Ethics of Outsourcing

Ethics of Outsourcing

What is ethics and how is it related to today’s world of business? Merriam-Webster’s Online Dictionary defines ethics as “the discipline dealing with what is good and bad with moral duty and obligation.” In today’s globalized society, it seems as though monetary profits are valued higher than making ethical decisions. Outsourcing has become an unavoidable result of globalization. From General Motors to IBM, we can experience the effect of outsourcing in many different sectors of our lives. Outsourcing has brought many economic advantages, and it has greatly enhanced productivity and growth of industries across countries. However, despite such benefits, outsourcing also generated a variety of social, political, economic and cultural issues for the outsourcing receivers and the outsourcing providers. The consequences of outsourcing experienced in America are considered to be unethical as it damages local labor market, and offers hardly any practical solution to address the unemployment issues.

Outsourcing raises an ethical issue, as so many blue collar workers, as well as well-educated white collar workers in the US have lost their jobs due to outsourcing. Especially, many who work in the field of technologically advanced services and software were exchanged for the workers in poorer countries for cheaper labor costs. Many of the multinational companies moved their manufacturing sectors to Mexico, China, or India. According to the article, “The Battle Over Outsourcing” (2004) by Bob Davis, et al. illustrates that many of the software programming work has been relocated to India over the years. Offshore outsourcing started with low-income jobs such as call center operators, and spread to high-paid computer system engineers (Davis, 2004). Approximately 200,000 service jobs have been shipped abroad to the developing countries during the early years of the twenty first century (Davis, 2004). Among many of the multi-national corporations, IBM has been one of the pioneers of outsourcing in the IT industry. William M. Bulkeley (2004) explains in the article “New IBM Jobs Can Mean Fewer Jobs Elsewhere,” that IBM purchased Daksh eService in 2004 to absorb 6,000 Daksh employees to expand IBM’s India-based workforce. Truthfully speaking, the primary goal of most multi-national corporations is to acquire financial benefit. For that matter, thousands of US workers replaced to cheaper laborers in China or India help the outsourcers to reduce the manufacturing costs. However, the ethical issue springs from the fact that not everybody benefits from the offshore outsourcing. The estimated 200,000 service jobs shipped abroad means the extensive number of US workers who lost their livelihood. Although outsourcing has become a fast developed trend around the world, it became a threat to American workers.

However, in business, the ethical issues are often neglected to create economic gains. After all, international business has opened huge markets for the United States products and has provided customers with new and cheaper goods. Bulkeley (2004) argues that IBM engrosses about $15 billion a year from outsourcing, which is 17% of the total revenue. With the advancement in shipping and telecommunications, it is easier than ever before to sell products and services across the world. If businesses and customers are willing to accept the international market, then we must accept the increased competition due to the outsourcing. United States corporations now have to compete against businesses in regions where production as well as labor costs vary greatly. In a long run, it would be foolish not to use the cheaper resources, even if it means cutting down of many US employees. In addition, outsourcing has the benefit of providing jobs to people in developing countries like China and India where there are so many human resources but lack any systematical or technological resources. Therefore, outsourcing will undoubtedly remain to be a natural part of business in the twenty first century. Rather than worrying about the number of US employees to lose their jobs, the government must implement effective solution to address these repercussions.

Since outsourcing is unavoidable in today’s economy, there must be governmental programs to serve as a practical solution to re-train and re-employ displaced workers. U.S. Department of Labor (2007) devised the Worker Adjustment and Retraining Notification Act (WARN) for the employees who have lost their jobs from off-shoring. The newly revised law is to protect the employees and their families from the program known as, “Rapid Response.” “Rapid Response (2007)” services provide health bene fits and pensions, training programs, as well as unemployment insurance. “Rapid Response” services also connect the workers to re-employment services, which introduce them