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Should a company outsource? Is the company not causing loss of employment to the local community in order to save costs. These are some of the questions that are often posed by the critics of outsourcing. It is currently widely accepted that indeed outsourcing is not just a cheap operation tactic but rather a strategic business decision (Kehal, 2006). However, it is of the essence to understand that ethics and outsourcing currently continue to be burning issues for many businesses that want to make the move to outsourcing. Ethical principles are in many cases combined with ethical frameworks that provide guidance and support for ethical decision-making (Hamington, 2011). The ethical frameworks are important as they highlight the important aspects of a situation that helps it to be evaluated and highlighted. It is key to note that making ethical decisions is not a separate activity especially when such a decision can have an influence on others.
The first framework to analyze the situation is the maximizing the amount of good in the world. This framework tries to balance the benefits of an action against both the risks and the costs. It is important as it promotes the common good and helps each and every person have a share of the benefits that occur in the society. In fact, there are those that describe this framework as ‘the greatest happiness for the greatest number (Gini & Marcoux, 2012). It can sometimes be used to override the rights of individuals in the society in order to bring happiness to the wider community. According to this framework, outsourcing is plainly unethical as it transfers benefits from the society in favor of decreased cost (Hamington, 2011).
There is not great happiness for the greatest number because most people remain unemployed as the business takes employment elsewhere. This hurts the society as persons feel like the business has abandoned them for increased profits and that the action is unethical.
Making decisions that best suits oneself is the other ethical framework. This ethical framework often considers that people and companies should make their decisions that are informed of self-interest (Treviño, 2003). This framework is a big supporter of respecting the autonomy of both businesses and people when it comes to decision-making abilities. It allows people to make reasoned as well as informed choices. According to this framework, there is nothing wrong with outsourcing. This is because the business has made an independent decision that is centered towards enriching itself. The business according to this framework has not hurt anybody as they have not done something wrong to the society but rather they have outsourced employment elsewhere in order to increase their profits. The sole intention of the business is to make a profit and consequently by, not outsourcing it will not be in tandem with its main objective.
The biblical principles state clearly that there is a need honesty in business and reasonable profits. For this reason, outsourcing can be said to be wrong in regards to this framework (Harris, 2004). This is because the firm is often seen as greedy and wanting to accumulate more profit at the expense of its current employees. This is because the company will automatically have to lay off several employees in the company in order to allow the corporation to outsource. This is in contradiction with the Bible principles of honesty and reasonable profits.
Outsourcing is unethical. This is because the society does not stand to benefit as employment is taken into offshore countries in order for the firm to make more profit. There has also been an issue with the quality of work that is done when it comes to outsourcing with many people arguing that the work done is often below par. Further, outsourcing can also be said to show the greed of the companies, they often try to cut down costs at the cost of hiring capable people in the local community (Halbert, 2012). They, therefore, forfeit their corporate social responsibility of the society by, not re-investing in the society. Consequently, it can be argued that indeed outsourcing is unethical.
The ethical frameworks are important when it comes to making a decision as they help in the determination of standards of behavior that can be considered as ethical. Further, the making of good decisions often requires trained sensitivity to ethical issues and the use of ethical frameworks provides a practiced method of exploration of the ethical aspects of a decision and the weighing of different considerations that often have an impact on the course of progress.
For this reason, the ethical frameworks are important as they enable one to come to a reasonable conclusion. It is critical to realize that when an ethical framework is regularly practiced, the method in many cases becomes so familiar that persons often work through it automatically without necessarily consulting the specific steps. The ethical framework should also be informed with a careful exploration of the problem and aided by different insight and different perspectives of others. It is through this way that good ethical choices can be made in complex situations such as outsourcing.
Hamington, M., & Sander-Staudt, M. (2011). Applying care ethics to business. Dordrecht: Springer.
Harris, R. A. (2004). The integration of faith and learning: A worldview approach. Eugene, OR: Cascade Books.
Gini, A., & Marcoux, A. M. (2012). The ethics of business: A concise introduction. Lanham, Md: Rowman & Littlefield Publishers.
Treviño, L. K., & Weaver, G. R. (2003). Managing ethics in business organizations: Social scientific perspectives. Stanford, Calif: Stanford University Press.
Halbert, T., & Ingulli, E. (2012). Law & ethics in the business environment. Mason, OH: South-Western Cengage Learning.
Kehal, H. S., & Singh, V. P. (2006). Outsourcing and offshoring in the 21st century: A socio-economic perspective. Hershey, Pa: Idea Group Pub.
The article attempts to draw the line between Ethics and Business. It identifies the correlation between these two aspects and looks at the ethical implications of some business decisions. It highlights the fundamental principles of two ethical frameworks and examines the different scenarios under which these frameworks can or cannot be applied.
Evaluate the ethicality of outsourcing manufacturing work from your local community to a developing country.
