Outsourcing should include corporate social responsibility

Office workers at Raffles Place on Feb 18, 2015.
Office workers at Raffles Place on Feb 18, 2015. ST PHOTO: DANIEL NEO

I agree with the editorial on March 2 that companies must keep up their end of the bargain when making decisions regarding outsourcing ("Outsourcing: Yes but with a heart").

The merits of outsourcing are not always clear-cut. In some instances, it might even be counterproductive to subcontract services that were previously provided in-house.

At its worst, it is the prelude to an unhealthy corporate culture of diluting managerial responsibility and neglecting workers' welfare.

First, companies often use cost savings to justify outsourcing low-end tasks and back-office functions.

However, the firms that provide these services are themselves profit driven. In order for these service providers to offer competitive pricing for corporate clients, workers in these lines of work must typically endure depressed wages.

For example, a company may pay $4,000 a head to security or cleaning companies, but guards and cleaners on the beat will get less than half that amount.

Moreover, outsourcing means that large firms do not need to provide additional support that in-house employees would otherwise enjoy - for example, group medical plans, or skills and productivity upgrading.

Contractors seldom provide such extensive benefits or training schemes.

Workers' standards of living are, therefore, further diminished, while their future employability might also be adversely impacted.

Second, companies are increasingly resorting to the outsourcing of front-line customer service positions, such as telephone operators.

When it comes to customer care that is crucial to a company's business, outsourced staff might not be able to reliably provide levels of service consistent with the firm's internal standards.

This could perhaps be attributed to a lack of dedicated training, or a lack of exposure to the corporate culture.

Hence, the degradation of front-line service standards could conceivably sour the relationship between the firm and its customers.

Management is an applied art in the world of business.

Rather than be blinded by the temptation to cut costs by any means necessary, managers should fully consider the rationale, or lack thereof, for outsourcing.

Perhaps, more importantly, they must be acutely aware that outsourcing should not preclude corporate social responsibility, in a society that strives to be as inclusive as possible.

Paul Chan Poh Hoi

A version of this article appeared in the print edition of The Straits Times on March 10, 2016, with the headline 'Outsourcing should include corporate social responsibility'. Print Edition | Subscribe