Ethics_of_Outsourcing

Global Business and Ethics Corporations have a legitimate interest in self-preservation and find themselves in a unique position of being able to maintain a profit while meeting demands of offering competitive prices to customers. In order to increase profits and reduce costs, corporations are contracting with other companies or people to perform a particular function, otherwise know as outsourcing. In recent business history, companies have utilized the act of outsourcing to produce a product or accomplish a task in a more efficient, cost-effective manor. One of the most common ways we see companies reducing overhead cost and boosting profits is making the decision to begin global marketing and production. The act of global business creates an ethical issue for organizations to consider. Being able to move business production over seas allows companies to produce their product at a lower cost, but creates a local downsizing epidemic. Organizations looks at the benefits of outsourcing form a bottom line and profit standpoint. As more companies are opting to move business operations over seas, local communities experiencing larger unemployment rates. Displaced employees are plagued by loss of retirement, health insurance and some witness a reduction in salary. A friend of mine works for a large manufacturing company that until recently employed thousands of people in the US with good paying jobs. They are affiliated with car manufacturing- supplying parts. My friends’ job is to train other employees in how to use the machines used to manufacture the car parts. The company went bankrupt. The new owners decided to shift most of their production and jobs to China and import the parts back to the US to supply the American market. The company removed most of their high tech manufacturing equipment from the US plants they had shut down, shipped it to china, and installed it in factories there. My friend's dilemma was that if he wanted to keep his job as a trainer, he would have to start training the Chinese in how to use the equipment that his company had shipped over to China. He could either do that, or join his friends in the unemployment lines. Outsourcing is widely accepted in our culture because outsourcing has a tendency to improve the economy and raise the standard of living for the company producing the products at a lower overall cost. Foreign counties are eager to accept contracts for exports, export create an opportunity increase their economy. The standard of living being less, the new business and money affords a higher standard of living that otherwise, not afforded to the community. The challenges of outsourcing become prevalent when the work is out sourced over seas and the work is being done in a different company, since different countries mans involving new languages, time zones and cultural aspects to consider. Organizations and companies in other countries and cultures are held to a less stringent standard. Lower cost are in part due to lower minimum wage standards, more lenient labor laws, elimination of health benefits and lower personal work environment requirements. Local organizations see lower costs as an economic benefit of outsourcing. Organizations base outsourcing decisions in terms of profit and loss to the company. Ethically, outsourcing decisions need to be viewed and measured in terms of the loss to the local economy. Moving business creates a local gap in employment. The effects of Outsourcing on the American economy are evident in all areas of business. Customer service representative jobs, are a common example of companies cutting cost and outsourcing particular functions. Generally, those positions are not a core function that has to be managed in house. The positions are outsourced to another country where the functions can be handled effectively, but with a lower cost, higher profit scenario for the organization. Displaced customer service representatives employees are finding it hard to regain employment at a salary comparable to the obligations they must meet. While Customer service and office skill sets are an example of outsourcing on a larger scale, the action may dent the local economy, but not eliminate employment and opportunities. Many cities and town across the country are known for producing a particular product. For instance, in the state of Michigan Detroit is know for manufacturing Ford cars and Battle Creek depends on local cereal factories, Kellogg’s and Post. In these instances, the cities depend on production to provide jobs, generate income, and fuel the local economy. In recent years, most of these jobs have disappeared due to outsourcing. The factories either, scale back leaving a skeleton crew to manage essential functions locally and outsource all other functions overseas, or outsource all functions, produce the product at a much lower cost and shut down local operations completely. For many, these are the only jobs they have ever had, the only skills they know. Once these specialized jobs are not available, displaced employees are left with little or no employment options. In the wake of outsourcing, smaller communities are dealing with an increasingly large unemployable work force. Without new life in terms of money, and revenue generated into local economy, and due to the large demand on unemployment benefits, smaller communities are not able to recover. If a company/business is able to survive, while taking away from its own people, yes the American company still survives, but at what cost to the American people. Hard-working Americans lose their jobs, while immigrants or minors make money to support themselves and the corporation still survives. Successful business requires companies to turn a profit, and all employees have an underlying obligation to protect the companies’ best interest when making decisions. Those decisions often made regarding what best suites the organization and less about how it affects the people the company employs. Without considering the effect, outsourcing will have on the people and economy directly affected. Ethical business decisions are often the hardest to make because it requires the businesses to consider what would be in the best interest for all parties involved. References Breslin, D. (1999). What are the financial benefits of Outsourcing' Retrieved fromhttp://www.dau.mil/search/gsaresults.aspx'k=+pubs%7c%7cpm%7c%7cpmpdf99%7c%7cbreslind.pdf Sourcingmag.com (2003). Outsourcing-What is Outsourcing. Retrieved from http://www.sourcingmag.com/content/what_is_outsourcing.asp