Will the ends justify the means in offshoring transparency?

It’s hard to argue against transparency, which goes some way to explaining the overwhelmingly positive reception the Foundation for Transparency in Offshoring has received since its official launch on Friday. Its chairman, Tom Anderson, is a savvy social media operator who has succeeded in building up a handsome following and a healthy amount of noise for the initiative through such channels as Twitter and LinkedIn.

The FTO’s stated goals are admirable and unlikely to court much disagreement: get better information for buyers of research services about when and where their suppliers offshore their projects, so they can better understand any data security or intellectual property risks.

But however commendable the foundation’s aims, there is much to argue about in the way it seeks to achieve them.

Start with the language used. The press release talks about an “offshoring cover-up” in research while the FTO’s official Twitter account refers to the industry’s “dirty little secret”. Anderson says that in most cases “research buyers don’t even know that their projects are being offshored”.

The evidence for this is a mix of the anecdotal and survey data. In November, 850 researchers – both buyers and suppliers – were asked whether their organisation’s research projects were offshored. 20% more clients than agency researchers said no, 40% fewer said yes and 100% more clients said ‘not sure’.

But this does not prove a “cover-up”. Digging further into the results we find that when asked for their views on whether suppliers should be upfront with clients about whether they offshore, 68% of suppliers agreed. Of those suppliers who do offshore, 61% also advocated transparency. One might suggest that what people say and what they do are two entirely different things, but that’s not a ringing endorsement for the honesty of researchers or the reliability of survey research in general.

So let’s assume for a minute that everyone who answered that survey walks the walk. This would suggest that “in most cases” research buyers would know whether parts of their projects were being offshored, not vice versa as Anderson claims. Meanwhile, the “transparency gap” as he calls it – the percentage difference in the number of client and agency researchers answering yes or no to the offshoring question – may be down to the uneven split between buyers and suppliers in the sample ( 19% vs 76%).

To reiterate: whether or not there is a “cover-up”, it is hard to argue against a call to ensure transparency in offshoring. The FTO’s way of doing this is to encourage agencies to self-certify whether or not they offshore, which parts of their projects they offshore and which countries they outsource to.

The FTO says it takes no position either way on whether offshoring is a good or bad thing, only that transparency is important. Those who do offshore get a little badge to say so, while those who don’t also get a logo to add to their website and other communications materials. Chairman Tom Anderson’s company, Anderson Analytics, is the first we’ve seen to bear an FTO badge – but it’s the “No Offshoring” kind.

In an interview with Research on Friday, he explained that while he does not offshore at the moment he has done so in the past and would consider doing so again. Writing in a blog post this time last year, he cited “quality and IP issues” as his reason for taking “a strict 100% no-offshoring stance”. Yet a month later, writing about Dell and its use of Indian call centres and the $150 they charge to allow customers to deal with a North American call centre instead, Anderson boasts: “At my company… we don’t charge anything extra and our clients will always work only with Americans. Perhaps the market research industry should start charging two price levels as well?”

Again, it’s important to make clear that Anderson says he is not anti-offshoring. “Some of my best friends are in the business of offshoring,” he says. Yet, with the FTO launching at the tail-end of a recession, with many jobs having been lost and many more still at risk, there is a concern that such statements and such things as a “No Offshoring” badge will tap into already heightened protectionist sentiments.

In such a scenario, an FTO badge declaring a company as being a “responsible” offshorer may work against it more than in its favour. ”Nielsen vs American workers” is how CNN anchorman Lou Dobbs reported news last year of the research agency’s $1.2bn outsourcing deal with India’s Tata Consultancy.

Transparency is important and should be encouraged. But the FTO may not achieve its worthwhile goals if it inadvertently puts companies in the firing line of the anti-offshoring brigade.