The Ethics of Outsourcing Yourself

0:00Yeah, I mean, if you go read it again, we'll link up to the article itself if you want to search for it is the shadowy way new employees are cheating to get to the rise of shadow stand in the rise of shadow stand in the rise of shadowing. Right? Like they, they've decided that they want to get one over on the man. And I think that's the mentality. I love this, this quote here.

0:39Hey everybody, welcome to another episode of Business Lunch with your host, Roland Frazier. That's me and my wonderful co-host and business partner, Ryan Dice. Ryan, how are you doing today? I'm doing exceptionally well. How about yourself? I don't know. I'm feeling kind of shadowy, a little bit shadowy. that's a, that's, that's a, it's the segue. No, I am kind of, uh, losing my mind a little bit. Um, that's, that's total hyperbole. It's not that big a deal. Um, but I did love this article, um, that you sent me and some of the implications around it. So, um, once you set it up, let's dive in, what are we talking about today?

1:11Yeah. So, uh, so this is, this was, uh, something that's, you know, we kind of like, we've heard of the great resignation and quiet quitting and, you know, all the other fun things that are, uh, uh, that are out there. And now, uh, there was, uh, talk about this shadow stand-in thing. So that's where employees are outsourcing their jobs or parts of their jobs to other people. And basically they, they will act kind of as many agencies, I guess it would be like they turn, you know, if they've got a job creating, uh, ads. let's say for somebody that they then will hire somebody else to help them with the words and they'll hire somebody else to help them with the creative, you know, the, uh, the picks and, you know, and so on and so forth.

2:01And then they'll go out and get multiple, they'll apply and be working. Like one person said, they were working five American salary, full paying jobs and outsourcing to the Philippines while themselves living in the Philippines and basically making killing. Now, I guess all of the questions around that would be the employees don't know, I'm assuming the employers don't know in any of these situations as well. So is it dishonest? Is it okay? Do we not care because we're only paying for a result? Are we losing the value of what we think we should be getting when we pay a salary, when we're effectively not really getting the person that we pay the salary to?

2:44You know, lots and lots of issues around that. So I thought it'd fun to just kind of riff on it. Yeah. Did you have any initial thoughts as you were going through? I do. But since I introed it, let's, why don't you give me your thoughts? So I'm trying to approach this from the perspective of, you know, my, you know, kids are grown and they're coming back for Thanksgiving and it's like, how's your job going? And they go, oh, it's amazing. I basically have outsourced my entire job. Like, so I got this job and I'm making pretty good money, but I realized like I can pay other people to do the work for me.

3:18And it freed up all my time. And so, yeah, it's really great. I'm trying to think if, as both a dad and an entrepreneur, a business owner, if I would be proud or if I would be annoyed. And the more I thought about it, the more I realized it does come down to this idea of deception. Is this inherently deceptive? And I guess the test that I did when I was thinking through it is if this came up in a work setting, would you freely admit that you were doing this if asked? Would you kind of, would you be like, oh yeah, hey, I'm doing it if asked? And if no, then I think you have to admit that it's deceptive, that you are being intentionally deceptive.

4:02So I don't think I buy the argument of, you know what, as we pay people to get stuff done, not necessarily to do it. Because on one hand, I think that's true, right? You pay people to get something done. You don't necessarily care how they do it, except you kind of do. And I think you do for a couple of reasons. The first is just privacy concerns. To the extent that there's any sort of proprietary intellectual property, to the extent that somebody is dealing with any customer records or customer data, if somebody is giving that custody to somebody else, well, that's bad. So just right off the bat, we have to acknowledge that would be a big fat no-no.

4:37But also there's something to, no, no, I hired you and your particular skill set, and I'm not getting that. I'm getting something less than. And if I'm hiring you to be a manager, then I want to know that you have the skills of a manager. I think a lot of these people who are attempting this are going to discover, as a lot of people do when they get into, you know, when they start growing their careers, that doing a task and managing other people to do that task are two fundamentally different things. And even a couple of people in the articles mentioned, like, you know, it worked until I realized that the work product of the people I was outsourcing it to kind of sucked.

