Ethical Outsourcing: Reducing Costs While Staying True to Your Mission

Leaders of purpose-driven organizations face a clear fundamental paradox in the current market. On one hand, in the current economic environment, market forces, inflationary pressures and geopolitical instability are putting immeasurable pressure on greater operational efficiency and cost reduction.

On the other hand, the very identity of these organizations is built upon a non-negotiable commitment to a "triple bottom line" that values equally people, planet and profit. This creates a strategic tension: how does a company reduce its operational expenditures without compromising the very mission that defines it? This dilemma brings the ethics of outsourcing to the forefront for many leadership teams.

For the for-profit world, they had a seemingly straightforward solution - outsourcing. The promise of lower labor costs, access to specialized skills and the ability to focus on core competencies appears to offer a clear path to efficiency. However, for a purpose-driven enterprise, this path seems fraught with challenges that call into question: is outsourcing ethical?

The conventional Business Process Outsourcing (BPO) model is optimised for cost reductions above all else. But this is usually fundamentally incompatible with the operational and ethical framework of a purpose-driven organization. The conventional BPO model poses a number of challenges that make outsourcing a non-starter:

A common and widely reported drawback of conventional outsourcing is the loss of direct control over business processes. The conventional BPO model is designed so that operations are handed over to an external provider, with management only through specific KPIs. An organisation inevitably cedes a degree of oversight in this model.

• This lack of oversight and control is a significant concern for organisations. Let's consider the following outsourcing statistics which paint a clear picture:
  While 93% of organizations report being at least somewhat satisfied with their outsourcing partners, a staggering 63% are simultaneously considering or actively seeking to switch providers. (The State of Outsourcing: Statistics You Need to Know in 2024).
• 68% of firms citing "better control over quality" as a primary reason to insource functions (Global Outsourcing Survey 2024)
• A staggering 55% of companies admit to lacking a formal framework for tracking the value realization of their outsourcing initiatives. (Global Outsourcing Survey 2024)
• 60% of F&A outsourcing contracts will not be renewed by 2025. (Gartner Press Release)

This is driven from several interconnected factors. Outsourced teams, particularly in a model that prioritizes cost over partnership, usually do not possess the same depth of knowledge or passion for the client's brand, products and mission as an in-house team.

Compounding this issue are the persistent communication barriers inherent in many outsourcing relationships, especially those offshore. One Fast Food organisation recently noted an ongoing issue that their outsourced customer service team struggled to grasp the concept of “curbside pickups” - when mishandled these create fertile ground for misunderstandings and poor performance.

Conventional outsourcing introduces a "black box" into a company's operations, a space where it is unclear who is representing your organisation, their level of work engagement and their understanding of your organisation's unique mission.

Outsourcing is frequently and correctly associated with poor labor conditions, inequitable treatment of employees and suppressed wages. This is especially present in developing nations where labor laws may be lax or poorly enforced. These low wages, poor working conditions and a lack of transparency lead to a dispassionate, transactional approach to service delivery (The Labor Impact of Outsourcing). This is the dark side of the ethics of outsourcing.

The conventional model of labor arbitrage fosters an environment where high employee turnover - an average of 24% globally (International Journal of Research in Social Sciences ) is not an anomaly but an accepted industry norm.

This almost guarantees a constant, revolving door of inexperienced, undertrained and disengaged agents handling sensitive customer interactions or critical business processes. This is not the ideal environment for driving organisations forward, sustainably cutting costs or being more efficient, and it makes outsourcing without compromising values seem impossible.

These challenges and issues conventional BPO models have created create an obvious gap. Global talent is not the issue - the way in which people can access, engage and work with them is.

This gap is being filled by innovative companies through the concept of Ethical Outsourcing. It’s a holistic approach, sometimes referred to as sustainable outsourcing or impact sourcing, built on a foundation of two core tenets: fair treatment of workers and radical transparency.

• Fair Treatment of Workers: Moving far beyond simple compliance with local labor laws to ensure that all workers receive fair compensation, at or above a verifiable living wage, not just a legal minimum wage. It includes safe and healthy working conditions and meaningful opportunities for skill development and career progression. Ensuring that all forms of exploitative practices and discrimination are avoided.
• Radical Transparency: Outsourcing shouldn’t be a "black box" where you never really know who’s in your extended team. Clients should have the opportunity to coach and mentor your extended team in a culture of openness and shared responsibility. Fostering a true partnership based on trust and open communication is central to how to find ethical BPO partners. Additionally the costs involved in outsourcing should be transparent and clear. Clients should have a full understanding of how what they pay for talent - actually gets split between the contractor and the BPO.

