Ethics of Outsourcing
In this paper, I will discuss the ethics of outsourcing manufacturing from my local community to a developing country. I will view this debate through three different frameworks: Utilitarianism, Pragmatism, and White’s biblical principles. I will also conclude my final view on outsourcing and the benefits of using a framework for making ethical decisions.
Utilitarianism
Outsourcing has been viewed as a strategic decision rather than as an ethical dilemma. Robertson, Lamin & Livanis state that there are ethical considerations that are largely overlooked in evaluations of outsourcing decisions (2010, pg. 185). When reviewing an ethical dilemma, there must be a framework for which a decision can be made. “Utilitarianism
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is based on the premise that ethical choices should be based on their consequences” (Johnson, 2011, pg. 157). The first step using the utilitarianism framework is to identify the problem (Johnson, 2011, pg. 157). There are several ethical problems with outsourcing manufacturing including job transition and worker benefits. The largest apparent dilemma is that you fire a worker in your community and hire a new worker and support a developing community. Johnson states that the second step is to identify all stakeholders (2011, pg. 157). The affected stakeholders are the organization, current employees and families, the current community, potential new employees and families, and the new community. Johnson identifies the third step of utilitarianism is to determine positive and negative consequences for all stakeholders (2011, pg.
157). In most cases, the organization will have positive consequences since they are the ones considering the outsourcing. Mintz says that benefits an organization gets from outsourcing include increased productivity and allows current management to focus on clients (2004, pg. 6-7). The current employees and families will have experience job loss. The current community will potentially lose tax income, increase unemployment, and families will leave the community. The potentially new employees and families will have new jobs that will provide wages and benefits. The new community will get increased tax revenue and population …show more content…
growth. The last step of Johnson’s plan is the sum of the positive and negative consequences (2011, pg. 157). Outsourcing manufacturing appears to come out on top while considering all stakeholders. The employees hypothetically break even because you lose one job and gain another job. The same can be said about the communities, that one gets hurt and the other gains equally. Cameroon and Zimmerman state that “some groups win and some groups lose” (2010, pg. 328). If the organization has positive consequences then they should seek outsourcing opportunities under the utilitarianism framework because it benefits more people than it hurts. Collins states that utilitarians tend to reason by asking “I strongly believe that X is the best decision, because it benefits the greatest number of people” (2009, pg. 87). Johnson warns that “exceptions exist in nearly every universal law” and we must be careful when we apply this to individual cases (2011, pg. 161). There are many more variables when looking at specific cases; this is just a general study of outsourcing. Pragmatism Johnson defines pragmatism as good ethical choices that emerge through the use of inquiry (2011, pg. 165). Pragmatism is based in the idea that the scientific method can be used to solve ethical dilemmas (Johnson, 2011, pg. 165). Bucklin presented that there are five steps in business pragmatism including inquiry, discussion, decision, justification and, evaluation (1998). During inquiry we the same stakeholders as before including the organization, current and future employees, and the two communities. Pragmatism calls us to look deeper at the stakeholders and identify measurable comparisons between the employees and communities. For instance, a current employee and new employee might not receive equal wages relative to their community. Paying a current employee at double the community’s poverty line versus paying a future employee at the community’s poverty line shows that they are not equal as utilitarianism would suggest. Another instance might be that the organization will not benefit the future community as much as the current community because of lower property taxes. Discussion calls for us to list the potential actions that can be taken by the organization and consider the ethical principles of each potential actions (Bucklin, 1998). In this broad scenario there are two options, outsource or do not outsource. Without knowing more details about where, when, and what the organization is considering outsourcing pragmatism becomes difficult to apply to this case. We can not measure any of the variables between the two options without having the detail on the case. All we know is that current employees will move or be fired, and new employees in a new location will be hired to complete the manufacturing. Paul and Wooster discuss the merits of outsourcing manufacturing by large U.S. firms and conclude that not outsourcing in some industries, organizations will not be able to survive long term (2010, pgs. 313-316). This theory presents an interesting twist in the ethics of outsourcing because a new job in a new country is better than no job anywhere. Since Paul and Wooster only studied large U.S. companies and we are discussing a broader scenario it does not directly apply but should be addressed when looking at specific cases. The last three steps of decision, justification, and evaluation also can not be completed because we are unable to identify any of the measurable variables. Therefore, pragmatism leaves us knowing that outsourcing manufacturing will ethically affect an organization positively, negatively, or will not affect the organization. White’s Biblical Principals White’s biblical principles are ethical guidelines for conducting business activities and when applied to outsourcing are very useful (1978). White calls us to look at ethical challenges from five different points of view, each with roots in the Bible (1978). White’s first principle is just weight, which is this idea that the customer is getting what the paid for (1978). Just weight applies to outsourcing because there is a stigma that outsourcing leads to cheaper products or less educated employees. This stigma is not fact, and lots of organizations outsource manufacturing without cutting corners. The second principle is total honesty that in most cases is upheld during outsourcing. White says that “although you will frequently fail, our intent must be total honesty with our employer, our co-worker, our employees, and our customers” (1978). Most cases of outsourcing do so with total honesty although there are temptations to lie about where products are manufactured. Being a servant is White’s third principle and is difficult to apply to outsourcing (1978).
