Is Outsourcing Another Form Of Slavery?

Recently a barely known blogger named Stuart Robinson posted an article on his blog calling offshore outsourcing a newly named version of slavery.

The only problem with his slander was that it wasn’t backed up with any research. His beef was that 20,000PHP was “pitiful” wages for a Filipino worker. Before I serve up a piledriver’s worth of researched rebuttal, I want to point out that actual Filipino workers are agreeing that 20,000PHP is a good wage (that was just one example of multiple).

What Makes A Good Wage?

Before we start looking at wages we need to have something to compare them with. So I want to know if you would agree that a Governor of any U.S. state makes a respectable wage. I’m not talking about lavish riches either I’m purely just talking about respectable enough to not come even close to feeling like slave wages.

Ok so if a Governor would have a respectable wage let’s take a look at the average salary of a Filipino Governor. You’ll see that their wages start out at just over 28,000PHP per month which is higher then the 20,000PHP that I start my assistants at. However, I think and hope you would agree that a Governors position is just a few job classes above a writing or data entry position.

Now we have to look at something that compares a little more closely so I picked a Graphic Designer. Their daily job requirements would be quite similar to what I assign my Filipino assistants. So we check with Payscale.com which is one of the largest salary reporting websites for the average wage of a Filipino Graphic Designer.

We can see through Payscale.com that their average wage is about 180,000PHP per year or about 15,000PHP per month. Which is 5,000PHP less then what I recommended starting out your virtual assistants at.

Is This Slavery Then?

Let’s take a look at Wikipedia’s definition of slavery…

Slavery is a form of forced labor in which people are considered to be, or treated as, the property of others. Slaves are held against their will from the time of their capture, purchase or birth, and are deprived of the right to leave, to refuse to work, or to receive compensation (such as wages).

That definition sounds a lot different then my Filipino assistants living conditions where they make more money then Graphic Designers, work from the comfort of their own homes, get weekends off, and even have paid holidays off.

What Do My Assistants Say?

Ailene my top contracted assistant now makes a little more then 26,000PHP per month since she has been with us long enough to have had pay raises. That money is enough for her that she buys farm land as investments with her leftovers. She also said that she sometimes gives those land investments to her family members just to help out.

Just last month Ailene came to us asking for a day off because she was going to go see a dentist. Of course we said it wasn’t a problem and then she told us that the last time she was able to see a dentist was 20 years ago. That she or her family just have never been able to afford things like that until now.

Now the only thing left to consider is whether it’s ethical to be hiring oversea’s labor when our own economy is in such shambles. From what I have heard our economy isn’t where it’s at because of outsourcing but instead because of greedy banks, mortgage investors, and large corporate CEO’s spending budgets too recklessly and bending the system too far.

My stance on oversea’s outsourcing is that a business owners primary job is to always be looking for the highest ROI leverages that he/she can get. Whether that be from advertising sources, bulk ordering vendors, or their own employees. Anything else becomes the business owners personal preference as to how they have designed their brand.

To say that outsourcing is just a renamed version of slavery is asinine though.

Go Bigger,
Justin Brooke

P.S. How do you feel about hiring oversea’s labor? Is it even a question of ethics? I wanna hear your opinions in the comments below.

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{ 82 comments }

Jason Benfield May 9, 2009 at 8:23 am

Hi Guys, I was just revisiting some of the old post, and this one reminds me of a conversation I just had with the old champion breed horse farmer…

I noticed that most of the rich horse farmers here in Lexington are highering nothing but illegal mexicans…

These guys have more than enough money to higher anyone they want so I brought up the point…

He said that higher americans are such a freakin nightmare… they’re lazy, and want to get paid the most for the littlest amount of effort…

I asked him what the main difference was in the 2 types of people…

and he said it’s hard to even get the americans to come in to work, but it’s even harder to get the mexicans to go home from work…

So is outsourcing slavery? No…

but wouldn’t it be robbery to pay someone in the states $12 per hour and for them to turn around and do a half ass job?

