Offshoring and Working Conditions in Remote Work

The potential market for global outsourcing of business services is extraordinarily large: it has been estimated to be valued at up to US $386 billion (Tagliabue, 2007). According to a 2005 United Nations Conference on Trade and Development (UNCTAD) report (based on an estimate by the management consultancy McKinsey and Company), the business process outsourcing (BPO) ‘industry’ was worth only US $32-35 billion globally in the year 2002. By 2009, a recent UNCTAD report placed the estimate for 2008 at $80 billion (UNCTAD, 2009). Regardless of which estimate one chooses to believe, the total global value of this ‘industry’ is clearly substantial.

The overall purpose of this chapter is to examine the dynamics underpinning the global relocation of business services from the perspective of developed countries, and to consider the consequences for work, employment and employee relations that prevail in these countries. Since the offshoring of call centre and diverse back-office activities has been largely an anglophone phenomenon, the three countries selected for study — the US, the UK and Canada — are those from which the overwhelming volume of business services has been migrated.

Offshoring and outsourcing are not recent by-products of the emergence of the new economy in services. The first wave of offshoring and outsourcing, encompassing the manufacturing sector, began in the mid-1980s, motivated by low costs, the availability of skilled labour, the promotion of a business-friendly environment and the existence of production and supply networks in places such as China, Republic of Korea, Malaysia and Taiwan (Bardhan and Kroll, 2003). At that time, it was predicted that developed nations, nurtured by giant multinational corporations (MNCs), would evolve into service-based economies (Dossani and Kenney, 2003), requiring buyers and sellers to be frequently available in the same geographic location (Henley, 2006). This implied that while manufacturing jobs would move to other areas of the globe, service jobs would remain in the West.

This chapter offers a glimpse of the highly globalized BPO ‘industry’: the customer or client is in the US or any other English-speaking country, while the employee sits with a computer in a cubicle in some remote corner of Manila in the Philippines. This study identifies key aspects of the interaction between new technology and people and processes in information technology-enabled services (ITES). This section describes employee characteristics, patterns of work organization, working conditions and employment practices in offshored work in Philippine business process outsourcing (BPO) companies.

With constant pressure to find new ways to make their organizations more profitable, companies have examined all internal work functions in order to determine which can be carried out more efficiently by other organizations, including firms in other countries. As earlier chapters in this book have already highlighted, developing countries have seen their ability to deliver services in this industry rise at a much faster pace as information and communication technologies (ICTs) within these countries have become less expensive. In this context, Latin America has become a prime destination for organizations sourcing business functions via ICTs, and the result has been the development of a growing BPO industry in countries such as Argentina, Brazil and Chile. Of these countries, Brazil has undoubtedly been at the forefront of BPO expansion.

In recent years new export opportunities have appeared for developing countries mainly due to the development of information and communication technologies (ICTs), which allow long-distance provision of a larger number of services (accountancy, finance, logistics, computer and information services, etc.) — the so-called information technology-enabled services (ITES).

Earlier chapters in this book described how developments in information technology-enabled services (ITES) provided by business process outsourcing (BPO) companies have played out in different countries. First, we discussed the major ‘source’ countries for BPO — including the US, the UK and Canada. We then examined developments in several of the most important ‘destination’ countries for global sourcing of ITES, or, as it is more commonly known, ‘offshoring’ — India, the Philippines, Brazil and Argentina (in chapter order). These four chapters identified the most important trends in ITES—BPO in each country, including the size, scope and features of those companies using remote work enabled by ICTs; the size and characteristics of the BPO ‘industry’ and the workforce engaged in remote work arrangements (RWAs); the organization of work and the working and employment conditions in these companies; and a few important indicators of firm performance — especially the key issue of staff turnover.

Throughout this volume, we have seen that remote work in information technology-enabled services (ITES) has been growing rapidly along with the global business process outsourcing (BPO) industry. Obviously, as noted in the Introduction, the global economic crisis that swept over the world beginning in the autumn of 2008 has profoundly impacted economies and employment in nearly all countries around the world. Nonetheless, the underlying fundamentals that have driven the growth of the global BPO industry — the business imperative to continuously reduce costs; the availability of skilled workers in developing countries at much lower salaries and the desire for access to emerging markets — seem unlikely to change in the near-term, and will most likely accelerate when the global economy recovers.