Please join me in welcoming the next epoch in the history of the outsourcing industry.
Since its founding 30 years ago, the global outsourcing industry has grown from something that didn’t exist, to a $160bn/year industry. In the process, countries like India and the Philippines have built a middle class, US and European companies have globalized their workforce (saving billions of dollars in the process), and millions of people around the world have been lifted out of poverty because of this international trade.
The history of the outsourcing industry roughly divides into three distinct epochs each lasting about a decade. First, the industry was discovered and grew up in the 1990s due to the rise of the global communications infrastructure. During this time, companies around the world learned what was possible in global labor flows, and the positive impact it has on a company’s income statements.
In the second epoch, the industry experienced its explosive growth in the 2000s, when the majority of large companies adopted outsourcing in some form, and their customers were fascinated to learn that they were talking to people halfway around the world. We can call this period the “golden age” of outsourcing. Thomas Friedman wrote “The World is Flat,” which introduced the world to outsourcing, and it seemed as if not much bad could happen.
Then came the financial crisis of 2008–2010, which put pressure on companies to cut costs and externalize risk. The 2010s became the decade of continued expansion in outsourcing relationships, but also a severe decline in the quality of work in outsourcing arrangements, mostly driven by a global attrition problem. This led to parodies on TV about the industry and much frustration from US and European customers, who had once been fascinated by the globalization that the industry represented.
As the 2020s dawn in just a few months, where will the industry go next? Will low quality and high attrition drive a contraction in the industry, with former buyers insourcing operations, or will the industry find a way to fix these now chronic problems? I think my own experience maybe instructive for where the industry is headed.
Four years ago, I transitioned from being a BPO buyer to a BPO supplier. Having visited the Philippines a few times by 2016, and after deciding to start my own BPO company, I always had this nagging question: Will I create just another outsourcing company, or will we find a way to fix the chronic problems of the industry?
Coupled with this question, I was feeling guilty. I would go to the Philippines and wonder, “Why did the average American has so much more economic security and material wealth than the average Filipino?”
That led me, in 2016, to search for a way to be in the business but also to exercise moral behavior. We renamed the company “Rethink Staffing” because we wanted to rethink the way companies managed their offshore staff. We wanted to build good, collaborative relationships between companies and BPO suppliers, full of honesty and decency, while at the same time securing Agents’ economic lives.
By 2017, growth had taken hold and we were struggling to operate. We hired managers from the industry who knew how to operate, but who were dishonest and exploitative. I knew we needed better rules and purpose in our business, but I wasn’t yet sure how — except that the bad managers had to be removed.
In January of 2018, I formalized this “rethinking” by dedicating the company to the principles of Fair Trade and fashioned it in the model of Robert Owen’s New Harmony. I wrote and pledged the Agent Bill of Rights or ABOR to our agents, and set us on our way to measuring the company by a dual-scorecard: People and Financial results, by issuing our first impact report.
We were rewarded. Quality increased, attrition dropped, and growth continued. We were 3x the size in 2018 than we were at the beginning of 2017. And, we were emboldened to invent and build out an outsourcing company inspired by the fair trade movement.
We revamped our compensation policy with a focus on personal security and performance, created health and calamity protections for agents, started capacity building programs like English Proficiency Upleveling, and created many impact programs to help agents progress in their economic lives.
Over the last two years, while we invented fair trade outsourcing, we were so focused on the work of delivering for clients and improving Agents lives that we were still going by the name “Rethink Staffing” even though that was no longer who we were. It was clear that a change was needed.
While we had no struggle understanding who we were and what we wanted to accomplish, we spent time on trying to combine our old ideas and new ones, hoping that combination would propel us into the future. It quickly became clear that this was too complex of an approach. So, we chose simplicity.
Today, we announce the renaming of our company to Fair Trade Outsourcingᵀᴹ, reflecting not just what we do but also three key things that we believe in:
First, that our invention of the “Fair Trade Outsourcing” methodology of operating an outsourcing business, inspired by the principles of the Fair Trade movement, will solve the chronic attrition and quality problem of the third epoch.
Second, that the formalization of the practice of how a BPO company can create economic security for its Agents while delivering high-quality work to clients is good for the industry, and that we intend to share our methodology.
Third, that the dawn of the next epoch of the outsourcing industry begins today, where operating methodologies focusing on Agents welfare outside the walls of the delivery center, like Fair Trade Outsourcing, will solve the chronic low-quality and high-attrition problems of the industry.
We’re certain that Fair Trade Outsourcing — both the company and the methodology — gives the industry its best opportunity in years to solve the chronic problems it now faces. We hope you will join us in this journey for change that affects almost 100 million people globally.