To apply the idea of being a servant, we must look at the stakeholders in the case. The stakeholders are the organization, current employees, current community, future employees, and future community. There is no option with outsourcing where you can be a servant to all parties because to serve one hurts another.
The fourth principal is personal responsibility, which is that an organization takes responsibility for its actions (1978). Personal responsibility applies to outsourcing because the organization must take responsibility for the negative consequences. Dolgui and Proth state that some of the negative consequences can include problems of quality of products, delivery problems, and risk of fraud. (2013, pg. 6776).
All of these principles apply but the most important one in being a servant. It is not servant like to outsource because it is not loving your neighbors as yourself (Mark 12:31, New International Version). This evidence says that outsourcing is unethical and should not be done. Simply put you should not hurt your neighbors even if it helps others.
Final
Position After looking at outsourcing of manufacturing from three different frameworks, there is no clear answer to “Is outsourcing manufacturing ethical”. One framework says yes, one says no, and one is a wash without specific measurable data. The goal of Christians is much higher than being ethical, we are called to go above and beyond ethical. “A good name is more desirable than great riches; to be esteemed is better than silver of gold” (Proverbs 22:1, New International Version). There are examples where outsourcing manufacturing can be ethical. These examples dig deeper into an organizations goals than just is outsourcing ethical. There are also cases where not outsourcing could be unethical, specifically when organizations will be shut down. Are an organizations goals to make the most profit, or are they to support their employees, families, and community. An organization that looks at workers just as cogs and interchanges cogs freely to grow profits is not ethical. A biblically ethical organization serves all stakeholders before they make decisions based on profit. All this being said, and without further details, I would advise against outsourcing if ethics is of main concern. Usefulness of Predetermined Ethical Framework Collins warns to not select one framework while ignoring the others, that each framework offers unique insights (2009, pg. 156). This perspective is the benefit and the drawback of predetermined ethical framework. Predetermined framework has benefits that include, faster and easier decision-making and reduction of stress in decision making. Frameworks make decision making faster and easier because it eliminates lots of outside pressures and helps to focus on the issues at hand. Frameworks also reduces the stress of decision making by taking away the blame from one individual or group. Once the framework is in place, it will take the blame for the decisions. The drawbacks of frameworks are that there is no perfect framework that applies to all situations and all people. Using a framework based on the Bible will not always work for a Muslim, a framework that uses rational and logic fails when individuals with different experiences can not agree.
Globalisation is a growing phenomenon that is the result of various developments in the global environment, each of which merits an individual analysis of its social impacts. For the purpose of this analysis, the focus will be placed upon arguably its most controversial aspect, offshore outsourcing. Offshore outsourcing, or offshoring, is becoming an increasingly common business practice as a result of a combination of the recent technological advancements in the areas of transportation and communication, and the increased competitiveness of the business world. From the perspective of firms, tapping into cheap labor from less developed countries is a very logical business decision to reduce costs and maximize profits. This has not only motivated businesses to engage in offshoring, it has sometimes been critical to their survival in fiercely competitive environments. Before making judgments regarding the righteousness of offshoring from different perspectives, its impact on stakeholders must first be evaluated.
... bring the anticipated benefits, and in some instances can be a risky proposition (Chin, 2003). Villcocks and Lacity (1998) stated that among the possible disadvantages are the potential loss of control over critical functions such as timeliness and quality of service, difficulty in monitoring vendor performance, difficulty in explaining the business needs to vendors, the potential for loss of company secrets as well as intellectual property, and the high cost of outsourcing contracts. Schools also risk developing a dependency on outside agencies, lowering employee morale, loss of development skills for employees, and having to face the prospect of managing relationships that go wrong (Kakabadse & Kakabadse, 2000; Hayes, 2001). By outsourcing, not only do schools lose some of the personal touch in servicing their employees but their clients as well (Rombel, 2002).
Recently outsourcing has been in the news, especially during political election years. It seems to be a phenomenon that is causing much concern among the population. But exactly how is outsourcing effecting both workers and businesses? And is it as big of a problem as politicians describe?
