Towards a defeating inequality: Protecting Workers against the Negative Effect of Modern Outsourcing Practices

By: Francis Ben Kaifala Esq.

As inequality deepens, many drivers exist. Outsourcing has become a popular labour practice among corporations. This article discusses its advent, extent and ramifications. It also suggests ways to ensure that it does not become more of harm to workers' rights than being beneficial - particularly in emerging economies like Sierra Leone where the legal and regulatory framework in the labour market may not be as prepared or robust as that of countries in the West who are mostly exporting it.

It was back in 2007, I was in my first year as a lawyer in a Private Corporate Law Firm in Freetown, Sierra Leone. The Managing Partner of the firm forwarded to me an email from clients based in the US. He instructed that I conduct careful research and provide a comprehensive opinion that the firm would send back to the clients. The questions on “doing business in Sierra Leone” were fairly routine, as I had already responded to similar ones before. However, one question left me a bit confused – it asked what legal and regulatory regime existed in respect of “outsourcing practices” in Sierra Leone.  Until then, I had never heard the word “outsourcing” and had no idea what they were asking.

My research led me to one conclusion – there was nothing in our laws regulating outsourcing practices. I came to learn that outsourcing is a business innovation, dictated by neoliberal motivations, that creates a structure whereby other businesses provide services to a company with a view of reducing costs and other liabilities that employee-employer relationships bring about. While it had become very prominent in the business world outside Sierra Leone, it had not really reached the country at that time. I then went back to my Head of Chambers to inform him of this dead-end. 

After listening to me while focused on the Solitaire on his screen, he murmured “so. . .?” He was an extremely experienced lawyer. His question intimidated me, but I garnered up the courage to say, “there is nothing in our laws Sir”. Then he turned his swivel chair towards me, and said calmly “that which is not prohibited, is lawful”. He tilted his swivel chair back and continued playing Solitaire. That aphorism summarized the response we gave to the clients.

As years went by, I provided more such opinions to clients particularly in the US, UK, Nigeria and Senegal. By 2010, Nigerian banks and service providers, many of which had benefitted from our advice, flooded Sierra Leone. Before this influx, mostly local banks and other financial sector businesses hired their employees (from janitor to Managing Director) with full rights and good conditions of service.  They were paid reasonable salaries that ensured that they and their families lived at least middle-class lifestyles. Outsourcing of staff was unheard of.

With the advent of outsourcing, financial institutions, insurance companies, mining companies, etc. started laying off their staff only for them to be re-hired by “outsourcing companies.” These companies would send the newly hired employees back to their original companies as “contractors” on a rotational basis with lower salaries, no hope of end-of-service benefits, no job security, and without additional allowances, etc. Those affected mostly included custodial staff, security personnel, cashiers, tellers, etc. They are no longer deemed part of the staff structure of the businesses, and are not classed as employees. They become mere contractors and lose employment sweeteners like employee loans, car loans, leave allowances, sick allowances, paid holidays, and medical insurance, though they continued to provide the same services as before.

In 2013, I left for further studies in the United Kingdom. One of my suitcases was lost in transit. I had to wait for it for about a week and made several phone calls to the airline. Each time I called, it was an Indian sounding voice that responded to my query. I told my friend who was with me at the time that “it would appear the UK services sector has a lot of Indians”. I later learnt from my fiend that perhaps the jobs may have been outsourced to India. “That would be a different kind of outsourcing”, I thought to myself.  I later found out that British Airways was in talks with an outsourcer called Capita to outsource its call centre services to countries like India and South Africa, thereby shedding 1000 jobs. What was interesting to me was that whereas in Sierra Leone, outsourcing was within the country, in the UK, it was both within and across geographical boundaries. 

Four years later, I was in the U.S. on another post-graduate study sojourn and Donald Trump was toward the end of his first year as President. One of his biggest election promises was job repatriation to the U.S. and preventing job flight brought by practices that included outsourcing practices. Before Trump’s election, US companies took advantage of preferential trade agreements negotiated by US governments like the NAFTA and TPP to outsource some industries in the production line to low labour cost countries. This mostly included the outsourcing of call services, manufacturing, technology assembly and related jobs to emerging economies where the cost of labour was far lower and taxing regimes more favourable. 

I realized, businesses that were once highly supportive of their staff in terms of wages and other in-service benefits, have been sucked into the profiteering mantra of “concentrating on core competencies” and outsourcing the jobs that do not fall within that highly capitalist “corporate America” category. This has left workers with lower wages, disadvantageous terms and conditions of service, unregulated harmful labour practices and not much hope in sight for reforming the labour landscape to address these drivers of inequality.

Whether in the US, UK or Sierra Leone, it cannot be gainsaid that outsourcing is a component of the drivers of inequality. While it is the case that corporations may gain immensely from it, workers stand to lose considerably because those gains are not necessarily being absorbed into making their terms and conditions of service similarly better. Yet, not much has been done to provide protection for workers against such corporate practices. Workers’ conditions are mostly getting worse comparatively to the 70’s and 80’s when outsourcing had not developed to this level (In 2014 it was estimated to be growing at 12% to 26% percent worldwide according to ISO).

Though outsourcing is creating jobs in many emerging economies like India and China, it is also a problem in terms of the conditions under which the workers earn their living. There is a need to ensure that the conditions under which they work are humane and comparatively equal - if not better than they would be if employed directly by the companies benefitting from the work. Making workers’ lives better should not be limited to their wages but also other attached terms and conditions of service. Workers may earn less, yet be treated fairly and the environment and conditions under which they work made more respectful of their human rights. 

Some protective standards need to be developed at the domestic level which would be automatically incorporated in all labor relationships, formal and informal, to create a level playing field for workers. This could be in the form of a baseline – creating policies, guidelines, standards or legislations modelled in a similar form as collective agreements. It would prescribe minimum content of workers’ rights as a sort of implied terms in labour and employment agreements to protect workers. This would balance the benefit of outsourcing to corporations with the burden of preserving workers’ rights.

Leaving outsourcing in the realm of “that-which-is-not-prohibited-is-lawful” without some limitations will continue to leave workers at the mercy of businesses that are more concerned with the health of their balance sheets and profit margins than workers’ rights. Outsourcing is here to stay, but the fight to reduce, if not reverse inequality, has to include protecting workers suffering from its side-effects notwithstanding that many are benefitting from it. 

Francis Ben Kaifala Esq. is the Commissioner of the Anti-Corruption Commission of the Republic of Sierra Leone. He is also the immediate past President of the Network of Anti-Corruption Institutions in West Africa (NACIWA) and an elected Board Member of the African Union Advisory Board on Corruption (AUABC). He lectures part-time, Commercial Law, at Fourah Bay College, University of Sierra Leone; He holds the joint LL.M (Master of Laws) in Law & Economics from the School of Law and the School of Economics and Finance at Queen Mary University of London; He is also alumnus of the prestigious Fulbright Program and holds the LL.M in Comparative Constitutional Law and International Human Rights from the University of Texas at Austin.