From a business perspective, outsourcing is a strategy that is used to reduce operating cost and increase productivity. It seeks to let the business concentrate mainly on the production process and leave the side processes to other players. Most businesses do this purely to make more money (Sternberg, 1994). Not much ethical consideration goes in this. However, outsourcing to a developing country introduces ethical issues. How? In his book Meeting the Ethical Challenges of Leadership, Craig Johnson discusses the different ethical frameworks under which most decisions are made. In the case of outsourcing manufacturing to a developing country, the concern is the greater good. For an organization that does business along a utilitarian framework, the consideration is that the greater majority stands to gain. In this case, for example, the developing country uses the opportunity to create employment for its citizens and ultimately improve their living standards. For the organization, it marks reduced cost of operations and increased productivity. This is in tandem with the characteristic features of utilitarianism (Fieser, 2012). For this reason, the utilitarian ethical perspective justifies its application because, above all else, it advocates for the greater good to the greatest number of people. The question that would follow such ethical decisions is if in outsourcing work to a developing country, there are rules that an organization is violating? The guidelines of such outsourcing procedures should be clear so as to eliminate conflicts of interests. For example, is my local community outsourcing yet within the community exists people or groups of organizations that can adequately undertake manufacturing work? If the answer were to be yes, then the ethical foundation of such a decision would be questioned under the same framework (Johnson, 2015). Would it be ethically right to outsource when there is sufficient manpower and capacity from the local community to do the same manufacturing work? In this sense, such a move would clearly create conflict of interests. Let’s discuss this conflict of interest from a communitarian framework.
Communitarianism simply promotes the common good while imposing a certain level of responsibility on the individual (Jalil, Kamil, & Rahman, 2014). It emphasizes the integral nature of a healthy community in its set up and prescribes that a healthy community, above all, cares and protects its interests and promotes community maintenance. Therefore, under this framework, are the interests of the community protected by outsourcing manufacturing work to developing country. The answer is a resounding no. It would seem that, in outsourcing work outside the community, the principle of altruism which emphasizes love for the neighbor would have been violated (Geisler & Feinberg, 1980). In the normal sense of the word, your neighbor is the nearest person who resides next to you. So according to altruism, it would not be ethical to outsource work when within the community, there are people who could do the work equally well. The dichotomy between these two frameworks creates conflicting interests as one seeks to do good to the greatest number of people while the other wants what is right to be done at all costs. The question then would be, is it right to promote the interests of another country at the expense of the local community?
Alternatively, the dilemma of deciding whether the decision to outsource is ethical can be analyzed from Craig Johnson’s book Meeting the Ethical Challenges of Leadership: Casting Light or Shadow in which he discusses the ethical issues that face most leadership decisions. He advances for the use of logic and intellectual accounting in making key organizational decisions that have the capacity to impact a big population. Blanket condemnation of outsourcing as bad cannot hold unless viewed through the prism of the interest of the local community viz a vis that of the developing country. Practically, it would not be logical to outsource manufacturing work when rates of unemployment within the local community are not flattering. Logic dictates that in attempting to solve a problem, we analyze its cause and having identified it, employ the most practical solutions available. Now, in this case, the problem is to identify a manufacturing company that can do work for the organization, hypothetically. The two options available are outsourcing, which in a business perspective makes sense because it would be cheaper, and using local labor. I wouldn’t want to hypothesize a lot on why the organization outsourcing work would be cheap, since not much information was offered as reasons why the local community was overlooked. However, if the reason would be to reduce costs (as earlier hypothesized) then the logical decision would be to outsource.
This offers the most sanitized approach to handling ethical issues. However, as Jerry White instructs, the practicality of some of its views might not be in resonance with the modern world. For example, would a CEO blurt it out to his employees that the company was laying some workers because it had decided to outsource some of its manufacturing work to a developing country because it was cheaper? It’s highly doubtable. The CEO would be hard-pressed to explain why the company was prioritizing the affairs of a developing country instead of their own.
It making decisions that have ethical connotations to them, it seems rational to base the decision-making process on more than just ethics. Granted, ethics does have a role to play, but clearly, it cannot be the overriding priority. Based on ethics alone, there is bound to be a lot of conflict of interest as has been argued in the article. The middle ground, to me, would be to weigh the pros and cons of outsourcing, putting every ethical aspect into perspective, and making an informed decision based on the findings.
Fieser, J. (2012). THE CATEGORICAL IMPERATIVE. Moral Philosophy through the Ages. Retrieved from www.utm.edu/staff/jfieser/class/300
Geisler, N., & Feinberg, P. (1980). Introduction to philosophy: A Christian perspective. Grand Rapids: Baker Books.
Jalil, M. A., Kamil, N. M., & Rahman, M. K. (2014). THE GREATEST GOOD FOR THE GREATEST NUMBER OF PEOPLE:. Journal of Sciences and Humanities, 15-25.
Johnson, C. E. (2015). Meeting the Ethical Challenges of Leadership: Casting Light or Shadow. California: Thousand Oaks.
Rae, S. B., & Wong, K. L. (1996). Beyond integrity: A Judeo-Christian approach to business ethics. Grand Rapids, MI: Zondervan Publishing Co.
Sternberg, E. (1994). Profit Maximization: The Ethical Mandate of Business. Journal of Business Ethics, 293-300. Retrieved from https://philpapers.org
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