Is Outsourcing Ethical?

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I haven't quite gotten started with my new GetFriday VA, but as I zoom around online, I've seen many people question the ethics of using outsourced assistants who are paid less than US wages. I'm curious about what you think?

I did ask the customer service rep at GetFriday about the wages that were paid to personal assistants there, and he told me that everyone "is very comfortable." Of course, would he have been able to tell me otherwise?

I need the help and can't afford someone at $20-$25 an hour. At the same time, it is important to me that I'm doing the right thing. I want to be a responsible global citizen.

What do you think? Does anyone have any information on this? I'm curious--

[admin]

Hi All,

Outsourcing is a multi-faceted topic, but you should feel great about outsourcing in the way that I recommend it. Let me explain.

I recently spoke at the Ignite keynote for Web 2.0 last week (www.web2expo.com) and was approached by a Swiss gentleman who works at UBS, the investment bank, in Zurich. While we were talking, another person walked up and asked if I felt bad about taking jobs from Americans to give to Indians for slave labor, and the Swiss gentleman answered it for me. He said, "Tim, you're actually in social development. In Switzerland, a recent study showed that for every white-collar job that was outsourced to India we were bringing 25 people above the poverty line." He explained that five people could be paid the same wages as one Swiss, and five people depend on each of those five. The Swiss would be provided for by social services in Switzerland until he or she got another job, where the Indians did not have that provision.

Please note that the wages paid to these overseas workers are often the highest-paying jobs available in their countries. $5/hour doesn't should like much here, but in India -- even in a place like Argentina, where I used to live -- it can go quite far. There are plenty of Americans overseas who work for $5/hour in places like Jamaica or Croatia, and I've used them as well. It's not underpayment; it's just payment in another economic structure. I don't in any way recommend exploitation in the book -- I recommend being someone who "moves resources from low-yield areas to high-yield areas," which is precisely how J.D. Say originally defined and coined the word "entrepreneur."

Not just that, but I actual advocate virtual global workforces, and outsourcing is just one term for it. Sites like www.elance.com also enable US military spouses, retirees, and stay-at-home parents to offer their skills to customers worldwide. Without the option of "outsourcing" themselves, the amazing talents of these people would go wasted and they would be unable to earn income and create professional meaning for themselves.

The outsourcing in the book that I recommend, which is really just the use of a global market, helps to create an educated middle-class in developing countries, helps more Americans to sell their skills globally, and helps everyone to compete on a level playing field, which drives innovation and higher quality here at home.

I encourage you all to cut and paste any of the above where you see people misunderstanding what I advocate. I'm sure they have the best of intentions, but most have not read the book, and fewer still have taken the time to look at the issues as closely as the economists I spoke with when writing this book.

Please help spread the word!

Tim

[blackopal]

I initially had a problem with the idea of outsourcing work to another country for a low per hour amount (for the same reasons you mentioned), but I must agree with Tim, it really is a win-win for everybody. Not only does it bring jobs to these other countries, but they actually have a great work ethic as well. I'd recommend reading the full article by Esquire editor A. J. Jacobs that Tim mentions in his book.

Read it here: http://www.smartmoney.com/esquire/index.cfm?Story=20050909-outsource

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Thank you for this! This is how I initially thought of the outsourcing idea when I read the book. I had a moment of panic, I guess. I suddenly thought I might be hurting the workers I'm hiring by silently condoning unfair labor practice. If VAs in India really are paid well, though (and if it's helping 5 others in India live better), I'm happy to share!

Actually, as I'm thinking of this, I wonder if Americans could even change the way work is done in countries like India. If we tell GetFriday, for instance, that it's important to us, they might make things like healthcare, breaks, and unions standard for their workers (if they aren't already)?

Thank you ( so much!) for your assurance. It means a lot to me as I step out of my comfort zone.

[jetpacklife]

I agree with Tim. I thought I'd add one more thing. Don't forget who's job it is that you're actually outsourcing. It's YOUR job. It's your work that you would be doing. It's a job that YOU created. You're free to make money from your creations... You're just helping out someone (or someones) in India as well. And they are helping you too, by running your company more efficiently.

[Skanderbeg]

I have no problem outsourcing less-skilled labor. The problem comes with outsourcing things like software development. If this progresses too far, Americans will lose their know-how in the areas that have been outsourced.

Then, Americans will not be able to successfully start or run software businesses, because they will not have the know-how that comes from actually doing the work as you move up in the area. Same goes for other technologically complex industries.

For these reasons, I will outsource anything _except_ high-tech work. That's my position.

