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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.
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
"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
"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.
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