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Offshoring creates good jobs in poor countries

Offshoring creates good jobs in poor countries
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First Published: Tue, Jul 13 2010. 10 48 AM IST
Updated: Tue, Jul 13 2010. 10 48 AM IST
Geneva: Offshoring and outsourcing in services from call centres to accountancy and medicine have created good jobs in terms of pay and working hours in developing countries, according to a study published on Monday.
But the International Labour Organization (ILO) study found that improved work practices in the outsourcing industry could reduce excessive rates of staff turnover.
The study gives the lie to claims that outsourcing of such work has created “cyber-coolies” or “electronic sweatshops”, said Jon Messenger, an ILO researcher and main editor of the study.
“The jobs being created in offshore business services in developing countries are reasonably good quality jobs by local standards in terms of wages and working conditions,” he said.
The book looks at outsourcing in the two biggest markets, India and the Philippines, and two growing Latin American centres, Brazil and Argentina.
A study by the United Nations Conference on Trade and Development (UNCTAD) last year found the global market for information technology-enabled services was about $54 billion in 2008. The industry includes companies such as India’s Infosys Technologies and Wipro.
100% turnover
Wages are below those for similar jobs in rich countries — one of the main motives for companies to outsource operations — but average pay in the sector in India is nearly double that in other areas of the formal economy, the ILO study found.
In the Philippines they were typically 53% higher.
The study found that average weekly hours were 46-47 hours in India and 45 in the Philippines, whereas one fifth of workers in developing countries work more than 50 hours a week.
But negative factors such as frequent night work to handle customers’ different time zones, and demanding targets enforced by electronic monitoring resulting in a low level of worker autonomy, led to extremely high levels of staff turnover.
Sometimes the turnover rate in the typically young and well-educated workforce could exceed 100% a year, and rates of 30-40% are not unusual.
“A few key changes in policies and practices could actually make these good jobs even better while simultaneously helping to reduce staff turnover which would benefit businesses,” Messenger told a briefing.
These could include steps to improve health and safety for night workers, such as regular check-ups, and more flexibility for workers to organise their time and to meet targets.
Naj Ghosheh, an ILO researcher and the other editor of the book, said governments would want the industries to develop and innovate to move up the value chain rather than simply replicating imported processes. They would also want to retain skilled workers at home rather than encouraging them to emigrate.
The industry is highly influenced by language skills, with India and the Philippines serving English-speaking countries, Argentina serving Spain and Mexico building up operations to serve Spanish-speakers in the United States.
Africa is relatively underdeveloped although Nigeria’s computer-literate population gives it potential.
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First Published: Tue, Jul 13 2010. 10 48 AM IST