It is difficult to determine whether offshore outsourcing has a positive or negative effect on the U.S. economy. It may actually depend on which perspective you take on it. As stated by Hira and Hira (2005), outsourcing in the services sector is a major shift in how the economy operates and will have serious impacts, both positive and negative, on the trajectory of economic growth, distribution of income and the workforce. However, there are many factors to take into account when considering globalization. Companies must familiarize themselves with the various rules and regulations of global business, tariffs, trade agreements and barriers, and decide how to go global; global consistency or local adaptation. All of these issues affect a company’s plan to move forward with offshore outsourcing.
Since the concept of outsourcing was introduced it has been a subject of debate between politicians and citizens of the United States. Remarkably, it was the United States who supported outsourcing and now it is the United States that feels its economic progress is being threatened by outsourcing. One may argue that the financial situations that existed two decades earlier are not the same as they are today, thus the change of time, business priorities of economies have also changed.
Outsourcing is a technique for companies to reassign specific responsibilities to external entities. There are several motivations for outsourcing including organizational, improvement, cost, and revenue advantages (Ghodeswar & Vaidyanathan, 2008).
With the United States’ economy in a depression and our unemployment rate skyrocketing to record highs, job-outsourcing has moved to the top of the list of controversial issues. Froma Harrop’s essay New Threat to Skilled U.S. Workers and Thomas Friedman’s essay 30 Little Turtles discuss two different viewpoints of job-outsourcing, and their effects on society. Does our government really want to cut back on job-outsourcing, and what can society do to help the issue? Friedman’s standpoint on job-outsourcing shows how it is emotionally beneficial to other countries and Harrop’s factual standpoint shows job-outsourcing regulation, however, I feel that our citizens are unaware of the opportunities and our government is eager to send the jobs overseas.
...ect on the college graduates and younger children of today. Outsourcing has made nothing but trouble for the United States with the passing of free trade agreements. It will cause a lack of jobs that will run the economy into the ground, and ruin the lives of the citizens of the United States. All of that so a business can use its faulty practices to make a higher profit. Outsourcing has consequences that will haunt the average American and their families for the rest of their existence on this planet.
In light of recent growth of domestic and foreign countries outsourcing and off shoring over seas, companies been taken advantage of the cheap labor cost for outsourcing and off shoring manufacturing. Competitive business investing in domestic and foreign manufacturing have affects every part of the business industries from design, software development, finances and logistic management, i.e., customer and sales. Nevertheless, outsourcing been praised by businesses for outcomes of cost-effectiveness, efficient, productive and strategic, but damned as malicious, because of companies’ greediness, detrimental, and brutal in the public eyes.
Kibbe, C. (2004, 07 09). Outsourcing: the good, the bad and the inevitable. New Hampshire Business Review, pp. 1A-21A.
Outsourcing has been around for many years. In this paper, I will discuss some of the history of outsourcing, the good things about outsourcing, and the bad things about outsourcing. Outsourcing is important because many companies rely on it in order to get many different products and services to their facility on time and in good shape. Outsourcing is a huge part of the business industry today. Any business can be affected by outsourcing.
Every firm has to make important decisions regarding the production process of a product. Different firms have distinctive production strategies and the main goal is to maximize efficiency as well as financial growth. One important decision that every firm needs to make is to either outsource or insource the production of a product, or parts of a product. Outsourcing and insourcing are techniques of dispersing work among alternative departments or companies for strategic reasons.
In section 2 and 3, I introduced approaches for and against outsourcing. In section 4, I compare 6 standard ethical approach regarding outsourcing. Finally section5, I summarized all the ethical views regarding outsourcing issue and concluded with my approach based on the analysis and research. I finished the paper raising other issues related data privacy and protection.
A disciplined approach to management eying leading employees, improving the management team and building the business strategy. Instead of treating each problem as a one off. They design systems and structures that make it easier to handle in the future. (Techrepublic, 2015) 2.2. Risk of exposing confidential data: When an organization outsources HR, Payroll and Recruitment services, it involves a risk if exposing confidential company information to a third-party Synchronizing the deliverables: Some of the common problem areas include stretched delivery time frames, sub-standard quality output and inappropriate categorization of responsibilities. At times it is easier to regulate these factors inside an organization rather than with an outsourced partner Hidden costs: Although outsourcing most of the times is cost-effective at times the hidden costs involved in signing a contract while signing a contract across international boundaries may pose a serious threat Lack of customer focus: An outsourced vendor may be catering to the expertise-needs of multiple company at a time. In such situations vendors may lack complete focus on your organization 's tasks. 2.3. 1.Know the
The practice of outsourcing jobs is not a new concept. People have been outsourcing jobs for decades. Some people even offshore outsource jobs. There are many opinions to offshore outsourcing based on how it influences the economy. Some people are in favor of outsourcing jobs and some people are against outsourcing jobs. People need to get educated about the great impacts that offshore outsourcing does to an economy. The global economy has started to thrive and offshore outsourcing has profited the consumers as companies want to cut costs and competition, which is why I support offshore outsourcing jobs to foreign countries.