Business Process Outsourcing

Ethical Outsourcing: Why It Should Matter To Your Business


Global outsourcing commands a Market Value of more than $92.5 billion. In 2023, roughly 66% of all U.S. businesses outsourced the work of at least one department. Outsourcing is as much a part of today’s business landscape as memos, Zoom meetings and coffee breaks.

Businesses use outsourcing to access specialized skills, tap global talent pools and save capital in the face of constantly rising costs. And most of these businesses rely on some level of outsourcing simply to compete. For these businesses, outsourcing is not a choice. It is a necessity.

Still, businesses do have a choice when it comes to outsourcing ethically. In fact, if you wish to truly enjoy the lasting benefits of a strong outsourcing partnership, I believe ethics should be high on your list of considerations. But how can you choose a business process outsourcing (BPO) partner that shares your values?

We’ll explore this question and provide actionable tips below. But first, we need to acknowledge how outsourcing can carry some ethical risks.

The Ethical Risks Of Outsourcing

According to a Deloitte report, 57% of businesses identify cost savings as their main reason for outsourcing. This makes sense. Running a business is expensive, turning a profit is challenging and every penny counts. But cost savings aren’t everything.

I believe there are serious risks in allowing cost savings alone to guide your outsourcing decisions. When implemented with care, outsourcing can lead to expanded opportunities for underrepresented groups, greater job access for working mothers and improved diversity for organizations. On the flip side, outsourcing can contribute to global labor exploitation, environmental degradation and human rights violations.

Ethical Risks Equal Practical Risks

There is a right way and a wrong way to outsource. The wrong way involves outsourcing to a nation with poor labor rights protections, lax environmental laws and low wages. While this type of outsourcing arrangement can shrink your labor costs, it will come at the expense of laborers working under unethical, unsafe and inhumane conditions.

These ethical lapses may consequently be followed by very serious costs to your business including a decline in the quality of your product or service offerings, a tarnishing of your brand’s public image and increased vulnerability to economic, political and social turmoil. Moreover, partnerships based in poorly regulated localities may heighten your vulnerability to data breaches, cyberattacks and compliance issues.

While you may be saving money upfront, an outsourcing partnership without ethical safeguards makes you susceptible to potentially costly hazards down the road.

The Outsourcing Environment Has Changed

Partnering with the wrong provider may also put you out of step with the increasingly sustainable practices of your competitors. Today, a growing number of businesses—especially in the U.S.—are recognizing the importance of moving toward sustainable environmental practices.

For the leading businesses, these practices are not simply greenwashing initiatives designed to paper over environmentally damaging practices. There are clear economic benefits to reducing your organization’s energy consumption, shrinking your carbon footprint, and innovating sustainable business processes.

When you partner with an outsourcing firm that saves on costs by skirting environmental concerns, you risk falling behind competitors who are finding real, long-term and forward-thinking ways to reduce their costs.

The Importance Of Ethical Outsourcing

Strategic business process outsourcing is about more than just finding the cheapest service provider. It’s about joining with a partner that shares your company’s commitment to fair and ethical practices.

Ethical outsourcing is also about extending your firm’s commitment to diversification. If your outsourcing operations are conducted with care and compassion, your BPO partnership should help your firm achieve broader cultural representation.

This is why it’s so important to conduct due diligence before entering into a BPO partnership. Assess your prospective partner’s employment practices, adherence to labor laws and commitment to diversity and inclusion. Make sure you know exactly where the work will be taking place and that you understand the legal, social and political conditions specific to this locality.

It’s also important to be aware of bad actors in the outsourcing space. In recent years, especially with the rise of AI, the cost of entry has decreased significantly. The result has been a surge in illicit activity and alleged BPO providers with convincing websites that are in fact fronts for massive data theft scams. Be absolutely sure you know who you’re doing business with.

One way to gain this assurance is to work with a company that is based in the U.S. and has experience managing offshore operations. I find that this arrangement can help balance the protections that come with U.S. laws and regulations with the pricing advantages of overseas support.

Tips For Evaluating Outsourcing Partners

Below, I’d like to offer a few actionable tips on how to select a BPO partner that aligns with your company’s values:

• Evaluate labor practices. Does your partner pay fair wages, provide safe working conditions and comply with international labor laws?

• Assess diversity and inclusion. Does your outsourcing partner exhibit diversity, provide access to equal opportunity and promote workplace inclusion?

• Audit data security and privacy. Are there measures in place to protect sensitive data and ensure compliance with relevant data protection regulations?

• Inquire about legal liabilities. Will your firm be protected by U.S. laws under the conditions of your BPO partnership?

• Review their environmental record. Are there initiatives in place to minimize environmental impact and promote sustainability?

• Request live in-person meetings. Can your BPO partner accommodate face-to-face meetings, field questions in real time and offer a space where both parties can assess compatibility?

It goes without saying that cost savings will be a factor as you choose a BPO partner. However, you must be sure to weigh this priority against your organization’s ethical and security priorities.

When choosing a BPO partner, I urge you to prioritize one that not only helps your bottom line but owns a proven track record of ethical conduct and shares your commitment to diversity, sustainability and social responsibility. This is not just an ethical decision, but a strategic one that can carry lasting benefits for your business.

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