Five questions for Bitkollegen co-founder Franziska: What is responsible offshore IT?

In recent weeks, we have received many questions. About what we do, why we do it, and why we do it the way we do. Via email, LinkedIn, or in conversations with friends and colleagues from Germany. Here we have collected a few questions and answered them for you.

What is IT outsourcing or offshore IT, and why is there a need to focus on responsible action?

IT outsourcing/offshoring is the outsourcing of IT services that are provided without physical presence at the employer/client’s location – from anywhere in the world. This ranges from individual orders, such as creating websites, apps, online calculators, portals, or other tools, to integrating employees who work in the outsourcing destination into teams of a company based in Europe.

Countries with low living costs and generally low income levels but high educational standards are particularly popular for this. This is also the case with India. Many large tech companies, such as Google and Microsoft, employ thousands of employees here. However, if the goal of outsourcing is to get as much performance as possible at the lowest possible price, this can have negative consequences. For example, even below-average salaries for the respective destination may be paid, the employer may refuse to cover health insurance, working days may last 12 hours, and employees who complain or underperform can be easily replaced due to the saturated job market.

This also happened to some of our employees. These stories made us think. From the outset, we intended to implement working conditions in India similar to those in Germany. But we also had to learn what all is involved and continue to learn how to optimize working conditions for our employees.

So, what exactly do the employees get that they wouldn’t get from other employers in India?

There are various things, I just want to list a few:

For example, health insurance, which is not standard here but an extra that the employer must organize. For a few more euros, you can also include the employee’s family. A sensible thing, as around 90% of Indians are not insured.

Another thing is flexible working hours. Our office is open from 8 am to 8 pm. Our employees can flexibly arrange their working hours within this time window. They are also allowed to work from home, but this is currently rarely used, as our new and fully air-conditioned office offers comprehensive comfort at work and is currently very well received by employees.

We also want to promote well-educated young women. There are many of them here who have good degrees and already have several years of professional experience. However, when women get married or have children, they only have the option of returning to their profession full-time or not at all with most employers in India. A whole group of qualified specialists is thus lost to the labor market. We try to offer these women the opportunity to keep up with their profession by, for example, working on projects for 15 hours a week despite starting a family, by offering part-time work and home office as needed.

Lastly, promoting women also means that we are responsible for transportation from home to the office if necessary, e.g., by taxi rides or a driver, so that our female employees who do not have their own vehicle do not have to worry about their safety.

Why should German or European companies be interested in the exact working conditions of employees at an outsourcing service provider?

In general, I think every company that purchases a service should be interested in how it was created. There are, of course, certain markets where it is practically impossible to get products sustainably, socially, or sustainably. Everything to do with rare earths, for example, falls into this problematic area. This is not the case with IT outsourcing. However, as I have perceived it, the purchasing companies often did not look closely. Many other service providers in this area unfortunately do not transparently show what the offices look like and provide insights into everyday work.

In addition, there are increasing requirements in Germany and Europe that even oblige companies to take a closer look at their suppliers and service providers. These obligations currently come from the Supply Chain Due Diligence Act (LkSG), which will apply to all companies with 1000 employees or more from 2024. According to the LkSG, companies must check according to various criteria how suppliers deal with their employees. If they do not, hefty fines can be imposed. A European supply chain law is also currently being introduced, which is basically intended to apply to companies with 250 employees or more and has an even broader focus, e.g., on environmental and climate protection.

It can be assumed that in the future the requirements for German companies to take social and ecological conditions into account when procuring will become even stricter.

Social is all well and good, but there are also many environmental problems in India, right? Are you also concerned with that?

Admittedly, we are just starting out. Our office is still under construction, and we only recently, at the beginning of 2023, completed and moved into one floor.

However, we have tried to address certain environmental problems where we have the opportunity to make a positive contribution.

In mid-March, we spoke to many members of the local community about the garbage problem in the streets and started a joint garbage collection campaign. We hope that we can continue this commitment through further measures. However, there are many challenges here, because once the garbage is collected, it is unfortunately not yet collected or recycled in a resource-saving manner. This means that we are probably reaching limits here, but we will continue to deal with the issue of plastic waste.

Another thing is that we are checking whether we can operate our IT entirely with renewable energies. We are currently getting offers for PV systems on the roof of our office. It’s only logical, because the sun shines almost continuously here. The electricity that comes from the grid, on the other hand, has a high coal electricity share (in 2020, for example, it was around 72%). Therefore, you can actually make a direct positive contribution if you generate your own electricity from solar energy.

Aren’t your services much more expensive than other IT outsourcing companies? Is your offer still attractive to customers?

It’s true, the price was and is of course the decisive factor for companies from the USA, Europe, and Germany to opt for IT outsourcing. Especially in Germany, however, another important factor is added: the shortage of skilled workers. This means that companies don’t necessarily want to save money, but have no choice but to look for skilled workers outside the usual paths (Stepstone and the like).

This also means that the price is no longer the only criterion. In addition, as already mentioned above, the obligations under the supply chain law force companies to take a closer look at their service providers. Then, of course, there are also companies that have written social or sustainability as a corporate purpose on their flags, green startups, or impact startups, for example. These companies cannot afford not to use socially responsible IT outsourcing simply because of their reputation.

Finally, we also assume that we can definitely keep up with the price in the offshore IT industry. We may not be in the lowest segment here. But especially our meticulous and cost-conscious planning, of course also with the support of our Indian partners in the construction and furnishing of the office, has led to the fact that we have so far developed little overhead that we have to pass on to our customers.

To make it transparent for our customers and to make the decision to request an offer from us as