Congratulations to Rhea Sharma, first prize winner of the 2024 Risky Women Writing Competition, presented in partnership with Bovill Newgate.
Rhea Sharma takes on the human cost of offshoring GRC functions, showcasing the stark wage disparities faced by workers in developing nations. It calls for a more human-centric approach to offshoring, urging organizations to invest in employee development and treat all workers with dignity, thereby fostering a fairer global economy and strengthening GRC capabilities.
Picture this: You’re the only daughter of street vendors in a small, remote village in the Philippines. You work hard—really hard. You scrape together just enough money to get a modest college education. It’s not enough to whisk you away to some dream life abroad, but it lands you a white-collar job in Manila, working in risk management for an Australian company— sounds like you’ve made it right? Wrong.
Your starting salary? 25,000 pesos a year. That’s like, what, $700? Yeah, not much. Most of it goes to your folks back home because, let’s face it, they need it more than you do.
You end up busting your ass in the Big Smoke working longer hours than your Australian colleagues, stuck in a cycle of monotonous tasks that offer barely any chance of advancement. And as you finally start to climb the ranks, maybe to a team leader position, earning a whopping $3,000 AUD annually; you have this gut-wrenching realisation: your life will never, ever match that of your Australian colleagues. No healthcare like theirs, no cushy retirement plan like theirs, and vacations? Ha! You can forget about sunbathing in Mykonos.
You’re trapped in a system that sells you the illusion of progress while the gap between your life and theirs only gets wider. The system is rigged, and you’re not winning.
The Forgotten Human Cost
The above scenario paints a bleak but all-too-real picture of the human cost of offshoring GRC functions— one I’ve witnessed firsthand managing teams in both Australia and the Philippines. Both teams are doing the exact same job, but they’re being paid vastly different salaries. It’s a bitter pill to swallow.
Managing offshore employees stuck in this predicament has shown me that while organisations celebrate the cost reductions and boosted profit margins, the ethical and social ramifications of exploiting regional wage disparities remain buried beneath layers of corporate rhetoric.
This commentary is inspired by my own lived experience, where I realised that, despite my best efforts, I alone could not help them escape the systemic traps set by this insidious practice. Fighting to change the fabric of one organisation isn’t enough; It’s a pervasive problem that demands a collective reckoning!
The True Price of Cheap Labour
Organisations relocate tasks to low-cost countries, where the global governance architecture, crafted by wealthier Western nations, ensures that the economic subordination of developing nations continues.[1] Yeah, I said it.
Whilst organisations acknowledge that it reduces operational costs; what they won’t acknowledge is that it maintains a system where the value of the income employees earn is intrinsically tied to the country in which they live. The human capital in these regions is vast, but it’s leveraged in a way that perpetuates global income inequalities, trapping workers in a cycle of economic servitude.
The strategic logic that underpins offshoring: reducing fixed costs like wages— often ignores the broader socio- economic impacts. Organisations could argue that offshoring gives onshore workers a ‘specialisation advantage’[2], but let’s be real, that’s just a fancy way of saying they’re dumping the boring, dead-end work on those in less developed countries. That’s because offshored employees are often relegated to tasks that are standardised, monitored, and devoid of any real opportunity for personal growth or job satisfaction. This isn’t just about being underpaid; it’s about being undervalued, underutilised, and ultimately, unseen.
From a GRC perspective, the risks are equally profound. Low-complexity tasks might seem efficient to offshore, but this approach often increases GRC risks. Businesses tend to pursue offshoring in the hopes of reducing costs, becoming more efficient, and gaining a strategic advantage. However, due to this misconception, many organisations have experienced, at best, mixed results.[3] The harsh reality is that offshoring isn’t all it seems, organisations that engage in offshoring, already looking for cost savings, often fail to appropriately capacity build, leading to serious quality issues.