Alex Poole May 12, 2009 at 11:51 am

The economy is global – as we’ve seen so clearly in the last year for all the wrong reasons.

Just because money crosses a border doesn’t mean it disappears!

Asking people to keep their money within their political borders is economic protectionism that was outdated pretty much before I was born.

As if a Filipino never spent their hard-earned cash on a US-generated product….

..now about those steel tariffs ;)

Cheers, Alex

Alex Poole’s last blog post..Jumping out of the Comfort Box

Jack Humphrey May 13, 2009 at 9:53 am

John Jonas told me his people go around bragging they have an American boss, and that they are intensely proud of, and excited about their jobs.

Before outsourcing money coming in for these guys there was….nothing. That’s called abject poverty. That being the only other choice makes this guy a raging fool.

Justin Brooke May 13, 2009 at 8:24 pm

Hey Jack, thanks for stopping by… John Jonas is certainly an outsourcing stud. Yeah, the filipinos are the LAST people complaining about outsourcing, they’re in love with us right now.

Don’t remember whether salves in America were in love with their bosses… hmmmm? LoL

Christian Cabuay May 14, 2009 at 1:22 pm

As a Filipino American, I can honestly say that P20K is a good honest salary in the Philippines. I lived there from 1995-2003. I was working as project manager for a new media company and only got P18K at my peak.

Christian Cabuay’s last blog post..Embrace Your Roots

Christian Cabuay May 14, 2009 at 1:36 pm

Sorry for the double comment post but I checked out the article in question.

It said:
* Rent – P10,000 per month
* Utilities – P7,000 per month
* Transport – P3,000 per month
* Groceries – P25,000 per month

What crap. He’s never been there obviously and just looked up some “facts” online. Those #’s are wrong with the exception to rent IF they are renting a studio. Most people live with their parents well into their 20’s and even after their are married and in their 30’s.

Utilities – Overblown – Unless you have aircon on 24×7 it wont reach P7K. Having a Meralco bill of P3K was considered high

Transport – P7K? Only if your taking a private taxi everyday to work or to get around. Most commute via Light Rail System, jeepney or bus. Back and forth will cost no more than P100.

Groceries – P25K? Only if you weigh 500lbs and eat at The Fort restaurants everyday.

Christian Cabuay’s last blog post..SA

Katie May 18, 2009 at 4:08 pm

Hmmmm,

Federal minimum wage is $6.55 per hour. California’s minimum wage is now $8 per hour. Does that mean that in the U.S., people outside of California who are making minimum wage are slaves?

Now I know minimum wage is not much money, and anyone working for someone else is a “wage-slave”, but gee, the “logic” of some people….

Offshore Web Design Company May 28, 2009 at 4:27 am

yes i agree with you…..good informative article. Thanks for sharing.

David Internet Marketing July 1, 2009 at 2:18 pm

Hmmmm,

Federal minimum wage is $6.55 per hour. California’s minimum wage is now $8
per hour. Does that mean that in the U.S., people outside of California who are
making minimum wage are slaves?

Great Point Katie! That puts things into perspective.

-David G.

David Internet Marketing’s last blog post..Boost your Page Rank in Minutes

David Internet Marketing July 1, 2009 at 2:22 pm

Katie you make a great point about the different minimum wage
laws in different states. And does it really make sense that the government
can dictate to the employers the minimum amount they have to
pay their employees?

-David G.

Darlene July 4, 2009 at 9:59 pm

The only reason people should complain with outsourcing jobs to the Phillipines is with technical jobs that they are not qualified for, i. e. with large corporations. This presents customer service problems. True, they do speak better English than those in India; however, since trouble shooting problems cannot be handled by them, it must be then referred back to the US for more qualified personnel to handle the problems. This usually creates a very dissatisfied customer. But for small business owners and for the Internet Marketer, it makes sense. So, to just make a blanket statement as Stuart did, without doing his due diligence, showed how little he really knows and how most people should just ignore him. Thanks Justin for all your posts and keep up the good work. I just got around to reading this one, but have read many others of yours.