[searstower]

Skanderbeg,

Just thought I'd put in my two cents here since my opinion differs somewhat. I run a web design business, most of which is outsourced to contractors. I've found that the American independent/freelancer contractors that I've hired have the worst work ethic of all, and their communication skills are even worse.

Now that I've got your attention ;)
With that said, I network with local developers and programmers often, and always enjoy being able to give them work, but I'm now require them to do a test project which I make 'blow up' on them in the middle to see how they react before I let them to work with any real clients of mine. They usually just don't take work as seriously.

Americans will not be able to successfully start or run software businesses, because they will not have the know-how that comes from actually doing the work as you move up in the area.

Au contraire. Coming from one of the software/web development capitals in the world (Seattle), I can tell you that there is no shortage of startups and homegrown software in the states, and as long as there is open source, there will not be a shortage.

The OS community is huge and growing, and that is for the most part what is fueling these software startups. The most successful developers I know started by developing open source software/web programs (without getting paid) and making them great.

Anyway, just another point of view!
Rebecca

[Skanderbeg]

Of course, nothing is 100% black or white. Maybe people can spend their free time working on OSS projects while they work a day job at Starbucks to pay the rent. In my mind, that is a far from ideal model though. It really will mean that the vast majority of Americans won't study computer science, and won't go into technical fields. You know this has already been happening since 2002 or so.

It's not just CS either. It's all areas of engineering.

You say you know some great developers, but you also seem to say Americans don't take work seriously. Of course I would fire the ones that don't take things seriously, but I would try to hire the ones that are worth it.

I admit it's a futile endeavor in the end, to oppose an econnomic trend. I guess I just hate to think about how our country is going to look in 50 years, when the only jobs are hard labor, retail service, or entrepreneurship, and the Mexicans have all the labor and retail jobs.

[Skanderbeg]

By the way, this is to Tim, regarding his response above:

It's nice to think about it as social development, but how do you justify helping 5, or even 25 people in a developing country, at the expense of even one in your own country? Is it right to help them progress, have more kids, and grow, while seeing your own nation/culture/people shrink, instead of helping someone of your own country and culture do the same?

Just a question -- I am interested to see how Tim thinks about these things and why he things they're not an issue. Not just for theoretical reasons, but also to help decide my own direction.

[Danzilla]

Ok, I'll jump in on this one.

I've been a software tester for 12-13 years now. In 2001, I hired on with a company in Irvine, CA as a manager (my first management gig). I did my due diligence -- the company had been in business since 1984 without any history of layoffs. I had just come from a company that went Chapter 11 seven days after I started with them, so I was a bit paranoid.

About 6 weeks into my new position, the company had their first-ever round of layoffs. I lost two people on my team. My director handled the actual layoffs since I was still relatively new. I decided not to panic.

5 months later, they had their second round off layoffs. It took out my team and myself. I was taking a vacation week to move into a brand new house -- and they told me the day after I moved in. (gee, thanks). We had a subsidiary in India, and that's where all of our testing work went. A couple months after that, they laid off my director, and the company was bought out a year later.

Keeping in mind that this was during the big ol' dot.com bust, I was unable to find work anywhere. I called all my friends in northern California, and they said it was worse up there. After 9 months of searching, I switched careers. Got a real estate license, and wound up in new home sales. For 5 very long years. I hated doing it, but it paid the bills.

So if you are concerned about taking a job away from someone here in the states, you need to remember that the stateside person may or may not wind up in a better position than what they had. That person should also be capable enough to get up and find their way in the world again. Send them a copy of Tim's book. :)

For what it's worth, I left the new home sales position at the beginning of 2006, just as the real estate market began to go south. I've been back testing software for the last year, and I'm happy to say that, due to the hellish Los Angeles commute, my company let's me work at home full time. :) And yes, with a laptop and cell modem, I can work anywhere. I have a few other issues that are preventing me from traveling, but they will be resolved in a year or two.

It IS a global economy. Choose your resources wisely, and in a way that satisfies your personal ethics.

Now if you'll excuse me, I have to set up instructions for my (company's) contractor in Shanghai so he can do some testing for me -- while I review dropshippers to see what I might want to sell online. :)


- Dan

[agolden]

I agree with Tim. I thought I'd add one more thing. Don't forget who's job it is that you're actually outsourcing. It's YOUR job. It's your work that you would be doing. It's a job that YOU created. You're free to make money from your creations... You're just helping out someone (or someones) in India as well. And they are helping you too, by running your company more efficiently.

Thought this was a great point. I would happily outsource more and more of myself. Why not? It's best for each of us to be effective and focus on our respective core compotencies, otherwise I think the risk of not accomplishing what we set out to originally do increases.

