The upside of outsourcing

To match Insight INDIA-OUTSOURCING/I heard an excellent, in-depth interview this week with William Easterly, the development economist and author of a new book called The Tyranny of Experts: Economists, Dictators and the Forgotten Rights of the Poor. Easterly, a controversial figure, is critical of top-down development experts — he names Jeffrey Sachs and Bill Gates, among others — who push technocratic, centralized approaches to alleviating poverty. Instead, he argues that the best way to promote economic development is for westerners to push for democracy, human rights and free markets in the world’s poorest countries.

Easterly cites, among others, the Nobel laureate Amartya Sen, who has said: “No famine has ever taken place in the history of the world in a functioning democracy.” Others disagree, noting that parts of India came perilously close to famine just a decade ago. What’s more, China has lifted hundreds of millions of people out of poverty while suppressing human rights, but allowing economic freedom.

I’m in no position to try to adjudicate the debate about how poor countries become rich, but I was thinking about Easterly’s faith in markets and global trade as I wrote my story this week for Guardian Sustainable Business. The story looks at an idea called “socially-responsible outsourcing” or simple “impact sourcing,” and a nonprofit called DDD that tries to put that idea into practice. (DDD stands for Digital Divide Data.) DDD operates businesses in Cambodia, Kenya and Laos that employ young people, typically high school age, to provide information technology and web research, mostly to clients in the US. The goal of the enterprise is to provide economic opportunity to the poor, DDD’s founders told me.

Here’s how my story begins:

So much attention is paid to deplorable factory conditions in poor countries that it’s easy to forget that global supply chains for electronics, apparel and toys have helped lift masses of people out of poverty. Since 1980, 680 million people have risen out of poverty in China which has seen its extreme-poverty rate fall from 84% to about 10%, largely because of trade, reports The Economist.

Now, a small number of companies, nonprofits and foundations want to see if the rapidly growing global supply chains that process data and operate call centers — an industry usually described as business processing outsourcing, or BPO — can be deployed to help alleviate poverty in Africa and South Asia. Can outsourcing, a business driven by the search for cheap labor, reconfigure itself to do good?

“By responsibly and ethically employing hundreds of thousands of people, BPOs have a role to play in shifting the social landscape in emerging economies around the world,” says a report called Outsourcing for Social Good from Telus International, a Canadian outsourcing firm, and Impakt, a social responsibility consultancy.

Others agree. The Rockefeller Foundation has committed $100m to a project called Digital Jobs Africa that aims to improve one million lives in six African nations. A nonprofit called Samasource organizes poor women and youth in Africa and Asia to deliver data services to such businesses as Microsoft and Google. And a company called Cloud Factory that operates in Kenya and Nepal says digital outsourcing can “flatten the world, connect people into the global economy and raise up leaders to fight poverty and change their communities.”

The pioneer of what is called socially-responsible outsourcing or simply impact sourcing is DDD (Digital Divide Data), a New York-based nonprofit that operates for-profit data centers in Cambodia, Laos and Kenya. DDD and its impact-oriented peers set themselves apart from outsourcing giants such as Tata, Accenture and Infosys because, they says, they deliberately seeks out workers in the some of the world’s poorest places and provides them not just with jobs, but with the education, training and career counseling they need to rise into the middle class.

“Our ultimate mission is to alleviate poverty,” says Jeremy Hockenstein, 42, the founder and CEO of DDD. “We focus on students who are finishing high school, who are very motivated and very smart and who come from low-income homes.”

Having met Jeremy Hockenstein (via Skype) and his co-founder Michael Chertok (face to face), I have no doubt of their good intentions. Both gave up more lucrative careers to start the nonprofit. DDD is about helping its global employees, not exploiting them.

But their work raises an intriguing question about how much intentions matter when it comes to infotech outsourcing, or all of global trade, for that matter. Despite all the the abuses in the global manufacturing supply chain, it seems inarguable that the factory jobs created in China, Mexico, India and Bangladesh have benefited the poor in those countries. Is it possible the Walmart and Apple have done more to alleviate poverty than Bill Gates and Jeffrey Sachs?

You can read the rest of my story here.

Why globalization is (mostly) green

Shipping millions of containers of stuff around the world might seem to be bad for the planet but in the long run globalization will help us solve our environmental problems.

With apologies to anyone who took Econ101 in college and at the risk of oversimplification, here’s why:

  1. The global economy is not a zero-sum game.
  2.  Trade benefits buyers and sellers
  3. Rising incomes and wealth are good for the environment.

Ergo, globalization is mostly green.

This may seem self-evident to some but as I follow the conversation about business, the economy and sustainability in a number of venues — from the sparring over China in last week’s presidential debate to Mark Bittman’s musings about an ideal food label to the argument from some enviros that what we need is not economic growth, but “degrowth” — I’m surprised by lack of understanding of the benefits of trade, globalization and growth. [click to continue...]

Edgar Gunther, RIP

This blog has been quiet for a few days because my father, Edgar Gunther, died last Saturday morning. My dad was 88 years old. He’d suffered since last fall from an irreversible heart ailment that left him increasingly frail; his death was peaceful and not unexpected. But you are never quite prepared for the loss of a parent. I’m writing about him today because, despite an often-difficult relationship, his experiences inevitably helped shape my thinking on a number of topics relevant to this blog…immigration, globalization and religion, among them.

Immigration: My dad had lived in Greenwich Village since the late 1990s.  This week, as I’ve wandered around New York, making funeral arrangements, seeing family and thinking about his life. I couldn’t help noticing: The waiters, the cab drivers, the doormen—they’re all immigrants. So were the health care workers who cared for my dad during the last six months, in particular a wonderful Filipino woman who lived with him for the past month or so and offered her love and care.

My dad’s is a classic immigrant story. A Jew born in the Saar region of Germany in 1921, he escaped to New York with his family as a teenager in the late 1930s, fleeing Nazi persecution. Powered by his ambition, energy and intelligence, he created a rich and [click to continue...]