Is Outsourcing Unethical?
With today’s economy, the confidence and trust in our business and government leaders have Americans putting their money under their mattresses. The “microwave-generation” mentality has Washington scrambling, putting pressure on companies to find ways to increase their profitability to appease shareholders, as power-hungry politicians manipulate to keep their jobs in the next term.
The outsourcing of cheap labor to foreign countries is one example of the strategies employed by U. S. companies seeking to survive or to increase profits. In particular these days in the outsourcing of customer service departments and manufacturing. Not that outsourcing is solely a product of an unhealthy economy.Even during times when the economy is booming, cheap labor has been used, supposedly out of greed or the need to fill jobs that Americans are unwilling perform.
Do you believe it is ethical for U. S. companies to outsource cheap labor to foreign countries, while unemployment is at 9.4% nationally and rising? In addition, do you believe such practices will shoe up customer confidence? Is this an issue of nationalism versus globalism? What are the implications of “free trade” on this issue?
[Unemployment percentage resources from The Bureau of Labor Statistics www.bls.gov]
This post was prepared by James Scott.
I don’t believe that outsourcing is inherently unethical, but I do think that there are better options available to us than this. If we were to seriously consider a reformation of our labor unions we might be able to hold a candle to the rest of the world. I see no reason why a man with a high school education on an assembly line earns more than some of our teachers. And we wonder why the jobs are going overseas. I would say that there is an issue with the way that Americans view value now. Value used to be considered ‘getting a good product for a good price’, and has morphed into ‘getting the cheapest product available.’ Until that mind-set changes, we’ll have to outsource because demand is pushing us that way.
You made a couple of good points. I don’t know much about the history or inner workings of labor unions, but recently it seems that they are doing more harm than good in some cases. This has alot to do with all of the media discussion of the negative effects that the long term agreements with labor unions were having on auto companies (particularly GM). Not only do they drive the cost of domestic labor up, they also have some crazy insurance and benefit agreements that can really bleed a company dry. It worked well in the past when most US workers worked for US companies inside the US for their entire lives and there was little foreign involvement, but it looks like a union is becoming less and less practical as resources become available overseas.
I also agree with your comment on the perception of value. When it comes to money, nobody seems to care about what is fair or what makes sense in a big picture scenario. Most individuals only care about themselves in the short term.
The concept of value is inherently relevant to our current economic situation. As you’ve pointed out value traditionally meant good quality at a fair price. The focus was on quality primarily and profit secondarily. It would seem as though recently the focus has been on profit, resulting in products hitting the marker that provide little if any real value.
Demand may be pushing us that way, but does that serve justice to people who are paying American taxes and paying American dollars to compete with people earning a lower or a less powerful currency? Another question is that just because demand is pushing us that way and just because it is the right thing to do for the company, is it ethical? Those are two different things to be honest. Some things are the right yet unethical.
This is not my official comment on the subject but just a short thought. Think about the jobs being outsourced, all types. An example is outsourcing to accountants abroad during tax season. Do you really feel safe with your information being swapped around the world. It is hard enough to trust people within your own country to be ethical and protect your personal information, especially with identity theft being one if not the biggest crime taking place at this time. But having your personal information in countries where it is much more costly to try and effectively police. I have been a victim of identity theft four times and I like to assume it is only taking place by small time crooks within the US, but who really knows. None of my fraudulent charges have amounted to enough for the banks and/or creditors to pursue the source of the crime.
I don’t trust anyone with my personal information. If I couldn’t meet my accountant face to face I would find another one……..I don’t think the majority of people would be willing to conduct business with an individual they hadn’t met. Personal service is different fromm purchasing a product. I cancelled my sattelite radio, because I had a problem and could not communicate with their customer service rep. too much aggrivation for me to deal with.
I agree with you Scott, that is a pro for keeping the jobs in the country. Like I said in my original debate, there are ups and downs for both. One isn’t the right choice. I had never thought about this but it definitely makes sense when it comes to the tax example. I mean just because fraud can happen from it, it doesn’t make it unethical, but it is a problem that can arise from outsourcing. Do you think if these fraud activities didn’t happen to you 4 times, you would still think the same way?
It may not be unethical, but it is not right in my opinion. Personal information, in the wrong hands, can destroy a period of your life. It takes a lot of paperwork and time away from other pursuits to make sure you get back all or most of what was stolen with your identity. If on the other hand, you knowingly make a purchase online or by phone from another country, well, that’s your gamble. But something as simple as going to H and R Block (not that they send your info overseas–just an example) that kind of practice should not be allowed without personal signature consent from the customer.
I believe that it is completely ethical to outsource labor to cheaper countries. As long as working conditions and wages meet the countries requirements then any business has the right to relocate somewhere cheaper. If the business did not then it may become unprofitable and then not only will the manufacturing and customer service jobs be lost but all jobs of the company would be lost. The people who believe that it is an issue of nationalism versus globalism do not realize that it is purely an economic decision. Businesses have to make decisions that will keep them in competition. The more worth a company has then the more the company can grow which will lead to more jobs not only in America but all over the world. We have some companies from overseas that are setting up manufacturing plants here in America, this is because it is the cheapest way for the company to remain competitive in America. If the company could manufacture overseas and ship here to America cheaper than it could produce in America then it would choose that option.