There are a ton of examples, from commerce, eg. suppliers to each of us essentially outsourcing the collection of our groceries to the super market so that they are all in one convenient location. Our the remodel of a home to a contractor who specializes in construction. Both domestic examples.

Mostly, what I pick up from the thread is the legitimate concern that the group here wants to manage their outsourcing ventures ethically and responsibly which should be commended. This is great to see.

[jv619]

Here is a changethis.com manifesto that is related to this topic:

No Need to Fear: How Global Outsourcing Equals Opportunity (http://www.changethis.com/29.02.NoNeedFear)

JV

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Thanks for posting this. It answered all my questions -- and then some.

On a side note, I've been working with my GetFriday VA for two weeks now, and it's been excellent. After this discussion on the board, I feel good about my decision to chose an overseas VA.

Thank you, everyone--

[Feumet]

I haven't quite gotten started with my new GetFriday VA, but as I zoom around online, I've seen many people question the ethics of using outsourced assistants who are paid less than US wages. I'm curious about what you think?

I did ask the customer service rep at GetFriday about the wages that were paid to personal assistants there, and he told me that everyone "is very comfortable." Of course, would he have been able to tell me otherwise?

I need the help and can't afford someone at $20-$25 an hour. At the same time, it is important to me that I'm doing the right thing. I want to be a responsible global citizen.

What do you think? Does anyone have any information on this? I'm curious--


Can I ask where this question comes from? Is there somehow guilt associated with finding the lowest priced best-qualified person to do a job? Alternatively, perhaps we should be prejudice as to where someone lives?

Not being judgmental, just trying to figure out the root rationale of how this question would ever come up in the first place.

Thanks!

[Drewkerr]

My biggest issue of outsourcing as always been about taking a job a American can do, keeping a job in country versus out of country. Seeing jobs lost of friends and families to jobs being moved overseas has been tough. But when it comes down to it, business is business.

[Feumet]

My biggest issue of outsourcing as always been about taking a job a American can do, keeping a job in country versus out of country. Seeing jobs lost of friends and families to jobs being moved overseas has been tough. But when it comes down to it, business is business.


I can understand part of that....but I have had some rather wonderful insights, mentors, and real life educational experiences about that subject that got rid of the guilt. LOL

I am not going to get political here at all but hopefully help with some insight for people that have not wrestled with this before.

First of all I am a capitalist in the true Ayn Rand fashion. Capitalism has saved billions of peoples lives and is the only system of government in the world that does not involve enforcement of someone’s will on another without the use of a gun.

That is what made the US so great for such a long time. Although, there is more and more interference in commerce in general and government intervention always creates problems and we are seeing that today. I highly recommend the book “The Politically Incorrect Guide to Capitalism” by Dr. Robert P. Murphy as one of the entertainment books. He does a great job on explaining Capitalism and all of the great things it does and most importantly the how and why. You will not have heard this in college.

It explains what true lasses-faire Capitalism is all about versus regulated Capitalism, which is what exists in nearly all countries in the world including the US. He has some great info on how outsourcing to people in other countries (we are not talking about illegal aliens working here) actually help our economy.

It is about the free exchange and bargaining for goods and services by two traders on level playing fields. Both are and should be committed to getting the best deal they can for themselves. Guess what? Everyone wins when this plays out without interference, be it by Governments or other institutions. This is the only system out there that always works itself out as long as neither party are supported nor interfered with by outside sources. This would be in the form of regulations, subsidies, or extraneous taxes.

Let us examine the "guilt" train of thought by using an example. Lets say, that the Condo that my offices were in up until recently in San Jose on Santana Row cost over 1 million dollars. It was nice, but not that nice. Yet, I can buy something as good and actually better in every appreciable way for $175,000 here in Nashville. It is bigger, has walnut floors, taxes are lower, girls are prettier and not quite as insane….LOL and the weather I think is even nicer. Should I feel guilty about that or should I have to pay as much in Nashville as in San Jose because it is not “fair” to the condo owners in San Jose? Does that make sense?

As far as the Americans go, how much time are they spending in front of the TV every single day that they could be using to gain more skills or make more money (I used to do this too...argghhh) ?

Here is a breakdown.

The Bureau of Labor Statistics (BLS) of the U.S. Department of Labor
reported today that in 2005:

--Employed persons worked 7.5 hours on average on the days that they
worked. They also worked longer hours on weekdays than on weekend
days--7.9 versus 5.5 hours.

