Monday, February 16, 2009

A Dark Side of Business Process Outsourcing (BPO)

Before I retired and relocated to the Philippines, I worked for or knew of employers in the U.S. who were unscrupulous in dealing with their workers. Some of their unethical and / or illegal practices included requiring employees to work off the clock or designating ordinary sales clerks as "assistant managers" and placing them on straight salary in order to avoid paying them overtime. As a result, I'm sensitive to attempts by businesses to short-change and exploit rank and file employees either directly or through their political lobbies, one of which is the U.S. Chamber of Commerce in the States, and their local branch, the American Chamber of Commerce, also known as Amcham. And while the the theme of "Your Guide to Living in the Philippines" is helping expats adjust to the Philippines, I feel that it reflects badly on the rest of us non-Filipinos living here when foreign companies indulge in questionable business strategies locally. So I'm taking this opportunity to digress from my usual advice material in order to address this issue.

Unfair though it may be to the working people of the Philippines, it should come as no surprise that Amcham is calling for and end to holiday overtime pay for local employees (see Foreign firms seek flexible holiday pay) . Although the spokesperson in the article claims that such elimination is not the intent, it should be obvious that by using the term "flexibility" that this is Amcham's slippery slope towards that end.

The ostensible excuse for this organization's proposal is the impact of the global economic situation on business and the resulting need for cost cutting. In turn, a reduction in labor expenses (read wages) would supposdly enable companies avoid layoffs and to hire more people for less money and thus reduce unemployment as well. In other words, these BPO companies who have already saved money by off-shoring these jobs to begin with want to also exploit their overseas workers by balancing their books on the backs of these employees—who are much more vulnerable to the downturn in the world and local economy than their employers. In effect the workers, by taking a salary cut, would be paying out of their own pockets for their employers' holding the line against staff reductions or even for absorbing new employees.

But are employers really that hard up? We've read of the incredible bonuses and salaries that executives of many corporations in the U.S. receive, and yet these businesses were still given bail-out money. Some of these companies such as Citibank have branches and BPO operations in the Philippines where they receive considerable tax breaks. Yet upper management still considers it more expedient to cut labor expenses than their own bloated salaries and bonuses instead.

But the biggest joke in Amcham's proposal is that employers and employees "work together" in setting holiday flex-pay schedules, as if rank and file employees have equal power and voice in the matter as management (with the possible exception of workers in unionized industries). Otherwise, its obvious that all businesses follow the golden rule: The one who has the gold makes the rule. A business is not a democracy. If a company decides to eliminate a benefit, it doesn't matter how the workers feel about it. BPO companies always have the option of taking their operations to another country where labor is cheaper, and they don't mind using this leverage as a threat to get their way in the host country.

And if anyone is under the illusion that the Chamber of Commerce can be be trusted to safeguard workers' rights and interests, please see "The Anti Union Network" which discusses the campaign by the U.S. branch of this organization against pro-worker legislation, among other practices. Then there is the opposition by Amcham China against that country's proposed legislation attempt to improve workers' rights (Steelworkers, Global Labor Strategies Counter Corporate Opposition to Worker Rights in China).

Finally, consider that if these foreign corporations get away with this "flexibility" scheme, isn't it just a matter of time before local businesses also jump on the bandwagon and try to impose similar or even more wage and /or benefit reductions?


dannybuntu said...

*clap* *clap* *clap*

Finally, vindication. I have been long saying this about the BPO industry. Coming from an American expat I am sure that your testimonial is very very very compelling.

On the other side, us Filipinos have been known to just "bear with it". If that's what brings food on the table and it's not illegal then "ok".

As a former employee of a BPO myself, I have long thought that my employment in a BPO is the result of an American losing his or her job because his or her employers want to save money. If companies hold the bottom line as their core principle - then I myself would one day be subject to the same cost cutting measure.

Global Economy.

Glenn said...

Thanks for the posting, I learn something on this. Thanks dude. You can also check business support services.

Secular Guy said...


You're most welcome. I checked the link, and when I saw "Inbound", it reminded me of my old job.

Business Process Outsourcing said...

Interesting... I was searching this info for my sister. She will be happy for such a great info. Thanks for sharing...

Secular Guy said...


You're most welcome. If my posts help just one person, it gives me a sense of accomplishment.

Horse Classifieds said...

Great blog you got here. It would be great to read more about this matter. Thank you for giving that data.

Secular Guy said...


Thanks for you support. Not much has changed since I wrote this post over one year ago. But there is hope. In many countries including the U.S. the the economically exploited and are rising up against their oppressors.

Here in the Philippines, the spike in oil prices has generated higher prices that haven particularly hard on the workers. I hope that President Aquino will live up to the mandate that the voters gave him last year and comes to their rescue.

Akshat Sethi said...

Outsourcing is a good thing, and benefits both participant companies. When one company moves to a different country, the new country has more jobs. Their economy will boom because of the trading with other nations.

Simply Akshat Sethi

Secular Guy said...

That is the boilerplate statement that business people give for the existence of Outsourcing. However, the ends don't always justify the means.

If you had really read my article you would be aware of the drawbacks as well as the advantages to BPOs for the workers who staff them.

Please correct me if I'm wrong but I'll bet that you're in a managerial position and have never been on the wrong of an exploitative work environment.

Danny Garcia said...

Wow, got a notification for this post and then I saw my old post. And then, I said to myself. That's a long time! My avatar is even from the old days - Simpsonize.

Anyway, much has changed in my life since those days - I now work part time as a farmer/gardener/resort caretaker. Earn a few bucks from blogging and well that's it.

How are you sir?

Secular Guy said...


Thanks for writing. I hope that all is well in your new endeavors. As for me, one of the few things that have stayed the same are my blog and web sites.

Danny Garcia said...

Sounds good.

If you have the time, please do visit me on my blog at or if you like - in person :)

Secular Guy said...

Consider it done.