TryBPO.com August 11, 2009 at 9:40 pm

Nice post. We run an outsourcing company geared towards small and medium sized businesses out of the Philippines. My business partner lives there and I’ve been making it out a couple of times a year. I can tell you quite plainly that 20,000 pesos a month for an entry or close to entry level position is quite generous.

Our business comes from the 2M – 20M businesses that are in need of a managed outsource crew and it’s quite beneficial to them. We track ROI on their expense and report regularly and they’re quite pleased with the results. That other post Justin wrote about how to hire a VA from Craigslist is ON THE MONEY and I would recommend to anyone starting out. Where, I think, we provide value to the start-ups and entrepreneurs is that we can afford to take on projects that may not have any initial payment, provided there’s a high level of trust, pay-for-performance, or company equity in it for us.

Great blog, Justin! – Justin Cooke TryBPO.com
.-= TryBPO.com´s last blog ..Life Travel: Combining the Forces of Outsourcing and Tim Ferriss =-.

Zoran September 26, 2009 at 11:27 pm

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sitefling.com to GoogleReader!

AnnaHopn September 29, 2009 at 12:15 am

Hi there,
Thank you! I would now go on this blog every day!

Robor October 1, 2009 at 5:26 am

Greatings, Interesting, I`ll quote it on my site later.
Robor

Pothi October 3, 2009 at 6:22 am

As a freelancer working through oDesk, I’ve been watching the trend in oDesk for quite a while. I should agree with this blog post that it’s becoming kind of slavery in oDesk which is just next to the top (Elance) in online marketplaces. Though, oDesk has decided to bring in minimum wage ($3 an hour), it is still a rock-bottom price for many.

Of course, ethics play a major role especially in the long term assignment. One without ethics can not stay long in the competition.
.-= Pothi´s last blog ..Minimum Wage coming up in oDesk =-.

Justin Brooke October 3, 2009 at 6:28 am

Uhmm maybe you should read the post above before calling it slavery. We are talking about how we pay our employees over $4/hour and how they make almost as much as their local governors.

Outsourcing Tech Support April 4, 2010 at 8:49 pm

An insightful and articulate post! You bring up an interesting topic. Why call it slavery? What is the problem when you are able to excel at a particular thing and deliver the same to your clients or partners in return of the money? It's parochial to call it a slavery. It takes skills and abilities to deliver something of value at lesser costs than your counter parties. Isn't it? Its not slavery it is the reason why we are prospering from developing to developed. Lets call it a business sense. We would have done the same thing.

Charlie

KPO Services May 3, 2010 at 9:54 pm

Outsourcing is the buzzword today in US and India. But I would say things are overlooked. Companies in US gain by low-cost advantage in India. Indian service providers will bill their employees working for their clients.Indian companies make profit from this business. Indian companies not even offer 10% of the profit to their employees as hike. But its the employees who slog a lot for the clients from which they don't stand to gain anything. The words of the client are taken as gospels. Employees concerns can't be addressed to the fullest. Even the employees sometimes are requested to stay long nights to finish the project before the timeline.

Justin Brooke May 3, 2010 at 9:59 pm

Which is precisely why I use the Philippines and always recommend people do
their research first. It's very important to have a strong screening process
upfront otherwise you could hire the wrong guy or the wrong company, which
is much more costly in the long run than the quick money you gain in speed
of setup.

robien May 8, 2010 at 8:55 am

Hi Justin,

Great post! Ive started outsourcing myself to the Phillipines just today, and I hope it will help my company grow tremendously. I have hired a young and dedicated woman from there rather than an Indian IT company, I think it will help her also to do more things in her life. Overall I feel great about it, only idiots could call that slavery!

Great blog by the way, I just discovered it from the guest post on Shoemoney and have it bookmarked!

Robien @ TweeterStarGet More Followers

Home Outsourcing Problems May 21, 2010 at 1:54 am

I can't accept this. Because this is one of the job. For that , we are getting salary .

outsourcing June 5, 2010 at 1:25 pm
outsourcing June 5, 2010 at 6:25 pm

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