The ethical and economic case against corporate outsourcing

¶ … outsourcing from an employee and corporate perspective in an attempt to gain insight into the pros and cons of the outsourcing issue. The researcher proposes that outsourcing is morally and ethically an objectionable practice, that results in little benefit to the company and much harm to the employees it affects. A formal review of the literature available with regard to outsourcing is analyzed, and the case against outsourcing is made. The researcher shows how outsourcing impacts workers in a negative manner, goes against the moral and ethical standards inherent in business and proves that outsourcing will ultimately result in dissatisfaction for corporations in the long-term.

Introduction

From a moral and ethical standpoint, outsourcing is wrong and has negative consequences on both employees and the productivity and efficiency of corporations in the long-term. From a practical standpoint, corporations that rush to outsource job functions realize few returns on their investment and few profit savings in the long-term. The rush to outsource has left companies with little value and no tangible increases in productivity or delivery.

Right/Duties/Moral Obligations of Corporations

Younkins (2000) suggests that the "concept of social responsibility" can be directly related to "actions and pronouncements taken by business leaders in response to strategic business objectives." Moral and ethical standards dictate that corporations should be considered 'servants of society' and created via the permission of the state, which in essence "owes itself to society (Youknins, 2000). Thus corporations have an obligation to act in a manner that is socially acceptable. Yet corporations that are outsourcing violate this very principle, and act in a manner that is socially and ethically unacceptable, sacrificing committed employees to save a few dollars.

Mintz (2004) points out that from an ethical perspective honesty in communications is at the "core of trustworthiness" within a corporation. Honesty requires that a corporation conduct activities in a manner that is not misleading or deceiving, and imposes an ethical obligation on the corporation to do what is best for the employee as a client (Mintz, 2004). However again outsourcing breaks this bond of trust and causes the corporations to be dishonest regarding their intentions and unavailable to supply employees with a stable working environment.

Proponents of outsourcing might argue that outsourcing is a utilitarian approach to labor problems, suggesting that the act of outsourcing is right because it produces the greatest happiness and common good for all (Shaw, 2005). Consequentialist theories dictate that a utilitarian approach is appropriate in situations where the overall happiness to the largest group of people is desired and achieved (Shaw, 2005).

Non-consequentialist theories such as Kantian ethics however suggest that an act is right if it is a moral duty, and that moral duty can be assessed via a test labeled the "categorical imperative" (Shaw, 2005).

Kantian ethical theory supports the premise that outsourcing is morally wrong. It goes against the common belief that human beings should not be used as a means to an end. In the case of outsourcing, human beings are used to facilitate the best interests of corporate objectives, rather than what is in the best interests of people as a whole.

People have an ability to be morally responsible when they can act in a manner that is under their control according to Kant; the same is true of organizations (Shaw, 2005).

Conclusions

Outsourcing jobs is merely a function of corporate America's "quest for short-term profits at the expense of the well being of workers" (Dobbs, 2004). Companies are defending the practice in part by claiming that it is an efficient and competitive way to boost productivity (Dobbs, 2004). However, corporations are failing to acknowledge that a primary motivation for outsourcing is seeking the lowest possible price for labor, and the practice if continued will result in a loss of millions of jobs in a relatively short time frame (Dobbs, 2004). The costs to society are large. Companies are loosing key players and not realizing substantial savings or increases in productivity over the long-term.

Companies are also marching blindly ahead, disregarding their corporate social responsibility and moral obligations to protect those employees that have worked diligently for them for extended periods of time.

References:

Dobbs, L. "Is Outsourcing Killing Jobs." Optimize, September (2004), Issue 22.

Doig, Stephen; Ritter, Ronald; Speckhals, Kurt & Woolson, Daniel. "Has Outsourcing

Gone Too Far?" The McKinsey Quarterly, (2001): 25.

Mintz, Steven. "The Ethical Dilemmas of Outsourcing." The CPA Journal, 74(3), (2004):

6

Shaw, William H. Business Ethics. Canada: Allen, (2005).

Younkins, E. "Individual Rights, Social Responsibilities and Corporations." The Free

Radical (March/April 2000).

Kantian ethics suggest that an act be assessed from the standpoint of whether or not it is an example of the way that an individual believes that people should act, and that people should not be used merely as a means to an end, but rather that people must be respected on the basis that they are human beings. (Shaw, 2005).

Further Kant argues that what makes humans responsible is their ability to act against inclination and desires, and it is the very fact that people can reason that they are under a moral obligation to act responsibly.