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March 30, 2004

A Passage to India: Report Asks If BT Offshoring Is Socially Responsible
    by William Baue

A recent report by SustainAbility assesses whether offshoring and corporate social responsibility are compatible, focusing on the case of British Telecom.

SocialFunds.com -- Offshoring, or the shifting of jobs from developed to developing countries, represents a litmus test for corporate social responsibility (CSR). Viewed through one lens, the practice is irresponsible, as it strips workers in the developed world, where the companies are typically based, of their livelihoods. Viewed through another lens, the practice is the paragon of responsibility when implemented in a fair manner, as it infuses income into emerging economies.

Recently, British Telecom (ticker: BTY) commissioned SustainAbility, a London-based business strategy and sustainable development consultancy, to assess the degree to which offshoring in general, and BT's offshoring practices specifically, are socially responsible.

"Our opinion, with some important reservations, is that offshoring's benefits tend to outweigh its negative impacts--but that the way in which some companies have handled their decisions has at times been irresponsible and unfair to those affected," the report authors state.

The report, entitled Good Migrations?: BT, corporate social responsibility, and the geography of jobs, is authored by Judy Kuszewski and Kavita Prakash-Mani, senior advisors at SustainAbility, and Seb Beloe, director for research and advocacy there.

BT, which the report characterizes as a CSR leader, began exporting jobs to India in 2003, and by December of that year it employed about 770 workers at two call centers, one in Delhi and another in Bangalore. These call centers, which handle directory inquiries, late payment reminder calls, and broadband sales, among other things, have the capacity to employ 2,200 workers.

The report generally approves of BT's offshoring practices. Specifically, it applauds the company's "powerful purchasing code," Sourcing with Human Dignity, its commitment to no forced redundancies, and its promise to retrain and re-deploy all affected BT staff.

"To date, all but four [call center workers who lost their jobs] have been found new positions in BT, have chosen to take voluntary redundancy, or have simply left the company through normal attrition," the report states. However, the report does not reveal the fates of these four workers.

The report criticizes BT's decision to begin offshoring before devising a specific strategy or engaging affected stakeholders, particularly labor unions. SustainAbility interviewed a representative of BT's main managerial union, Connect, which reached agreement with the company over offshoring. The Communications Workers Union (CWU), which is actively campaigning against BT's offshoring, "was invited to participate in this project, but has been unavailable for comment," the report states.

The report's conclusion characterizes labor union opposition to offshoring as futile and "protectionist."

"We don't see the campaign that we're running as protectionist in any way," a CWU spokesperson told SocialFunds.com. "It isn't as if BT is expanding into the Indian market--the jobs service the domestic UK market, which is why we feel that it is morally wrong that these jobs should be stripped out of the economy that BP is deriving its profits from."

"It is simply about cost-cutting for the company," he added.

The report concedes this reality.

"The competitive pressures companies face to reduce costs and increase efficiency will not abate anytime soon," the report states. "The practice of offshoring, therefore, is a business reality, one that companies and their many stakeholders will face and need to manage far into the future."

"We believe that the interests of employees, governments, communities, and others are best served not by opposing the offshoring trend, but by campaigning to encourage companies and governments to address the negative impacts and ensure the greatest spread of benefits to those affected," it continues.

Toward these ends, the report concludes by offering a 12-step program for companies to address CSR issues surrounding offshoring, about half of which address home country practices, with the remaining steps addressing developing country considerations. Key among these latter recommendations are those that address the potential negative impacts in developing countries, such as practices that ask workers to mask their cultural identity through fake accents or names.

© SRI World Group, Inc. All Rights Reserved.

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