Addressing ethical problems in business is a critical challenge because an organization’s reputation and goodwill are highly reliant on ethical issues. As a result, the company is able to realize a significant value chain. Companies are constantly outsourcing to achieve a competitive edge, and consumers want high quality goods at the lowest price. The ethical concerns surrounding outsourcing will be the subject of this research. The organizational decision of a company to purchase products or services from an outside supplier is known as outsourcing. With the current globalization, organizations are forced to obtain parts and some services through both local and international outsourcing. However, outsourcing has raised different ethical views over the past year. Utilitarianism advocates for the choice of a course of action which yields benefits to the maximum number of people. It focuses on the benefits that the masses derive from a specific course of action, rather than an individual. According to the theory, businesses should adopt benefits that are beneficial to the masses.
Outsourcing is considered to be unethical by the advocates of utilitarianism; this is because the reason why companies opt to outsource services and goods from other countries is to reduce costs, hence increasing profits. Outsourcing enables firms to reduce costs through the accessibility of cheap labor, tax reduction, and accessibility of cheap raw materials. However, the decision takes away job opportunities from the local citizens and gives the benefit to other countries. Critics of outsourcing have expressed the concern that outsourcing leaves the local citizens to suffer from high rates of unemployment and provide job opportunities to other countries. For instance, most American firms are offshoring their customer services to India, due to the cheap labor, leaving most American graduates with the problem of joblessness. The act only favors the firms through reduction of costs but disfavors the large masses.
There is the need for organizations to operate in a way that is not only beneficial to them, but also beneficial to the society, and can help improve the society’s living standards. Multinational companies face the ethical dilemma of whether to outsource or not. They are ethically required to adopt policies that are beneficial to the company, employees, customers and the society. A decision to outsource on the other hand represents the ability of the company to reduce costs, improve its productivity and enhance its economic growth. However, it remains to be an unethical decision to provide jobs to foreigners while most of the local citizens are unemployed.
This study recognizes the need for companies to not only consider the benefits that a policy accrues to themselves, but also to their local workers and the country. However, the study disagrees with scholars who have labeled outsourcing as an unethical practice, since outsourcing accrues benefits to all the stakeholders. There is need to note that companies outsource some of its operations, but its core operations remain in their headquarters. This shows that outsourcing does not entirely take away job opportunities from the local citizens. It is ethical to distribute opportunities evenly to both local workers and foreigners in a justified manner. One way of achieving this is through outsourcing, which ensures that companies take advantage of the cheap availability of some factors of production in other countries. This not only increases the profits of the companies but also earns them a competitive advantage hence ensuring their survival in the global market. This ensures that the company is capable of providing good customer services as well as employment to the local employees.
It looks profitable for companies to outsource in their quest to reduce costs, but the question remains to be whether they are doing it ethically. The main objective of the companies is to provide quality goods and services to their customers. However, they have a social responsibility to give back to the society that is helping them to achieve their primary objective. It would, therefore, be unethical for the companies not to employ both the local population as well as the foreign population. However, the job opportunities should be provided in an even way. Outsourcing should be done in an ethical way, whereby companies meet all their responsibilities to their stakeholders. The most common form of outsourcing us whereby manufacturing firms in America place some of their operations in countries such as China, India and other Asian countries; therefore companies should fulfill their corporate social responsibility in those countries, maintain good working conditions as well as avoid human rights and labor violations.
Outsourcing is a way of striking a balance between quality processes and affordability. It is, therefore, a practice that should not be viewed negatively, as an action that takes away opportunities from the local society, but rather, a strategic competitive move.
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