Outsourcing software development to India is ethical as it transfers wealth to poorer communities

July 23, 2019, 9:40 pm

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The debate "Outsourcing software development to India is ethical as it transfers wealth to poorer communities" was started by Allirix on July 23, 2019, 9:40 pm. 14 people are on the agree side of this discussion, while 6 people are on the disagree side. People are starting to choose their side. It looks like most of the people in this community are on the agreeing side of this statement.

Allirix posted 3 arguments to the agreers part.
Nemiroff posted 1 argument to the disagreers part.

Allirix, MADHURA, Harmony, Sumit082 and 10 visitors agree.
guchch and 5 visitors disagree.

Nemiroff
replied to...

that was not what I was referring to as effectiveness of individual action. certainly even 1 person outsourcing work to poorer nations is more money injected into their economy. individual action does have an effect there.

what I was referring to is an individual trying to avoid exploitation in business choices. unless exploitation is dealt with systemically, an individual will either be a short term charity, or soon to be out of business.

also, injecting cash into an economy does not mean it will help those who need the help. I was reading an article that was refuting Warren's claims about debt by saying that overall household debt has not risen as fast as overall household income. the problem is the increase in income was not shared by all households, mostly at the top, while debt was mostly gathering at the bottom. they glossed over that fact. the person bidding on your contract may be running an Indian equivalent of a sweat shop, pocketing most of the money, while continuing to work starving employees. at least that is a very logical possibility.

finally, you are correct. long term this does increase their standard of living as was seen in China and slowly other manufacturing countries... but marginal increases in cashflow do not affect this imo, it must reach a critical mass with non existent effects before that.

my key point is that as an individual business you should focus on your own bottom line. there is nothing wrong until you start lobbying and blocking change. however it is not your personal responsibility to bring about that change, you will simply go out of business trying. perhaps an exception to this would be established goliaths, but definitely not small businesses acting unilaterally.

4 months, 3 weeks ago
Allirix
replied to...

*I used a map that said 0.2 before*

4 months, 3 weeks ago
Allirix
replied to...

"I do not believe individual action of the type you are referring to will create change"
Individually no. But collectively, outsourcing to poorer countries injects capital into their economy which tends to be used to invest into productivity which is what develops an economy, leading to wage growth. I wasn't contributing much doing services arbitrage, but I still injected capital into the region and added to labour demand.

"1st, just because their cost of living is lower does not mean their wages are living wage."
True. But, due to the radically different cost of living $1 in the USA is effectively worth $4 in India (PPP GDP conversion factor 0.26). Therefore, my contribution is far more likely to help build a living wage in India than in the USA. This is the basis for my belief it was ethical

"in addition, the freelancers may further outsource your work to employees in very shitty conditions."
@mwest "Because they are in desperate need of income, they have little choice but to accept whatever is given."
Maybe, but I am pretty sure they were their own bosses and I was not the only one hiring them. Even so, I believe outsourcing to countries with relaxed labour laws still helps increase the demand for labour, which increases employee bargaining power which lowers the chance of employees being in shitty conditions or accepting whatever to make ends meet.

Just look at China. International investment skyrocketed their wages and there have been incredible fair-work progress. It's not perfect, and I personally blame the one-party system, but it is far better than it was. Also, because wage growth is making China less competitive it's losing it's title as the manufacturing capital of the world as multinationals shift to other Asian countries, like India. This will cause their economies to go through the same development as China. Another reason why I believe it was ethical.

@mwest
"I think the most stable way to improve poverty is to start with your immediate area and grow outward. Each person who is able starting with themselves, then their household, then their community, state, country, then on to helping other countries."

I completely disagree with isolationist business policies like that for the sole reason that is has the opposite effect to what you're suggesting. Research clearly shows engaging in the world marketplace is the quickest way to develop a strong economy. Bigger market, more innovations, more access to talent, economies of scale, etc

4 months, 3 weeks ago

I'm not really sure if this is a matter of ethics or not, but I think the main concern is the sustainable result of who you employ when it comes to improving an economy. I think the most stable way to improve poverty is to start with your immediate area and grow outward. Each person who is able starting with themselves, then their household, then their community, state, country, then on to helping other countries.

If every company was willing to outsource to whoever needed it most, it would be fine. But not all of them will, so it seems like a sporadic thing that doesn't offer a long term solution to the problem of poverty, especially given how work conditions for the poorest people tend to be. Because they are in desperate need of income, they have little choice but to accept whatever is given.

4 months, 3 weeks ago
Nemiroff
replied to...

I do not believe individual action of the type you are referring to will create change. you having ethics as a business will simply let unethical businesses drive you out of business. as a business, your priority is to maximize profits, to succeed, and to survive. as a society, our priorities should be to pass fair laws that enforce ethical practices on all businesses equally. thus good people wont get screwed by economic forces.

that being said, the exploitation in your scenario is several fold. 1st, just because their cost of living is lower does not mean their wages are living wage. that's why in these 3rd world nations where everything is very cheap, many people still starve to death and live in shanty towns.

in addition, the freelancers may further outsource your work to employees in very shitty conditions. you cannot let people who are desperate for work enter a bidding war for who can work cheaper. that's how you get people starving to death in low cost countries. desperation doesnt lead to the best choices, and making poor people compete against poor people to make things cheaper for wealthy people is appauling.

I'm not saying your actions are appauling, individually you are doing what you must, and if you didnt, someone else will and you will be out of business. the fault is in the system, not the individual. unless the individual is lobbying to make the system less ethical.

4 months, 3 weeks ago
Allirix
replied to...

If all humans are equal then wouldn't it be equally ethical to pay poor people to do it in my own community. Using that logic it may even be more ethical to outsource to a country with a weaker purchasing power because each $1 you give them is effectively $5 (India's PPP conversion factor is 0.2 which means the effective cost of living there is 1/5th what it is in the USA). So you're able to support a living wage to a human being, deliver a lower cost product to your customer, and contribute to the long-term growth of a nation.

Also, the specific scenario I'm thinking of was, when in uni to make ends meet I was a freelance Web developer who outsourced a lot of the work I couldn't do to India. A friend recently told me this is unethical because it exploits the cheap labour in another country. I wholeheartedly disagree but they didn't explain their reasoning well and I'm just wondering if I am missing something.

I understand labour laws are more unfair in developing economies so I'd agree that exploiting the relaxed laws to minimise costs is unethical. But I was outlining deliverables online which freelancers in India bid on. My understanding was they were their own boss so it's not exploiting cheaper unfair work practices. It's just cheaper because their cost of living is lower and competition is so strong there.

4 months, 3 weeks ago

Is it more ethical than sending it to poor communities within your own country? Or more ethical than outsourcing to China? Also, what are the working conditions because if it's like much of China's factory work, it is automatically unethical

4 months, 3 weeks ago
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