5:13Right. And so I had to go back and like redo it again. So I think for a lot of reasons, the way that they're doing it, this idea of the shadow aspect of it is just a bad idea. I think it's bad. I think it's dishonest. And I think if I discovered that somebody was doing it, I'd probably fire them. The other challenge that I have is that what I'm paying for when I hire an employee versus an agency is full access at any time during the work hours. and if you are running effectively an agency and you've got multiple people that you are owing your loyalty to, you're not going to be there when I need you.

5:55So I have a problem with the deceptive part of it. I have a problem with the fact that I won't have the access I need. And I have a problem with not knowing who's getting access to my stuff. Because these people are giving their logins to lots of different people. And several of them said that they were working for different government jobs that had security access. And so now they've got security access or access to my stuff. And they're sending out the logins to their access to my stuff to people I don't know and that we don't, you know, understand who they are or have any recourse to deal with or any.

6:28I mean, I think it's bad on all those fronts. As far as the what you get, I am much more results oriented. If I hire an employee to accomplish the following five things and they're giving me all of that work at the quality that we've agreed, then I'm not unhappy from that standpoint. But I definitely think that it's wrong to effectively be like you came and interviewed for a job with me and I'm like, holy crap, you're going to do my digital marketing and you're Ryan Dyson. Look at your rep and all that kind of stuff. And then you're like, yeah, totally, man. I'm there. I'm for you. And then you give it to somebody in the Philippines.

7:16and now I think it also harms your reputation because it's like, man, I thought Ryan was really good at this stuff, but it seems like almost like it's a second language to it. You know, it's, it's like, I think you would, you would definitely get that. And our experience with agencies time and time again is that they don't ever successfully scale because they can't get past the, you know, the one person. And I'm saying most of the agencies we deal with, obviously there's giant agencies out there that, you know, that are successful, but really it's, you get sold on a person who's going to deliver a result the way that they deliver it.

7:53And then you're not getting that. And that's who you interacted with. They represented that they were going to do it and they just flat out lied to you. But I think that you hit, you, you, um, you aren't getting what you were told you were going to get, you were lied to. And so I just have a problem with that generally. So that, that would be my biggest challenge with it. And, and all the other stuff, I definitely, I mean, I like the idea of if, if you are the super employee, because we talk about this as a concept, you can have super employees where you go and hire a virtual person or a virtual assistant or somebody, you know, in a foreign country or whatever to help that person do their rote tasks, or you empower them by giving them RPA, the robotic process automation or AI to support what they do.

8:39I don't think we have any issue with any of that because we know what's going on, but truly outsourcing the core thing that I hired you for, I got a problem with it. Yeah. I mean, if you go and read it again, we'll link up to the article itself if you want to search for it is the shadowy way new employees are cheating to get to the top or the rise of shadow stand-ins. Again, we'll link it up in the notes. But just to hear some of the things that these people say and how they describe the work they do, it's just kind of gross, right? Like they've decided that they want to get one over on the man.

9:20And I think that's the mentality. I love this quote here. I'll read directly from the article. It says, others like the Southern California developer Brandon Nowak, which never freaking hire this dude, have contemplated dipping their toe in the water, he told me that shadow stand-ins are inevitable outcome to our system of making money. And this is his quote. Companies themselves are taking advantage of you by hiring you to do work, which they reap more value from you than they give up. They're taking advantage of you because they're getting more value than they give up. That is the basis of capitalism.

9:52I'm not anti-capitalistic necessarily, but I don't fault anyone, myself included, for looking to turn those tables on the companies themselves. And he goes on to say, For-profit corporations are government-sanctioned psychopaths existing only to predatorially and parasitically earn profit. This was, I'm sorry, this is another person who said this. I don't want to credit. Yeah, another person said it. Corporations are owed no moral obligation whatsoever any more than a hen owns a fox moral consideration. The only rational response is to extract as much value as possible. What a whiny, crybaby, communistic, woke little freaking snowflake.

10:40I hope this person gets fired. And it just is gross. So gross. So, I mean, I definitely have thoughts on this. What's your response? Well, I mean, I think anyone who employs either of those people who have now identified themselves out in public is just asking for trouble. But what a childish concept to say that, number one, corporations are made up of people. So we're saying that the people who are working at the corporation, whose jobs depend on managing and selecting good people to discharge the duties of the corporation, are going to be impacted if you lie, cheat, and steal from them. And the shareholders who invest in the company and the clients that the company sells, it's to me setting up this straw thing in the middle that absolves you from all responsibility to be truthful and a good human being.

