, and other household help with their income - help that many Aussie’s wish for!

Philippine Labor Laws

To protect the interests of private employees, companies seeking to hire Philippine staff offshore must comply with the strictly-enforceable Labor Code of the Philippines. The Labor Code addresses areas such as hiring, termination, minimum wages, benefits and working conditions. There are hefty consequences for employers who fail to meet the legislated requirements.

Avoiding unethical outsourcing practices

The best option to avoid the traps and complexities of the Labor Code is to choose a reputable outsourcing provider which places the ethical treatment of employees at the forefront of their business. Your outsourcing provider will take care of all the HR requirements, removing any compliance headaches and helping you manage the risk of employing people in a foreign country with unfamiliar industrial relations legislation.

Some outsourcing providers go above and beyond, providing extra benefits and employee perks, the results of which are beneficial to both the outsourcing provider and the client (you). Additional benefits can include free shuttles to and from work, subsidised on-site cafeterias, internal team building events, HMO, and more. Providing a workplace that values the needs and desires of employees is conducive to attracting and retaining quality staff, high attendance, high performance, fewer workplace complaints, and ultimately, a high level of client satisfaction.

Filipinos aren’t so different to other work forces around the globe. They are increasingly seeking out diverse workplaces which can offer them ethical and compliant employment opportunities, safe and inspiring workspaces, employee and family engagement, competitive wages and attractive additional benefits.

At Beepo, we have a strong commitment to meeting the legislated, ethical and additional expectations that come with employing talented, highly-skilled staff for our clients. Click HERE to discover 33 critical questions you should be asking your outsourcing provider to ensure you’re making the right choice for your business.

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