--On weekend days that they worked, employed individuals (ages 25
and over) with a bachelor's degree or higher worked about half as
many hours as those with less than a high school diploma--3.7 ver-
sus 7.1 hours.

--On the days they worked, employed men worked about an hour more
than employed women--7.9 versus 7.1 hours.

--Married persons spent more time doing household activities than
unmarried persons--2.1 versus 1.4 hours per day--and women,
regardless of marital status, spent more time doing these activities
than men.

--Watching TV was the leisure activity that occupied the most time
(2.6 hours per day), accounting for about half of leisure time on
average, for both men and women. ( this is 18.2 hours a week) By
contrast, the next most common leisure activity, socializing--such as
visiting with friends or attending or hosting social events--accounted
for only about three- quarters of an hour per day for both men and
women.

How many continuing education classes are they taking? How many Muses are they starting? Is there anything stopping them from buying books like Tim’s? I am willing to bet that every single person here has purchased books to help better themselves on a regular basis and that Tim’s book is not the first one they purchased.

Nothing is stopping nearly every single American form doing what we are doing other than themselves and the lack of will to do so with very, very few exceptions. Do you think that is a fair assessment?

I hope that they will do what we are doing and perhaps, we each can show at least one other person, or perhaps two or three how to do what we will be doing once we succeed at figuring out the new Ferriss paradigm that we are engaged in. :)

I will leave you with one of my many favorite capitalistic quotes:

“Capitalism is the only system that functions in a way which rewards rationality and penalizes all forms for irrationality….It is capitalism that gave mankind its first steps toward freedom and a rational way of life. It is capitalism that broke through national and racial barriers, by means of free trade. It is capitalist that abolished serfdom and slavery in all the civilized countries of the world.” Ayn Rand, The Virtue of Selfishness

[AdamTeece]

All this keeping a job in country vs. out of country is one of the problems with the world. True globalization will occur only with less nationalism. I am very happy to be an American, I mean I joined the Navy to help defend it(actually I joined because I was lazy and didn't want to apply for college, but that is besides the point). But one of the causes of wars and all of the, this country vs. that country is because of extreme national pride. I still don't understand why we can't all just be happy to be human. I almost want us to definitively discover an alien race on another planet so that way when we go to war at least maybe our planet will be united against theirs. I understand that each country has different political and religious beliefs on how things should be run, but is it really necessary to try and force beliefs on each other? I think global outsourcing might be just another step towards a true global economy.

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Just for the record (since I'm the OP), I actually don't have a problem with taking jobs out of the country, so the American job market wasn't my initial issue.

I was worried about providing a living wage and good working conditions for workers. I didn't want to be part of a system that didn't pay employees fairly or didn't have fair labor practices. Once I found out that the working conditions and pay are actually excellent for employees at GetFriday, I was happy to work with them.

[Feumet]

Just for the record (since I'm the OP), I actually don't have a problem with taking jobs out of the country, so the American job market wasn't my initial issue.

I was worried about providing a living wage and good working conditions for workers. I didn't want to be part of a system that didn't pay employees fairly or didn't have fair labor practices. Once I found out that the working conditions and pay are actually excellent for employees at GetFriday, I was happy to work with them.

LOL...that is the great thing about the whole process. What has been your experience with them so far?

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So far, it's been excellent! My VA has been responsive, kind, and exceedingly professional.

There was a bit of a delay in initially getting set up and assigned a VA (I think Tim's book has caused quite an influx of business for GetFriday), but once I started working with my VA, things picked up. I've never had an assistant before, and having someone do work for me is like magic!

[Feumet]

I just checked Get Friday and they are at 15 per hour. I know that I just heard Tim on a conference call say the he is paying $4 per hour for his best team.

How? Are his prices incorrect. I can get 15 per hour assistants here all day long but they probably won't work while I am sleeping...:)

[ConsistentIncome.com]

I, too loved the book, but am seeking a lower hourly rate than the 10-15 dollars mentioned. Does anyone have a reliable VA at under $10 an hour??

Thanks and best wishes to you all!!

Jason :)

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I pay $9/hour at GetFriday -- because I signed up for a package with 40+ hours a month. I know this might be a lot for some, but it works well for me, since I work three jobs and have more than enough to keep my VA busy for 40 hours!

If that doesn't work for you, I've heard some people on the boards say they found VAs who can do data entry and less skilled work for $4/hour by looking on elance. If you open a ticket (and let VAs bid for your work), you might get more than decent rates--

[ConsistentIncome.com]

Sweet Indeed! I checked it out....looks great to me!

I'm going to give it a shot and see how it goes.

:)