11:38And the other gentleman is truly the, it is that kind of communist concept of like, there should be no, I should give no additional value that I should take all of the value for myself and not create any additional value for anyone else out in the world. What a terrible world it would be if the world were full of those people. So, you know, so I have, I have giant challenges with it from a moral standpoint of the, the fox to the, you know, to the hen and the predatory parasitic. I mean, gosh, like that's just, I guess, anti-capitalism at its at its best and can we also just acknowledge the hypocrisy of it because what is this person doing to the person in the philippines right paying them a hundred percent of the salary that they're getting oh my god like how do they not see their own hypocrisy like you're doing it too it's this like bizarro robin hood thing only instead of steal from the rich and give to the poor it's merely just steal from the rich and keep it for yourself like just it like I was oddly enough I started off when I read this article I'm like you know what kind of good for them if they're being efficient with their thing as an employer I'm more interested in the thing getting done than how it than them doing it I'm kind of for it and then I saw the mentality that's behind a lot of this stuff and it's just gross it's not just anti-capitalistic it's just flat out dishonest and it is also you know exactly what it describes sometimes so I would just know now here's here's what I would like I'm trying to think putting on my employer hat for a second here's what I would love for someone to do I would love for someone who if they work for us to come to us and say hey so I had some realizations I was doing some research looking around and I can actually hire some outsourcers for x amount of money to do like 80 % of the actual like doing like the typing on the computer stuff that it's doing.

13:41And so if you'll give me a little bit more budget, I believe that I can manage three or four of these people and dramatically increase my output. And for that, I should probably deserve a raise or a promotion. Like I believe that these people, they're not because they're so scarcity minded in their thinking, they're not realizing that what they are doing is called building a team. And the fact that your team members live in another country and the fact that you can pay them less is not a reason to exploit them. It is a reason to say, I think I might be ready for this pesky management thing. I think I might be ready to grow promotion because I can produce more output through the management of additional people and systems than I can produce by myself.

14:25those kind of people I would love nothing more than to give them more money because they are producing more value and guess what you twitchy little twerp Kevin that is how economies are built that's how people like get to eat food on an ongoing continuous basis so yeah the the I agree with you I think that that is the approach and also I don't want them hiring people so like if they're my employee, if they're my employee, then there's all kinds of legal challenges. So, okay, now you've outsourced your work. Let's say you're a coder because they sell a lot of this is happening in the tech world.

15:00So you're a coder and I've hired you to do something and you've signed my legal agreement that says, you know, invention assignment, IP is mine that you create because it's for the company, et cetera. But now you hire somebody in Ukraine or India to do the programming and now they've programmed, now they've got a claim on that code that's not covered by you and you don't have an agreement with them and you can't transfer that to me. Now I go to sell the company and in due diligence, we find out that there's been some of the shadow stuff going on. Now I don't own all my IP and it's because you lied to me.

15:36And now you've opened yourself to a giant lawsuit from me. You probably don't have the money to pay it, but I mean, I'm mad. And now I've got a judgment against you for 300 million, which I was going to sell the company for that didn't go through because I mean, it's like or I have to spend one hundred and seventy thousand with attorneys to go track down the person who did the programming. And now I'm going to send you that bill. You're setting yourself up for a lot of liability. Plus, all these people are outside our compliance from a employment standpoint. if you're doing people in the Philippines, most people don't set up, even if those people are employees and the local laws in several of these countries now require you, if you have just even minimal requirements to go and do payroll and taxes and all this other stuff.

16:23And now you're out of compliance with all of that stuff. I mean, it's a rat's nest of liability for these people who are not business people who are just like one of the, I think ladies in there said that she hired, she gave some of it to her husband and then she gave some to a friend. And that was the one that ended up not performing and she had to let him go. It's like, she's opened herself to all kinds of liability. She's not paying payroll taxes or any of that kind of stuff. Are those people who are doing work for them, that's being done for me, for my employee now through, there's a thing called respondent superior that says the employer is liable for the acts of the employee.

16:57If they're in the course of the job now in the course of their employment, they've hired these people and now they sexually harass them. And then that person comes and sues me because my employee, I can go on for a long time of bad ideas around why this is not smart for the people who are doing it or for the employer. So in terms of just straight legal liability, you're setting yourself up and your employer for all kinds of potential challenges that you're not thinking about, you know, and all those costs that the employer would have of hiring those people, you should be paying too, because you're now effectively an employer, you know, by the way, what about payroll taxes?

