Is your outsourcer an IT sweatshop?

The debate about IT outsourcing is growing more strident in the US, so how are CIOs and IT directors there responding to the issues?


Companies are still developing guidelines on this topic. "We're looking at general categories, making sure it's a safe environment, that there are no children in the workforce," Kifer says. "But I think eventually you'll see organisations drill down and come up with concrete and specific requirements."

Priorities intrude

Already, IT departments are asking their outsourcing providers about recruitment and retention policies, compensation plans, employee training and benefits packages, says Stephanie Moore, an analyst at Forrester Research Inc. But Moore and others question whether the trend will go beyond those basics. She hasn't seen any contracts that ask about charitable giving or community-focused activities, for example.

Attorney Melise Blakeslee is even more skeptical. IT departments still focus on key business issues when evaluating outsourcing contracts, says Blakeslee, the leader of the tech transactions, Internet crimes and e-business groups at McDermott Will & Emery LLP and author of the upcoming book Internet Crime, Fraud and Tortes (Oxford University Press, March 2009).

IT managers want to know how outsourcing providers handle and safeguard their data, whether they can deliver on time, and how much they charge for their work, Blakeslee says.

The issues that fall under social responsibility aren't addressed in the contracts, and so far aren't discussed, she says. Although some companies do ask about a provider's diversity initiatives -- it's common corporate policy to ask such questions with all business partners, Blakeslee says -- even that issue carries little weight.

"I have never seen it determine anything," she says.

"Cost is king," Moore adds. "Cost comes first, flexibility of terms comes second, and maybe then, if you're stumped, you look at [social responsibility]."

But Corbett and Dalal maintain that examining a provider's social policies has business value. For example, they point out that ethical labour practices, such as offering training and benefits, translate into better employee retention and improved engagement.

"Few would do it if it didn't produce a financial return, and it's becoming a competitive advantage," Kifer says. He cites environmental policies as an example, noting that reducing a data center's cooling requirements can save serious cash in this era of escalating energy costs.

Good response

One indication that the trend toward socially responsible outsourcing is real is that outsourcing providers are responding to it.

Dariusz Sus, head of global business process outsourcing product development at Capgemini, a global outsourcing provider, says clients are asking about his company's compensation plans, diversity initiatives and work schedules. He says clients want to ensure that Capgemini treats employees fairly so it can attract and retain qualified workers.

"Our clients are concerned about social responsibility because they treat our people as an extension of their own [workforce]," he says.

And though companies haven't been as inquisitive about Capgemini's green policies and corporate citizenship initiatives, Sus says those questions "may come sooner [rather] than later."

He remembers one client asking about Capgemini's community initiatives because the client had plans to eventually expand overseas and wanted to be seen as a good corporate citizen.

Sus says he believes client companies will start looking more closely at these areas when selecting providers.

Some already do.

"All things being equal," Kifer says, "we will select an organisation that has a plan and demonstrates [a determination] to use a level of social responsibility that's consistent with our goals and objectives."

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