Global Business and Ethics

¶ … ethical issue of outsourcing, or sending jobs overseas, and its affects on the world economy and cultures. Outsourcing has become a very common practice in the 21st century. Outsourcing is quite simply the practice of sending jobs to remote call centers and other locations in foreign countries, while eliminating jobs in the United States. The ethical issues surrounding outsourcing and the resulting globalization are complex, and pose risks and consequences for the companies who choose to outsource.

Globalization has created the ability for employers to hire and train workers around the globe, often at extremely reduced salaries and benefit levels, thus saving the employer thousands and even millions of dollars. The practice is so widespread that many financial institutions routinely send data to overseas locations, income taxes are prepared in India and sent to customers remotely, and medical records are interpreted by workers clear across the globe.

The ethics and moral issues of these outsourced jobs are many, from privacy concerns for consumers, to pay and workplace ethics of the employers over their employees. In the process, outsourcing is changing the way companies do business, and how ethically they treat their employees, as well. The first ethical concern companies have not been addressing is the failure to address the concerns of U.S. employees who lose their jobs as a result of outsourcing.

One expert writes, "The plight of the people being laid off is cause to wonder whether other considerations, traditionally omitted from the balance sheet, should be examined -- considerations such as ethics" (Breslin, 1999, p. 24). Often, these outsource victims cannot find another job, or a job that pays what their previous position paid.

Author Breslin continues, "From a financial perspective, some employees who are forced to take jobs in private industry lose their retirement and health insurance benefits as well as witness a reduction in salary, even after factoring in severance" (Breslin, 1999, p. 27). These separated employees may never reach the standard of living they enjoyed when they were employed, but worse, their layoffs will trickle down into the community, as the current economic meltdown has shown. Gradually, as more people lose their jobs, they stop buying consumer goods, and the entire economy suffers.

Many large corporations have outsourced entire operations and the communities have suffered because of their outsourcing. Globalization offers businesses opportunities that never existed before, and that is changing the culture of the world. Another writer notes, "International business operates in an interdependent global economy where market functions are influenced by national political and cultural diversity" (Kline, 2005, p. 7). American corporations doing business in areas such as India are changing the cultural climate of the country.

Indians are becoming more westernized, they are bringing new earnings and development money into the country, and they are changing how they live and work, i.e., their culture. The implications of this illustrate how globalization is westernizing the world, and few business leaders are addressing that aspect of the ethics of doing business in other countries. Author Kline continues, "Private international corporations bring an entire ethos that may differ significantly from traditional societal norms, especially for non-Western societies" (Kline, 2005, p. 171).

Thus, the entire society shifts away from their traditional culture, and this will have long-term, lasting affects on a country and its peoples. Many Indians may see the proliferation of call centers and other outsourced businesses as a good thing, at least initially, because they are providing jobs and bringing modernity to the country. However, these jobs are usually low paying and tedious, and the quality and consumers often criticize knowledge of the employees when dealing with them. They are also changing the face of India and her people.

The situation is similar to the colonial period of world expansion, when countries like Great Britain entered a country, made it a colony, and anglicized the native peoples. In countries such as South Africa, they took over, created their own white cities, dispossessed the native peoples, made English the official language, and destroyed the culture of the area. In a way, outsourcing is doing the same thing, because it is changing the face of foreign countries, and doing away with their native culture, replacing it with an American corporate culture.

Typically, outsourcing involves transferring labor and/or services to underdeveloped countries. Depending on what type of work is being outsourced, labor laws may not protect the new workers from injuries and other job-related problems, and depending on the outsourcing contractor, they may take advantage of their employees, or pay them sweatshop wages in horrible working conditions. Ultimately, it is the company that originally outsourced the jobs that should be responsible for these things and ensure they do not occur, but many companies simply turn their head and ignore the problem.

Not only is this unethical, it should not be allowed, and companies should be held accountable for the working conditions in foreign countries, just as they are held accountable here. Yet another ethical issue often ignored is the use of child labor in factories where jobs have been outsourced. One example talked of a twelve-year-old sixth grader who left school to work in a Nike factory to help feed his family.

Author Kline notes, "It's illegal in Mexico to hire children under fourteen, but the Mexico City Assembly recently estimated that anywhere from five million to 10 million children are employed illegally, and often in hazardous jobs" (Kline, 2005, p. 88). Nike should have never allowed that to occur, and the plant operator should not have allowed it to occur, either. It is unethical and morally reprehensible, yet it is still happening around the world. Along with ethical and moral issues surrounding outsourcing, there are risks and consequences, as well.

One of the biggest risks is client confidentiality. A group of CPAs state, "Is client information secure? Respondents to the AICPA's top technologies survey for the third consecutive year have cited security of client data as their no. 1 concern. Some members fear they cannot guarantee confidentiality when work is handled by distant third-party providers" (Shamis, Green,.