17:40Do you think that she's paying payroll taxes on what she's giving to the husband? You know, all kinds of challenges there. So yeah, I'm, I'm, uh, but, but going back to your model of, Hey, I've got, I found some people and I'd like to hire them. That's great. We will interview them and we will hire them and give you those resources if that makes you more effective. And now you've shown initiative management potential. I want to advance you. I'm happy to build a team under you. Now we've done that the right way, both from a legal, moral, ethical standpoint, and the right people are reporting to the right people who are being paid the right way with the right taxes and benefits.

18:21And also, by the way, you're cheating all those people out of the benefits that we offer? Because I guarantee you, most of these people aren't offering any kind of benefits. So they're actually probably worse off and more predatory and parasitic than the evil corporations that are being referred to. Yeah. Almost certainly. And that, like I said, just the hypocrisy is just astounding. So what do you, I mean, as far as an action item, like, you know, we're, we're employers, we employ people. I was thinking when I, when I read this, because I do believe that this is going to become more prevalent.

18:56I'm sure that it's happened at varying times at our companies. We've got a number of companies and a number of people work there. So the chance that somebody who works for us has already done something or is actively doing something like this is similar. So I'm thinking, and I know that we have team members who listen to this podcast wisely because they know that it's an opportunity to kind of hear what we're thinking. I was thinking it may make sense to reevaluate your employee handbook and, you know, exactly what are the do's and don'ts that you have in there. And perhaps having a clause for no shadow, you know, shadow stand-ins are not allowed.

19:32You're not allowed to use company money to hire this without company approval, anything, you know, software purchasing like need to go through the company. And even to use this, because then if you say like, hey, we're instituting this new policy, you can't do this thing, that can just come out like uncool. I think it's an opportunity. I think all employers have an opportunity to use this, to implement a formal policy around it, and to say, we don't want you doing this for all the legal liability reasons. But we do want to encourage you, if you see an opportunity to scale yourself, to be more productive through the hiring of outsourcers, through software, make that known because that can perhaps be a path to promotion.

20:14So one path, the deceptive path, is a path to getting fired and potentially sued. The other path is a potential path for promotion within the company. And I think just to make it clear that those are the two paths. It's not just stick. Like there's a carrot involved here too. Yeah, a hundred percent. I mean, I think what employer would not welcome the opportunity to have a more efficient and effective employee and get the results faster and better than they would through a different way. I can't think of anyone that would, you know, it's like, no, we've, we've read, we said we'd never have more than eight employees, Bob.

20:58So we can't hire that person. And it's important to me that you labor. I want to know that you're truly laboring over this, that you finish every day, very tired mentally and physically. That's important to me. Right. That's ridiculous. Nobody wants that. Yeah. But I do like it. And I agree with you a hundred percent. I think that from a legal standpoint in employee handbooks and employment agreements, it definitely should be something that you clarify. And I think you should explain why. It's like, it's not because we're parasitic and what was it? And predatory. Predatory and parasitic. Yeah.

21:35That we have this policy. It's because there is liability that is associated with it. And there's a lot of challenges from a legal standpoint. And honestly, from a moral and ethical standpoint, we want the people that work for us who are employees to be employees. So they There's multiple reasons that are good for us to do it this way. So if you do find yourself in that situation, and I think it's just explained that way, you do find yourself in a situation where you say, I could be so much more efficient if only I had somebody that did this stuff. Maybe we can solve that with AI, number one. Maybe we can solve that with RPA, you know, or if we can't, maybe we can solve it with another human and let's bring them in and let them have the benefits of working with this too, because if it's truly an efficiency for us to realize, why wouldn't we do that?

22:23Right. We want to support you in every way, just as you might want training or tools to do the things you do. You might need assistance. And we are pro that as long as we know about it and we have it within the corporate environment that we've created for that. I think that's it. It It makes so much more sense to do that than this. And maybe it feels the whole shadow thing. I mean, obviously it's a pejorative term to start with in the article, but like just the idea that you're sneaking around doing this is kind of evidence of its impropriety, I think. Yeah. That's what I'm saying. Would you admit it?

