The Politics of Business Outsourcing

Several years ago in Delhi, I called a pest control firm to treat my apartment for termites. A South Indian gentleman with a pleasing smile arrived with canisters of chemicals and a large syringe.

He went about his task meticulously. Each time he sprayed, a mist settled on everything. I asked whether this would really work. Breaking into a comforting grin, he said, “Sir, have no worry whatsoever. This is very strong stuff. It is totally banned in the United States.” I edged out of the room, as he reared the syringe to administer another dose.

I remembered this incident after I gave a lecture in Helsinki on global labor standards. As my talk concluded, I got into an animated debate with my audience on developing global standards for labor markets. A globalized world, with one country’s goods, capital, and pollution flowing into another, will inevitably need common norms and laws. But as my pest-control agent’s answer illustrated, one man’s poison can be another’s assurance. Common standards in a world as inequitable as ours will raise many contentious issues.

The impact of business process outsourcing (BPO) on many developing nations’ labor markets is a case in point. With technological breakthroughs in electronic communication and increasing bandwidth, many jobs that were done in industrialized nations, but that did not require face-to-face interaction, can now be moved to poorer countries, which have cheap labor, an educated workforce, and high rates of computer literacy.