Start Up Blog

The truth about digital offshoring

Posted in entrepreneurship by Steve Sammartino on June 13, 2010

BRIC nations (Brazil, Russia, India and China) are the buzz word in business for good reason. In the good news for us small entrepreneurs is that access is no longer limited big players. The internet has made it possible to have a global work force from launch date, and the same cost advantages that multinationals have had since they started exporting labour to China and other parts of Asia since the 1960’s. Anyone can do it now.

Before you worry about the ethics of ‘off shoring’ there’s some stuff we should know. Exporting labour overseas is ethically sound. It is beneficial both to the recipients and the providers of such work (us). The average computer programmer earns around $1000 a month in India. In the USA and Australia it’s more like $7000 a month. Unethical? Not really. The $1000 a month versus the average in India of $85 gives new information workers in India and very high standard of living.

When we inject money into developing economies we are increasing the living standards not just for our employees, but for their economy in general. In addition we have the option to pay them above market rates to create strong loyalty. We have the option  treat our people well and create important cultural exchanges and relationships.

Other peoples time is what we must leverage for startup success. A simple business fact time immemorial. Only now we have both currency advantage and access. The issue of moving jobs overseas is a crock. We live in a global age, an internet economy. We all buy goods everyday from overseas. Geographical barriers simply wont exist shortly. So we should just get on board. Protectionist attitudes are outdated. No one is sending kids down mines with digital offshoring. If local people are getting put out of jobs, then they’ve been earning too much for what they’ve been doing anyway. Their outplacement is inevitable.

Startup Blog says:

• Outsourcing is available to everyone, not just powerful companies
• Off shoring improves living standards
• Off shoring is ethical and important culturally
• We must embrace it, or get left behind. There is no choice.

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6 Responses

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  1. Edward Harran said, on June 13, 2010 at 9:41 pm

    http://www.samasource.org/about/

    “Samasource enables marginalized people, from refugees in Kenya to women in rural Pakistan, to receive life-changing work opportunities via the Internet. The core of this concept is microwork – little bits of labor that can be performed anytime and anywhere that add up to a real livelihood for our partners. In parallel, we enable socially responsible companies, small businesses, nonprofits, and entrepreneurs in the US to contribute to economic development by buying services from our workforce at fair prices.

    Our model has three parts. First, we screen and select Service Partners, locally-owned small businesses, non-profits, and groups of home-based workers, from the poorest parts of the world. Our Service Partners must satisfy stringent social impact and quality criteria that verify their contribution to economic development and their capacity to deliver good work. Next, we provide our Service Partners with free business training, using live sample projects, web-based tools, and site visits. Finally, we market our Service Partners’ services to paying clients through a website and sales team based in San Francisco. Our clients range from low-income entrepreneurs in Jersey City to mid-sized nonprofits, such as Benetech, and technology startups.

    Samasource derives its name from the Sanskrit word sama, which means equal. Samasource is a 501(c)(3) non-profit social business. Our management team and global advisory board have over forty years of experience working in technology, remote work, and social and economic development for leading institutions such as the Clinton Foundation, Kiva.org, the Ford Foundation and the World Bank.Thus far we have worked with 18 small businesses, nonprofit training centers, and rural data centers that provide dignified jobs to more than 500 marginalized individuals in Kenya, Uganda, Cameroon, Ghana, and Pakistan.”

    Watch Video of Founder at TedxSF here

  2. Mark Ferguson said, on June 13, 2010 at 9:43 pm

    Nice post mate. Very thought provoking.

    Mark (@iamarkus via twitter)

  3. Ben Rowe said, on June 13, 2010 at 9:56 pm

    Agreed.

    It’s another great way that individuals have competitive advantage over big companies these days.

    Great Post Steve.

  4. Ryan Spanger said, on June 13, 2010 at 10:09 pm

    Good post Steve. I think that one of the best ways to try to ensure ethical practice is to develop a relationship with digital outsourcers. Ensure that you are dealing direclty with the contractor rather than a middle man who may be exploiting the contractor. The more you know who you are deLong with, the more likely you are to treat them fairly and ethically.

    Right now the situation appears to work quite well. Sites like elancer and guru appear to be made of mainly of solo operators sigh whom you deal directly.

    The danger is that as digital outsourcing becomes more commonplance, it could start to take on more of the attributes of something like the global food production industry: often faceless, exploitative and unsustainable.

    So build relationships with digital outsourcers in the same way as you would with contractors in your own city. Get to know them, and reassure yourself that your money is going to the right place.

  5. Michael said, on June 14, 2010 at 8:21 pm

    First came across this opportunity while watching your ACA story Steve!

    Have since researched further info and heard further stories on various podcasts.

    I agree and support yoru reasons on why it’s useful and appropriate.

    I have utilised oDesk on numerous occasions with great success, I know others who aren’t so keen with it.

    I agree 100% with Ryan’s comments. You need to, as you do with everyday suppliers, build a relationship with them, build up your trust and provide them with the opportunity to prove themselves.

    Thansk for your comment Edward, samasource sounds like its providing great opportuniites.

    As my business grows I constantly review my internal systems for areas that have the option of being outsourced.

    My only concern with the process is privacy.

    I’m hesitant about where the work they carry out for me may end up or be utilised. Something I have no concerns with utilsing providers within the country.

    Twitter: @quantumunited

  6. Rainu said, on June 14, 2010 at 9:03 pm

    I am noticing that outsourcing now is not limited to giving some menial, non-creative tasks. Companies are now looking to partner with smaller companies in India, China and work with them, rather than just ‘outsource’.


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