BPO and Its Impact on Stateness and Sovereignty

Business Processes Outsourcing (BPO) is the “contracting of a specific business task, such as payroll, to a third-party service provider”. It is often done by companies to save costs. BPO done within a company’s own country is called onshore outsourcing. When BPO is done outside a company’s country, it is often called offshore outsourcing[1].

BPO is a subsector of outsourcing, a process which delegates “non-core operations from internal production to an external entity specializing in the management of that operation.” This is done for any of the following reasons: to lower the firm’s costs, to redirect or conserve “energy directed at the competencies of a particular business”, or to use worldwide labor, capital, technology and resources more efficiently.” [2]

It can be inferred that BPO has emerged as a product of globalization. Encyclopedia Britannica defines globalization as the "process by which the experience of everyday life... is becoming standardized around the world." Given this, I can say that BPO touches on several aspects of globalization[3].

In the industrial aspect, BPO allows global production markets to emerge and flourish. There is also a greater variety of goods (i.e. service providers) for companies to choose from. In the economic aspect, BPO opens up a global common market, where there is free exchange of goods and capital (i.e. service providers and companies’ capital). In the cultural aspect, there is the increase in cross-cultural contacts. And in the social aspect, there is the free movement of people throughout the world (i.e. workers migrating to a new country to work at).

I can say that I am a product of globalization, of BPO even. I am working part-time as a writer for various companies around the globe. The biggest company I work for allows me to choose projects from clients all over the world. I’ve had clients from the United States, Ukraine, India, and so on. I personally find it gratifying to be a participant in this global phenomenon called BPO. It never ceases to amaze me that here I am in a small room in a house on the Philippines writing articles for an SEO company based in Ukraine. My client will then hire a web master from India or elsewhere to upload my articles in the World Wide Web for billions of people from all countries to read. I receive my salary through Western Union, which is itself an international money transfer company with branches in many countries. The salary I receive is in US dollars, which is honored practically anywhere in the world. After receiving my salary, I shall be on my way to the mall, to purchase a dress from Marks & Spencers and jeans from Lee, both of which are companies which use BPO. (The fabric of the jeans I’m wearing might have been spun in China, sewn in India, and dyed in the Philippines too.) Oh the wonders of globalization and BPO. Even an individual as common as me is influenced.

On to the question: what impact could BPO have on the concepts of stateness and sovereignty? On my observation, BPO has been changing the ideas of stateness and sovereignty. A legitimate state has to fulfill five aspects: territory, people, government, sovereignty, and recognition. BPO seems to have changed the notion of “people”. Before, “people” meant your state’s citizens: either through jus sanguine or jus soli. But now, a US-based company such as IBM, can consider its Filipino call center agents its “people” too. Because these Filipino employees are part of the workforce of IBM, IBM is dependent on them and their service. These people often receive their salary in US dollars, just like real Americans instead of Peso-earning Filipinos. The idea of stateness has expanded, now to include even those who are non-citizens yet contribute to a country’s economy, enlarging states’ “territory” as well.

The idea of sovereignty has also been transformed with respect to BPO. National economies are now largely controlled by multinational firms. Likewise, the responsibility of each state to provide jobs for its citizens is undermined by BPO companies which do this with their own advantage in mind. The “happy” victims are developing states, such as our own Philippines. Weak states like ours are forced to accept whatever rules are set by richer states. With the heavy dependence on BPO by the Philippine economy and Filipino workers, our state could possibly lose more its idea of sovereignty and stateness. Also, the state as a whole is weakened because of brain drain; more and more of our professionals prefer to leave and use their talents and resources for another state (that or stay in the country while working for foreign companies).

In conclusion, BPOs are like a double-edged sword: they have positive and negative effects to stateness and sovereignty. BPOs are seen as products of globalization, yet with their proliferation, BPOs continue to support globalization—just like a vicious cycle.


Bibliography:

“Business process outsourcing”. Wikipedia. 2007. Wikimedia Foundation. 5 July 2007
http://en.wikipedia.org/wiki/Business_process_outsourcing>.

“Outsourcing”. Wikipedia. 2007. Wikimedia Foundation. 5 July 2007
http://en.wikipedia.org/wiki/Outsourcing>.

“Globalization”. Wikipedia. 2007. Wikimedia Foundation. 5 July 2007
http://en.wikipedia.org/wiki/Globalization>.
[1] “Business process outsourcing”. Wikipedia. 5 July 2007 http://en.wikipedia.org/wiki/Business_process_outsourcing>.
[2] “Outsourcing”. Wikipedia. 5 July 2007 http://en.wikipedia.org/wiki/Outsourcing>.
[3] “Globalization”. Wikipedia. 5 July 2007 http://en.wikipedia.org/wiki/Globalization>.