Is outsourcing more beneficial than harmful?
Outsourcing refers to the aspect where services and goods are obtained from an external supplier. There are various reasons why organizations outsource. Outsourcing enables companies gain entry in to foreign markets, enhances the global marketplace competitive edge and helps reduce product production costs. After a company gains competitive edge in foreign markets, it can produce its abroad, ship them to the target market, and sell them cheaply as compared to the domestic market. Osmond and Beth (50) assert that outsourcing ensures companies save production money and that cheaper prices are available to consumers.
Usually, outsourced jobs involve a company’s non-core functions. Hardly do companies outsource for jobs that are essential and crucial to the well- being of the company. This is because companies feel more secure and comfortable when in-house employees do jobs that are extremely vital to them. According to Lacity, Rudy and Leslie (24) outsourcing is harmful to a country’s workforce. If jobs are sent overseas, this minimizes the number of jobs that the worker in the country can access. For instance, the Bureau of Labor Statistics report that manufacturing jobs have reduced by three million and more since work is moved overseas. According to Forrester Research of Cambridge, there is an estimation that the total service jobs moved from US will total to 3.4 million by the year 2015. This results to considerable concern among workers whose industries are influenced by the move. Workers are uncertain of when their positions will be shifted oversea. This leaves stressed about the possibility of losing their jobs, their ability to support their families and earn a living (Gupta and Gorindarajan, 100).
The rate of unemployment is an adequate evidence to illustrate the destructive aspects of outsourcing jobs. After workers lose their jobs, they are left with no option but take pay cuts so as to acquire reemployment. US Labor Department statistics indicate that a third of all employees who are forced to search for new jobs during an outsource downsizing in a company, settle for a 20% pay reduction (King 40).
The extent to which ethical issues influence outsourcing decisions
Globally, it is accepted that outsourcing is a cheap labor tactic as well as a tactical business decision. However, outsourcing and ethics are still burning issues for the majority of businesses who want to engage in outsourcing. Ethical issues in regard to pollution, child abuse and lack of health explored before a company decides with whom, where and where to outsource.
Responsible companies encounter child labor and inadequate health in various supply chain sections. These dilemmas are prevalent when a company is sourcing or outsourcing, or operating in a country where there is high unemployment and poverty rates, poor enforcement of domestic labor laws, where child labor is regarded a normal child development phase, absence of educational opportunities and where there is a prevalence of diseases such as malnutrition and HIV/ AIDS. For instance, southern Africa has a high HIV/ AIDS prevalence that lead many orphans. The orphans are forced to work in order to survive.
Child labor is usually more often in lower tier supply chains of MNCs, particularly those involved with home working. These include the garment industry where vast retail brands get clothing from developing countries’ factories and emerging markets for instance china, India and Bangladesh. In turn, the garment factories outsource some chores to other factories. The factories can in turn subcontract to other businesses homeworkers and units. This makes it difficult for MNCs to adequately audit supply chains. Therefore, it is imperative that a company that intends to outsource should comprehensively assess the supply chains so as to abide ethically to child abuse, pollution and disease (Amiti and Wei 2).
A company has to consider the impact of outsourcing on an employee’s child. Statistics show that child neglect starts at infancy where parents have less quality time with their children. It is therefore, imperative that a company considers the impact outsourcing will have on children. Majority of mothers are homemakers, and their notion is that taking a child to a day care center or play school engages the child better. However, the child is being denied non- formal communication (Foxman, 105). A company should not outsource a parent where there are high chances of child abuse. Moreover, a company should assess the children rights in the country they are entering.
It is imperative that a company considers the environmental rights of the country they are outsourcing in. This ensures that pollution does not result from the company’s manufacturing and marketing activities. During the recent decades, there has been a decline in the polluting industries’ share in the marketing output in the United States. At the same time, there has been a decline in trade barriers that have led to the suspicions that US has outsourced polluting industrial procedures to developing nations. Domestic manufacturing in United States is presently cleaner since trade agreements have permitted US to utilize pollution havens in developing countries to carry out it dirty work. This indicates that complying with the environmental protection guidelines in the country a company is outsourcing to is extremely vital
Amiti, M. and Wei, S. Demystifying outsourcing. 2004. Web 12 October 2012. www.imf.org/external/. 2004.
Foxman, Noah. “Succeeding in Outsourcing.” Information Systems Management 19 (1994): 102- 109. Print.
King, William R. “Strategic Outsourcing Decisions.” Information Systems Management 13 (1994): 12-56. Print.
Lacity, Mary; Rudy, Hirschheim, and Leslie, Willcocks. “Realizing Outsourcing Expectations: Incredible Expectations, Credible Outcomes.” Information Systems Management 32 (1994): 12-30. Print.
Osmond, Thomas A., and Beth M. Schnaper. “Tips, Traps, and Travails: How to Hire the Right Outsourcing Vendor for Your Organization.” Benefits Quarterly 1(2000): 34-68. Print.
Gupta, A.K., and Gorindarajan, V. Global Strategy and the Organization. New York: John Wiley & Sons Publishers, 2003. Print.