In a world obsessed with artificial intelligence, one core value is getting lost: people. At the center of this debate is ethical outsourcing, a practice built on honesty, fairness, and human dignity. The recent Nate AI scandal shows what happens when businesses ignore that principle.
The controversy centers on Nate, a so-called AI startup that claimed its tech could automate online shopping. But behind the code were real people—many of them freelancers from the Philippines. These skilled workers were passed off as bots. What seemed like innovation was actually deception.
This article breaks down the scandal, its fallout, and why ethical outsourcing isn’t just good business. It’s necessary.
The Nate AI Scandal: What Happened?
A Mashable investigation revealed shocking details. Nate’s CEO, Albert Saniger, was charged with fraud. The FBI indictment says that the company deceived investors and customers by stating it used artificial intelligence for its services.
In truth, Nate relied on outsourced Filipino workers. These individuals manually processed online shopping requests, pretending to be bots. This deception went on for years.
Customers thought they were paying for advanced AI. In reality, they were unknowingly depending on low-paid human labor. The fake AI claims created an illusion of innovation while hiding the real effort of skilled freelancers.
This case is more than just corporate dishonesty. It’s a serious blow to ethical outsourcing. It damages trust in outsourcing models, especially those that rely on remote workers in the Global South.
Why This Matters: The Pain Behind the Pitch
When companies fake automation, they don’t just lie. They hurt people. Here’s how:
Underpayment
Freelancers in the Philippines were doing skilled work. Yet they were paid a fraction of what real AI systems cost to build and run. CEOs pocketed the profits while workers remained invisible.
Dehumanization
These workers weren’t recognized for their effort. They were turned into hidden components of a machine that didn’t exist. This strips away their identity and professional pride.
Reputation Damage
Outsourcing in countries like the Philippines plays a key role in the global economy. When companies deceive clients like Nate did, it harms the entire ecosystem. Trust is lost. Doubts grow.
Ethical Concerns
This isn’t just about money. It’s about dignity. Ethical outsourcing means treating people with respect, not as invisible labor behind a fake product.
What is Ethical Outsourcing
Ethical outsourcing means hiring external workers with fair pay, clear communication, and honest recognition of their work. It ensures companies treat people with respect and do not hide human effort behind false claims.
Clear Communication
Clients should always know whether they are interacting with AI or humans. Workers deserve to know the purpose of their tasks and how their work is being used. Clear roles and expectations prevent confusion. Transparency builds trust on all sides.
Fair Pay
Freelancers must be paid based on their skills and the local cost of living. Exploiting currency differences to save money is unethical. Rates should reflect value, not just cost-cutting goals. Fair pay leads to better work and stronger relationships.
Proper Attribution
When humans do the work, they should get the credit. Their role should not be hidden behind false automation claims. Honesty about who creates value is essential. Ethical companies recognize and promote their talent.
Respect for Work Conditions
Contracts should respect time zones, rest periods, and work-life balance. Freelancers are not machines. They need rest. Ethical outsourcing allows people to work sustainably, not around the clock.
Inclusive Growth
Outsourcing should uplift. Ethical outsourcing creates jobs, builds communities, and fosters international collaboration. It spreads opportunity beyond borders. Done right, it benefits everyone involved.
Examples of Unethical Outsourcing
Let’s break down what ethical outsourcing clearly avoids:
Mislabeling Human Labor as AI
As seen in the Nate case, pretending human work is AI is dishonest and harmful. It misleads clients and hides the real effort of skilled workers. This practice devalues human contribution. Ethical outsourcing always credits people for their work.
Exploiting Time Zones
Some companies force workers to match client time zones with no regard for sleep or well-being. That’s exploitation. Time differences should be managed with respect and balance. Ethical outsourcing allows flexible schedules that protect health and productivity.
Paying Below Local Standards
Freelancers should never earn less than minimum wage in their country. Ethical outsourcing ensures a living wage. Rates must reflect both skill and local cost of living. Anything less is unfair and unsustainable.
Ghosting and Late Payments
It’s unethical to disappear after assigning work or delay payments unfairly. Commitments must be honored. Ethical businesses pay on time and maintain clear communication. Reliability builds trust and long-term partnerships.
Using Middlemen to Avoid Accountability
Hiring via anonymous platforms or third parties can blur responsibility. This setup can hide unfair practices and block worker feedback. Ethical companies stay visible and accountable. They take full ownership of their team’s treatment and results.
How to Spot Ethical Outsourcing
It’s not always easy to know which companies practice ethical outsourcing. Here’s how to tell:
Transparent Hiring
Companies should state clearly who does the work and where they are located. Hidden teams often signal hidden problems. Ethical companies share this information upfront. Openness shows they have nothing to hide.
Fair Contracts
Good outsourcing agreements include fair pay, clear roles, and open communication. These protect both sides. A solid contract shows respect and trust. It keeps expectations clear from the start.
Team Disclosures
Ethical firms are proud of their teams. They don’t hide names or locations. They highlight their people, not just the tools. If you can’t find the humans behind the work, that’s a red flag.
Public Values
Look for companies that publish values about fair labor. Some have certifications or ethical pledges. These show commitment beyond profit. Values should be visible and put into action.
Positive Reviews
Media coverage, testimonials, and verified ratings often reflect a company’s ethics. Happy freelancers leave good feedback. If many workers speak up about fairness and respect, that’s a strong sign. Reputation matters.
Kuubiik’s Commitment to Ethical Outsourcing
Kuubiik is built on values. Our mission is to connect businesses with real talent, fairly and transparently.
We believe ethical outsourcing is not a buzzword. It is our standard.
Fair Compensation
Kuubiik pegs base pay to local cost‑of‑living indexes, then adds perks: healthcare, upskilling credits, and flexible hours. Bonuses reward impact, not presence. Such tailored care keeps staff turnover low and quality high.
Empowering Conditions
Team members choose their holidays. Stand‑up calls respect Asia/Manila mornings and London evenings. Autonomy drives creativity—another pillar of ethical outsourcing done right.
Leadership in Action
Natcho Angelo, the CEO of Kuubiik, was nominated for Entrepreneur of the Year 2023 for promoting a human-first approach in his business. See the full story on Kuubiik’s blog. Awards confirm that ethical outsourcing fuels not only social good but also business success.
A Future Built on Fairness
The Nate AI scandal is a loud warning. Clients, founders, and freelancers win when ethical outsourcing governs every contract. Check your vendors. Respect your workers. Drop the AI mask unless the code truly runs the task. Real progress lies not in buzzwords but in how we treat people.
Final Thoughts
Innovation is not about code. It’s about how we treat each other.
Ethical outsourcing creates progress that benefits everyone. It protects talent, promotes growth, and restores trust. The future of work depends on fairness.
Let’s stop the fakes. Let’s start being human again.