23:03If somebody came like, hey, so you're doing like, oh yeah, isn't it awesome? uh you know if you if you're if you wouldn't say that if you wouldn't proudly announce what you're doing then that means you're probably ashamed of it um or you know it's against the rules and you're going to have repercussions that means that you're being deceptive means that you're being dishonest um and and that's not going to build culture and it certainly isn't going to give you any moral high ground over the predatory parasitic uh corporate um you know people that that you work for, which by the way, are also called people.

23:37And if you work for a public company, good chance that stock is held in a bunch of teacher pensions and stuff like that. That's what I was, yeah. So, holy crap. We always forget about the shareholders. People are like, oh, that company got slapped with a $400 million fine. It's like, you know who really ought to get hit with that is the jerk that did the bad thing. Punishing the company like that is punishing the shareholders who are everyday people. You know, they're funds, but the funds are generally made up not just of a few fat cat finance people on Wall Street. They're made up of, like you said, teachers and fire, you know, firefighters and airline workers and, you know, just normal people who get hugely affected by stuff like this.

24:17It's so irresponsible and short-sighted to say the things those two people said. I would like to make one other comment. I know we can close this out. I think it's important to acknowledge. And it's a little speech that I have anytime somebody joins the company at a higher level, because I think they're worth it. I wouldn't say this to somebody who's an entry level employee. But what I've said, you think some people are worth more than other people. Yeah, from a direct value of the company, I do. Yeah, they're absolutely worth more to me, not as human beings on this earth. But yes, to us. they but so yeah people who are coming in i don't know i i know that that statement is oddly controversial but you know no here's me not caring they are higher value players to the entity then to the organization right um oh i know i know it is funny though that the fact that you can give me a hard time on that because we know that there are other people who would just be grasping at their pearls based on such a statement those people are not listening to this podcast so i I don't really care.

25:17No, but something that I say to anybody who's coming into the company at a higher level, I say, look, let's make something perfectly clear. This is a mutually exploitative relationship. And I use that term intentionally because I want it to kind of like jar them. But I say like, it is our job as a company to get as much value as possible, to extract as much value as possible from you, to exploit you, air quotes, as much as possible. It is similarly your job to try to get as much as you can from this relationship, right? To get paid as much as you can, to learn as much as you can, to make as many connections as you can.

25:57And as long as those two things are aligned with one another, then we're going to work together for a really long time. If at any point in time, you feel like you could be getting so much more somewhere else, you should quit. And I don't get to be like, oh, that's not nice or that's disloyal, right? These are transactional relationships. And yes, loyalty is a factor, right? But not loyalty, you know, against one's long-term, you know, long-term benefit. It just can't be. So this idea that how dare a company try to get as much as possible out of its team, of course they will. That's how they get as much value, take as much value to the marketplace.

26:39The employee should be doing the same thing as long as those two things are aligned. I think that's called a great transaction relationship. This ain't marriage. This ain't family. It's a team. I only differ in the word exploit in as much because I think that the desired value for the transaction is articulated by the company in its expectation with its job performance requirements and outcomes. And the compensation is dictated by the salary and benefits package that somebody gets. So, because I don't like, to me, I'm not trying to get everything like, and I know you're not like this. So I just want to point it out for people that are listening or watching, um, that we're not actually trying to get everything you possibly can out of somebody, uh, when they work for you're trying to get them to do what you need them to do.

27:35And within the parameters of the compensation that you've outlined. And if they do that, you're happy and you're not like, Oh man, I need you to do more, more, more. You're, that's not how you are. That's not how we are that none of the cultures in our companies. So, So just to temper that, because I get it's a hyperbolic example, but it really, the way that we work is we've established values on both sides and we've determined that this is a transactional relationship, even if there's friendship and loyalty that's involved. Ultimately, an employer-employee relationship is transactional and it's based on give me the value that I need you to give me for the compensation that I'm willing to give you.

28:15And if you get that, you're happy, right? But you do expect that you get that value. And if you, as the provider of the value to the company, go above and beyond, you're going to be appreciated and likely advance and be rewarded for it. And if you're the company and you can pay a salary that's a little bit above market, which we also like to do, then you hope that you're going to get a person who wants to be that person that's going to go above and beyond. But the truth is, is that the base level of the relationship is okay at the agreed upon amounts. Like that's the negotiated transaction. So just, I just want people to know, because I don't want people to say, Ryan said he's going to exploit everybody.