Again, I completely agree with you, but this is the situation of right vs. ethical. It IS the right thing to do for a business to stay in competition, yet is it ethical? We talked about this in class in depth, and came to a conclusion that those are two different things. It is completely right for a company to do what is best for them, I would too, but there are strong points that hint unethical behavior for other Americans (if we’re talking about this country) that I presented in my original debate.
I believe that staying competitive is the right and the correct thing to do. Yes that practice is ethical. How your company accomplishes that goal is whether your company is ethical or not. It is up to the managers to filter through the options and choose an ethical way to outsource.
Sam I don’t agree with the fact that you say it is ethical as long as the working conditions and wages meet the countries requirements. The problem is some countries don’t have strict labor laws or environmental laws. That’s the reason people out source because they can get the work done in less than human conditions. I wish every country had better working standards but they don’t
Outsourcing is a fundamental philosophy of economics. The idea is to save money for the company and pass on the savings to the consumer. A product at a lower cost will create a greater demand on the demand-supply curve in economics. Outsourcing also provides the company a way to compete with or surpass the competition through savings on labor costs. It provides jobs to the company or individuals contracted to do the outsourcing. Jobs are created, but just not locally. So in an ideal economic setting, outsourcing provides jobs and creates lower costs. Outsourcing is good for economics, but how is for ethics?
In a country or area that is struggling with unemployment, is outsourcing ethical? Does the company need to keep jobs locally? There are many variables that can influence the decision of these questions, but the main question to ask is, “Can the company survive or even prosper without outsourcing?” If the answer is no, then the markets are so competitive that outsourcing is the only option to keep even the current employees that would not be effected by outsourcing working. If the answer is yes, then the company needs to take the ethical path and determine how many people they can hire to provide jobs to the local community. The community will view the company as a caring company and some people will even pay a premium for there product for keeping jobs locally. In the long run, a company’s image can help it through tough times especially if the company is willing to help the people. So, I believe that a company should look at the local economical conditions and determine what would work best for the company and the community, together. The company shouldn’t be looking at just the bottom dollar.
Good comments. I like that you keep in mind the local thoughts and feelings on the subject.
Its a good topic to discuss on in the times when economic turbulence has hit almost every Nation on the globe.Before we decide if Outsourcing is ethical or not, its is very important that we clearly understand the perspective in which outsourcing should be viewed & understood. The reasons for outsourcing are many, Capitalism, Business, Globilisation,One Economy model for the world, made it necessary for nations to exchange resources and talent and A decade ago, all these factors helped US become a super power in terms of economy.
I have an ardent opinion that, Outsourcing is ethical. Being a capitalist, i completely support the idea of creating workforce, else where on the globe at a lower cost and connect that workforce to its respective job somewhere else. It is an amazing process. There is nothing unethical about it. Its a business idea, by which nations & their workforce come together for an act. The idea that, the economic downturn can be handled by going against outsourcing is a unhealthy outlook on an already unhealthy economic times.The reasons for the economic downturn are more deeper than just outsourcing.
The way out of this economic downturn is but, Globalization and outsourcing is just a byproduct of that process.But, i would add that, Whatever it is, it must be done withing the LEGAL framework that is mutually acceptable, because It is the illegal business forms that make it look the other way. but, in fact, Outsourcing is always an ethical process, which is invaluable.
Outsourcing IS a product of the current economy. We are in troubled economic times, yet that doesn’t make something ethical or unethical. Regardless of the situation, crime is always unethical. That is just one example differenciating the two. After reading a few arguements, I do think outsourcing in NOT unethical, but it is still hard to believe IT IS ethical. That may sound a bit weird, but that is how I feel. I’m going to read what other people have to say as well, but does anyone have any suggestions/examples that makes outsourcing legal & ethical & right thing to do?
Outsourcing can help create new jobs offering a talented workforce at a fraction of the price. Developing economies are exploiting each others markets, economies and labor forces.
agreed
Something that I think you touched on, to a degree, is the importance of the environment in which the economy exists, and the way that the economy is characterized and defined. The U.S. economy is capitalistic and inherently competitive. Since we are now existing within a more global marketplace, the competitors for companies and interests here has grown dramatically. It makes sense, then, that business strategies and realms of interest grow as well, beyond our country’s borders.
I don’t believe that outsourcing is unethical. The reason that U.S. companies outsource is because it makes economic sense. There is a cost savings to outsource either being physically closer to the raw materials that is used in the certain product or that the labor rates are lower. The rates may to low to American standards but in the other countries the people are happy to have a steady job. However, if the country does not have a minimum hourly wage then the company should research to find a wage that would be comparable to the current U.S. minimum wage.
I don’t know for sure with all countries, but I believe that some companies are allowed to negotiate the wage within that country because they do not have a minimum wage law. Yes, it would seem that US companies that outsource to these type of countries should seek to provide wages comparable to that of the US…but I bet most negotiated wages are not, thus defeating the purpose of outsourcing if the jobs outsourced are of minimum wage standards to begin with.
John I agree on the fact that what Americans consider a good rate is different in other countries. For example when I was in Cancun on my honeymoon, the maids at the hotel were very happy and appeared to be content with their job. In America people don’t look at being a maid as an ideal job, but over their it is a really good job. The staff was happy to have Americans come because it gave them work.