Moreover, consumers are smarter than ever before. They are increasingly aware of the ethical and social implications of their purchasing decisions. In a world where information spreads faster than ever, organisations can no longer hide behind the curtain of increased shareholder value while perpetuating global inequalities.
The reputational damage from being associated with exploitative practices can be swift and severe. We’ve seen it with the backlash against organisations tied to sweatshops. Whilst brands like Shein and Temu continue to thrive, raking in billions while turning a blind eye to the human cost behind their low prices; I refuse to support organisations with blatantly unsustainable supply chains— and I am not alone. The tide is turning, and organisations that fail to evolve will find themselves on the losing side of consumer trust, and that’s a hard place to come back from.
Moving Towards a More Human-Centric Approach
We need to flip the script on how we view offshoring— not only as a cost-saving measure but as a practice that is supports organisational ESG goals. To balance commercial objectives with these goals, organisations must adopt a more human-centric approach, one that supports the UN’s 2030 SDGs[4]. Perhaps by using a ‘Sustainability Compass’[5] to guide business decisions, ensuring that they are not only financially sound but also socially and ethically responsible.
The organisations we represent have the power, and the responsibility to make a significant positive impact. This isn’t about ticking off some boring CSR checklist; Ethical offshoring must go beyond immediate financial benefits that serve corporate interests. It’s about addressing the long-term socio-economic impacts on those who form the backbone of these operations.
Instead of confining these employees to low-paid & undervalued tasks, they must be given the same opportunities to advance into more complex and higher-paid roles as their onshore counterparts. Whilst this requires an investment in their development, the benefits are substantial and marketable. This approach not only fosters a more equitable global workforce but also strengthens the overall GRC capabilities of our organisations.
As 2030 looms closer, I urge the GRC community to confront the harsh realities of their offshoring decisions and begin to rectify the injustices that offshoring perpetuates. It’s time to choose a path that not only fortifies the bottom line but also actively fosters a more just and equitable global economy. If we want to build a better future, it’s time to start treating all employees, no matter where they are, with the dignity and respect they deserve. Because in the end, doing right by people isn’t just good ethics— it’s good business.
1 Boussebaa, M, Sinha, S & Gabriel, Y 2014, ‘Englishization in Offshore Call Centers: A Postcolonial Perspective’, Journal of International Business Studies, vol. 45, no. 9, pp. 1152-1169, viewed 26 September 2024, https://doi.org/10.1057/jibs.2014.25.
2 Landesmann, M & Leitner, SM 2023, ‘Immigration and Offshoring: Two forces of globalisation and their impact on employment and the bargaining power of occupational groups’, Review of World Economics, vol. 159, no. 2, pp. 361-397, viewed 10 August 2024, https://doi.org/10.1007/s10290-022-00470-5.
3 Aron, R. & Singh, J.V. 2005, ‘Getting Offshoring Right’, Harvard Business Review, December.: https://hbr.org/2005/12/getting-offshoring-right. [21 July 2024].
4 Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. Available at: https://sdgs.un.org/goals/goal8 Goal 10: Reduce inequality within and among countries. Available at: https://sdgs.un.org/goals/goal10
5 Sustainability Compass: A framework for guiding decisions towards financial, social, and ethical responsibility https://compassu.wordpress.com/introduction/
FROM THE JUDGES
“A unique piece, personal and timely from E, S, G perspectives and impacts with a balanced lens as critical decisions across sectors. Very memorable.”
“Well written, strongly documented and key industry issue. Excellent – is the winner for me!! Speaking truth to power and can be used beyond risk too.”
“I am admittedly biased to any article that exposes human trafficking, but kudos to the author for exposing an issue with offshoring that is rarely discussed.”
“A bold and stark look at the human reality of large international corporations offshoring to third countries, exploiting regional wage disparity. “
“This article has got it all. A powerful article, well written, and tackling an uncomfortable subject. There is an element of storytelling, but also sound technical basis, incorporating economics and GRC aspects, with a strong conclusion.”