January 07, 2008
The hidden costs of outsourcing
While outsourcing cuts operating costs, lost productivity and attrition rates among off-shore workers due to poor health and loss of social life dramatically decrease companies' profits.
The most common reason why companies send work off-shore is to lower their operating costs. Even with the initial expenditure in setting up project offices, hiring talents, travel, and training, US- and Europe-based companies still save in the long run.
However, there is a hidden cost that companies fail to consider: the health of their outsourced teams. Even among the outsourced workers who are lucky enough to be brought on-shore via H1-B, L-1, or other working visas, the trajectory is almost the same, due to the lack of labor law protections that are accorded to in-house workers or working citizens and immigrants.
An Associated Press story notes that heart disease, diabetes, sleep disorder, indigestion, and stress are common among outsourced workers based in India. The typical culprit is the need to work on overnight shifts answering calls from Europe and America, typically irate ones. Aside from poor health, their social lives also suffer. This is especially true among women who, after working on long shifts, are expected to care for their families upon coming home.
Moreover, dramatic changes in lifestyle and eating habits cause health problems. Smoking, drinking and high-fat diets are now common among outsourced workers writing computer programs or answering calls from overseas. It does not help either that cultural differences cause stress in accomplishing the tasks for which these workers are paid remarkably lower than their on-shore counterparts.
As other emerging economies--such as Philippines, China, Eastern Europe and Central America--dependent on their large supply of technology workers, enter the global outsourcing playing field, the global health outlook may just be bleak. In India alone, health problems amounted to $9 billion in lost productivity. In ten years, the amount could balloon to $200 billion.
Even with comparatively good salaries and fringe benefits, the demand to churn more outputs efficiently and stretch working hours can take its toll. Attrition rates are especially high in the contact center industry where workers also cite dead-end jobs and lack of opportunities to move up the corporate ladder as reasons for leaving their companies.
Nowadays, contact center agents switch from one company to another on an almost seasonal basis. But no matter the reasons stated for leaving their employers, it all boils down to general dissatisfaction and unhappiness with their working situations.
As the adage goes, unhappy workers are not only unproductive. They are also unhealthy. And the cycle will go on unless companies look for ways to address the matter. Off-shoring work may cut costs in salaries, hiring and facilities, but the hidden cost in lost productivity due to attrition and health threaten revenue growth.
While it is easy to say that off-shore workers deserve what they get for “stealing” work from Americans and Europeans, it is worth noting that these people who work on endless hours and sacrifice health and relationships may just as well be ensuring the job security of those in First World economies.
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