Brief thoughts on outsourced labor

I saw a Twitter post about someone explaining how they found out “this one weird trick” in entrepreneurship, where they discovered they could hire Filipinos at $3/hr to do the work of someone making $20-$30 per hour in America. I see content like this all the time given my interests in tech and entrepreneurship. I’m also a Filipino though and currently live in the Philippines, so I see the ramifications of this type of work from the opposite perspective.

I am a big fan of outsourced labor. I think it provides expanded access to capital for much lower cost. Entrepreneurs can hire the talent they need, save on costs, and reinvest that into other business needs. For example, so many people in America hire virtual assistants, and so many people in the Philippines work as virtual assistants. Virtual assistants make good money in the Philippines - $5/hr is an average rate to pay, which for Americans is so cheap but in the Philippines, with a minimum wage of ~$1/hr and severe problems with underemployment (you need a four-year hospitality degree to get a job as a Starbucks barista), a wage of $5/hr is life-changing. I think outsourced labor unlocks so much productivity and capital flow for everyone involved in the system. I’ve also been lucky to enjoy the privileges of being paid in USD but transacting in PHP during my 2 years in the Philippines, so I can attest to how far USD will go in the Philippines.

What bothers me, though, is the tone-deaf attitude that some people I see online adopt towards taking advantage of outsourced labor. When Jeff Bezos posts pictures about him vacationing in Italy or wherever or posts about him buying some insanely expensive thing, people dunk on him for enjoying his life while thousands of employees do the work. We get upset when CEOs get pay bonus packages right when they laid off thousands of employees, all because “the stock went up”. But somehow it’s OK for Western digital nomads to post about how they’re living their best life in Bali or flex being able to travel around the world, all while delegating their entire work to $3/hr outsourced Filipino labor? The same people who “wanted to escape the rat race” brag about having escaped, but credit it to their own brilliance and execution rather than the hard work of outsourced labor. Meanwhile they don’t realize that the people who are the outsourced labor feel the same way towards them as they themselves do towards big-time corporate executives who do the same things that they do.

To be clear, I don’t have any problems with hiring employees. I think it’s fair for owners to be compensated more, and I understand that they did the upfront work and invested their time and capital and energy just to get things off the ground. I also understand that the day-to-day of an entrepreneur with a team of outsourced labor is different than an executive in a big company. I also think people should enjoy the fruits of their labor and live life to the fullest. I also understand that $3/hr is quite a good wage in the Philippines and I know most people would jump at that opportunity if given.

But I also think it is tone-deaf and disingenuous to both talk about “escaping the corporate rat race” and “wanting to be free from having bosses” and to be against the corporate bloat of capitalist America, all while bragging about how profitable you are and how much more money you have, all because you’ve outsourced your labor to people who, instead of being paid $30/hr in America to do similar labor, can instead be had for $3/hr.

I’m a big fan of the decentralization of labor and I think that having remote employees unlocks a lot of employment options and capital for the global south. Outsourced labor is a big part of the Filipino economy and has been and is a reliable source of life-changing income for countless Filipinos. I think this should keep continuing even more so that Filipinos can unlock more access to Western markets and be able to capture more of the profits for their own businesses and thereby invigorate the Philippine economy, instead of having middlemen rent-taking Western entrepreneurs be the only one to capitalize on the “hire in the Philippines, sell in America” arbitrage. I also think that this is great for American entrepreneurs, as it unlocks a much greater pool of talent as well as significantly drops the cost of labor and allows owners to reinvest it in other pursuits.

Also in defense of outsourced labor, I don’t buy the “pay them a living wage” arguments that many Westerners have in response to reports that talk about how outsourced employees are paid $3-$\5 an hour. This is a living wage in those countries and I think that it’s actually quite OK and fair to be paid that. I think these sentiments largely come from people who either don’t understand how much living costs in other countries or they are projecting their own fears of losing their jobs. What I do find appalling about reports like this one is not the wage itself, but rather the nature of the work itself and the fact that such unglorious, mentally scarring, and inhumane work, which “has to be done by someone”, is outsourced to places with loose and opaque labor regulations. The labor that “Americans won’t, can’t, or shouldn’t do” is outsourced abroad, which is a moral and ethical quandry in and of itself. From the perspective of wages alone, however, I don’t buy the “pay them a living wage” argument; in these countries, $3-$5 is much more than a living wage, all things considered. I wish wages were higher and more proportionate to the value of their labor, but unfortunately it’s a race to the bottom, where if the wages increase to $6/hr, somewhere else will offer their talents for $5/hr.

I believe that Westerners who participate in the outsourced labor economy don’t make enough effort to understand the social, cultural and historical implications of the outsourcing economy. I don’t think it’s for any one person to fix or for any one person to shoulder the blame, nor should I think that knowing it would or should affect someone’s decision-making. However, I think that knowing the context of outsourcing, from the point of view of the people who are doing the labor, really helps understand and humanize their experiences. These are people who did not dream of doing outsourced work. They did not go to college and study hard in order to do menial white collar labor their entire career. They have hopes and dreams of their own. In many respects, I’ve observed that “doing fulfilling and enjoyable work” is a common expectation from Americans but is a luxury belief that Filipinos can’t afford; they do the work that pays them, “fulfilling work” be damned. Americans can make demands such as “loving their work” or “having a work family”, demands that just don’t resonate when your goal is to survive. Filipinos have had a long history of being colonized, starting with the Spanish in the 1500s all the way until independence in 1946. But the freedom for many people to do what it is that they themselves want to do and to “pursue their dreams”, which is an assumed “right” in America, is an unattainable luxury and privilege for the majority of people in the Philippines. Nobody in the Philippines grew up thinking that they’d end up in a call center or as a virtual assistant. Nobody in the Philippines glorifies being up at 2am working at an IT support center. But they do it anyways, and do it remarkably well and with a resilient attitude and a positive disposition, because it’s just what they have to do to survive. Working for $5/hr as a virtual assistant is much more appealing than being one of many (too many) job applicants trying to snag a $1-$2 job as a cashier (likely after getting a 4-year college degree, mind you).

In a sense, one effect of having more outsourced labor is that it makes it cheaper for some subset of people to become the fat-cat, golf-playing executive that they say they hate. I think this plays into my own belief that it’s hard to judge the character of someone until you remove all restrictions from them. What do they do when nobody is watching? What do they buy when they have all the money they’d want? How do they spend their time when they don’t have to work anymore? I don’t think money makes people evil nor is money bad. Money is money. But I think money amplifies the character traits that people already have anyways since having money gives you freedom to do more of what you want to do. Some rich people are super nice and generous, and some are selfish and materialistic. The same can be said for poor people, some are good and some are terrible. Many people I talk to often times make a value judgment where we implicitly believe that “rich=evil, poor=virtuous”, which I think is completely false and reinforces Western tropes like the noble savage. I think some people are too poor to actually show how terrible of a person they would be if money weren’t a problem.