Anti-Corruption Open letter by Wipro’s Chairman and Others: Corporation Social Responsibility in Outsourcing in India (and other Emerging Countries)

Posted March 31, 2011 by   · Print This Post Print This Post

Outsourcing has created a middle class and an educated wealthy elite in India and other emerging countries. The legal framework that promotes private industry and international trade in services also distributes the benefits unequally.  In a January 2011 “open letter” to the Indian Government, business leaders of Wipro and Mahindra (and other Indian industry) asked the Indian government for more attention to civil rights, social equity and clean and responsible government.

Open Letter. The public letter calls on India’s government to reform “the widespread governance deficit almost in every sphere of national activity, covering government, business and institutions.”  The key focus was to improve the quality of the rule of law through:

  • attacking corruption “with a sense of urgency, determination and on a war footing,” including the establishment of anti-corruption special public commissioners.
  • “creation of genuinely independent and constitutionally constituted regulatory bodies, manned by persons who are judicially trained in the field concerned.”
  • elimination of excessive administrative discretionary decisionmaking that has been “routinely subjected to extraneous influences.”
  • making governmental “investigative agencies and law enforcing bodies independent of the executive.”
  • unrelenting action to pursue a national mission without dilution or digression from the challenges of achieving growth and alleviating poverty.

For the online version, see http://www.rediff.com/business/slide-show/slide-show-1-an-open-letter-to-our-leaders/20110118.htm

Globalization of “Governance” and “Compliance.”   The inspiration from this Open Letter draws upon the governance and compliance mandates imposed by well-drafted outsourcing contracts on the service providers in countries such as India.  Governance, compliance and transparency are:

  • legal mandates under U.S. securities laws (Sarbanes-Oxley), the U.S Foreign Corrupt Practices Act (and similar non-US laws) and U.S. federal sentencing guidelines;
  • accounting mandates under SAS 70, Type II audit guidelines;
  • generally accepted “Business Process Management” principles that have evolved from ITIL software development guidelines and project management principles, and
  • shareholder democracy as reflected in principles of fiduciary duty of directors and officers; and
  • contingency planning and risk management for multinational enterprises seeking to concentrate back-office operations in a few specialized service centers.

Wipro’s Chairman Premji understands this linkage.

Social Impact, Legal Framework and Effective Sourcing. The January 2011 open letter highlights the social impact of global sourcing on India and, probably, other countries that have engaged in privatization and promotion of global entrepreneurship

Service Buyers. Enterprise customers now operate in an environment where “corporate social responsibility” (“CSR”) is measured by investors, local community groups, government and non-profits.   When assessing prospective sourcing partners, enterprise customers should add the Open Letter criteria to their checklist and communicate the CSR issues for a dialogue.  By addressing issues on the “rule of law” (versus “rule by bureaucrats”), the vendor selection process can serve the enterprise customer’s search for “viable” vendors, improve local legal frameworks and achieve more stable, predictable and resilient sourcing outcomes.

Service Providers.  This plea by Wipro’s Chairman Premji and other Indian business leaders highlights the role of the service provider in promoting good governance in the host government. Service providers have a “bully pulpit” to promote social responsibility so that the benefits of globalization and outsourcing are distributed widely to the larger community in their countries. Focusing on a more transparent, less corrupt, less bureaucratic government will invite further foreign direct investment and avoid loss of opportunities for sustainable economic growth.

Global Sourcing Council. The Global Sourcing Council is a non-profit corporation dedicated to promoting sustainable business practices and corporate social responsibility in global sourcing.  See www.gscouncil.org to join. (Full disclosure:  the author of this article is a member of the Board of Directors of this organization.)

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