ModernGhana logo
27.06.2004 Business & Finance

Offshoring of jobs spreads to Ghana for its low wages

By MARK HORVIT for Knight Ridder Newspapers
Listen to article

ACCRA, Ghana — The computer programmer sits before a glowing screen.

His room is small and hot, but he listens to cool jazz as his fingers dance across a keyboard, examining a database he's designing for one of the world's largest companies.

He earns about $400 a month — less than $5,000 a year.

Not a lot for someone with a computer science degree, but it's more than 10 times the average income in this small West African nation.

He and the 10 other programmers in a modest white office building represent more than Ghana's slim middle class.

They are among their country's brightest hopes — and some of the most feared people in the United States, because the companies they work for are American.

The programming jobs they hold could once have been done in the United States, perhaps by some of the thousands of computer science majors now looking for work in the United States. Politicians point to them, and the companies that send them jobs, as threats to the U. S. economy.

Displaced workers wonder why the jobs aren't theirs.

Working Americans wonder if they are next.

Anger about offshoring has skewed the debate about just how great a threat it poses.

It was one of many reasons Americans lost jobs in the last recession, and a new government study indicates that it is responsible for only a small percentage of the workers laid off in the first quarter of this year.

But in many ways, offshoring's impact already has been profound.


The programmers in Ghana represent a sliver of the hundreds of thousands of employees worldwide who are transforming the workplace and — whether you realize it or not — your life.

Odds are increasingly high that your medical records, insurance information, loan application — and even the credit card bill for that burger and fries you ate for lunch — have filtered through a worker on another continent.

In India — by far the biggest player in white-collar offshoring — more than 700,000 college graduates fill modern office towers, performing a stunning array of tasks previously handled in the United States.


And in Accra, Ghana? A rooster struts across the red-dirt-covered road that leads to a 4-year-old software development company hoping to prove that Ghanaians can compete in the new world market.

In some ways, this sprawling city of 2 million represents the final frontier for those who watch American jobs being sent offshore and wonder where it will end.

This is a place where power outages are so frequent that business meetings don't even pause when the lights go out.

But this is also the place where a Texas company has stationed an expensive telecommunications system to process the insurance claim form you fill out in your doctor's office.

The minimum wage in Ghana increased this spring to about $1.30 a day.

Find some work at that rate, and your effort might get you nothing more than one room with concrete walls and concrete floors, no kitchen and you'll have to use a public restroom.

So when American companies come to town and offer $5 a day or more, there is no shortage of takers.

But while there's a willing pool of workers, offshoring is in its infancy in West Africa and poses little threat to U.S. wage earners.

The companies have come despite Ghana's shortcomings, which present the kinds of problems that make it tough for many developing nations to attract work from the United States.

So what overcomes the drawbacks? Wages.

Ghana has other drawing cards, including a democratic government eager to work with foreign employers.

But the low pay is key.

The typical data entry clerk makes about $20 to $30 a week, a fraction of the $400 to $500 that some companies pay U.S. workers.

The disparity trumps the other expenses and headaches.

Employees are educated and willing to learn.

The quality of their work rivals, and sometimes exceeds, that done by their U.S. counterparts, according to the companies that employ them.

To a large extent, that's because jobs — even basic data entry — are considered a precious commodity.

Some American employers in Ghana have lengthy waiting lists of potential employees, while Indian call centers compete for qualified workers and must recruit nationwide.

Any information that can be computerized — documents, photographs, drawings, digital audiotapes — can be instantly transferred from one spot in the world to another.

Doctors in Australia, India and Switzerland are reading X-rays and other medical imaging tests performed on U.S. patients. Accountants in India are completing IRS tax forms. American doctors send their dictated notes on patients' aches and pains to overseas transcription services.

While expertise is important in attracting business, offshoring sites around the world succeed only so long as they achieve the fundamental goals of the global economy. "Be better, faster and cheaper than the competition," said Bill Booth, an Electronic Data Systems manager. "That's the name of the game."


Many people are surprised to learn that the intimate details of their medical visits are being transcribed from their doctor's dictation by workers in India and other developing nations.

They'd be even more surprised to know that it's been happening for years.

Worldtech USA — an Indian company with its U.S. headquarters in Texas — has been doing U.S. medical transcription work for six years. And company vice president Ajay Gaddipati said his largest competitors have been doing it for more than a decade.

Offshoring is more than 100 years old, but it mostly involved manufacturing jobs.

The overseas movement of white-collar work quietly gained momentum throughout the latter half of the 1990s.

In Ghana, for example, only in the past four years has any white-collar work begun trickling in.

As more work has gone overseas, the incentives have become harder to resist.

The real question many Americans are asking is how many more jobs will go overseas. A University of California, Berkeley, study determined that 14 million Americans — almost 10 percent of the work force — are employed in professions susceptible to offshoring.

The workers include data entry clerks, paralegals, medical transcribers, computer programmers and those whose jobs focus on office administration or financial transactions.

Now that someone in India — or Ghana, or Spain, or Mexico — can do your taxes, review your mortgage application, read your X-ray, design your pickup truck or handle your paycheck, a lot of Americans are asking what is left for them.

Ask an offshoring advocate, and invariably they will said that American innovation will lead to new, more highly skilled jobs that will replace the old ones.

"The beat goes on," said Allie Young, a research analyst. "We'll be dealing with this again. Job displacement is nothing new, but we forget."