Ethical outsourcing redefines the goals of outsourcing, shifting the focus from a singular obsession with cost reduction to a balanced pursuit of long-term, mutual value for all stakeholders. This is the essence of purpose-driven outsourcing.

Some outsourcing companies have taken the step to “prove” their ethical nature and obtain B Corp certification, ensuring they meet rigorous ethical standards. This provides clients with the confidence that B Corp certified BPO’s are not just talking the talk but actually walking the walk.

There is a contradiction in the idea of global talent getting paid more whilst clients pay less. It seems too good to be true. The reality is that both can be achieved - when it's done right. The key is to reduce costs with ethical labor practices, not by exploiting them.

As a B Corp certified BPO, Work for Impact, have helped many organisations deliver this exact balance. This is B Corp outsourcing in action. Turning the conventional BPO model on its head, they removed the unnecessary layers of management, replacing bloat with smart technology and radical transparency. The savings from this are then passed onto both clients and talent.

In fact, for most of their clients they have been able to achieve significant costs savings when switching to an ethical outsourcing model:

• Curiosity Stream: achieved a 75% cost reduction on 100k annual inquiries.
• Outside: achieved a 25% cost saving, 91% faster replies, 99% CSAT.
• Outdoorsy: achieved a 50% lower talent cost, 15% CSAT lift across 20 + countries.

Customer Service has always been a well-aligned department for outsourcing. But affordable and ethically hired outsourced talent can cut across a range of different roles to deliver exceptional results. Successful ethical customer service outsourcing is a powerful proof point for the model.:

• Profit Reimagined: A fellow B Corp, has been able to cost effectively hire a team of accountants across 3 countries to support their work by using one of the leading B Corp certified outsourcing providers.
• Younity: Scaled a team across 17 countries of 60+ project managers, translators, admin assistants, customer service agents and marketing experts.
• WeAct: Affordably scaled a mission-aligned team of 24+ across UI/UX design, front-end development and content marketing

Work for Impact has proved that when done right, outsourcing to global talent is a scalable, viable and successful option for businesses.

B Corps like Work for Impact, are bound to meeting high ethical standards. B Corp outsourcing is a promise that signals to the world that these organizations are different and can be trusted.

So, while the promise of ethical outsourcing being good for business and good for people sounds great - the key question is: does it actually work for people as well?

Work for Impact’s latest impact report provides compelling evidence that the ethical outsourcing model can have a profound impact on the talent who are hired:

• Fair, stable work: 95% say the projects they landed were both steady and fairly scoped
• Pay that actually covers life: 86% report earnings that meet their day-to-day financial needs
• Real wage uplift: 280% median pay above local living-wage benchmarks
• Quality of life up: 92% say their overall wellbeing improved
• Voice at the table: 85% feel empowered to influence decisions
• Ripple effect: 86.6% believe their work benefits family or community

These powerful outsourcing statistics demonstrate a model that can help organisations stay true to their mission whilst getting exceptional global talent at an affordable rate.

The human stories behind these results are what truly answer the question, "is outsourcing ethical?".

• James from Kenya secured a three-year accounting contract - moving from unpredictable short-term jobs to a stable income that lets him plan his future.
• Cesar from Colombia doubled his earnings, working 20 hrs/week for a Sydney based consultancy - supporting his daughter and enjoying afternoons in nature.
• Angela and Lucia (names changed) eliminated nanny costs and commute time, now being able to secure their incomes working from home while being more present for their children and family.

For the leader of any B Corporation or any purpose-driven enterprise, their strategic landscape is defined by a central tension: the operational necessity of cost management against their imperative of mission fidelity. 

The convergence of economic pressures, global instability and heightened stakeholder expectations has elevated "sustainable cost reduction" from a desirable goal to a critical business challenge. This brings us back to the core issue of purpose-driven outsourcing.

A definitive solution to this modern business paradox is the Ethical Outsourcing Framework. It allows leaders to achieve significant operational efficiencies and cost savings not by compromising their values, but by doubling down on them. It provides a blueprint for outsourcing without compromising values. 

With ethical BPOs investing in fair wages, employee well-being and transparent partnerships, they are cultivating a stable, motivated and high-performing workforce. One that delivers superior quality and reduces the hidden costs associated with the high turnover and poor service of the conventional outsourcing model. This approach to sustainable outsourcing is built for the long term.

By choosing to partner with an ethical, mission-aligned BPO, leaders are not merely delegating a task or cutting a cost. They are making a powerful strategic decision to extend their purpose into their supply chain, to amplify their positive impact on the world and to build a more resilient, more authentic and ultimately more successful business.

Ethical outsourcing proves that it is not only possible to reduce costs with ethical labor practices, it is in fact the most intelligent and sustainable way to do so.