Outsourcing From an Employee and Corporate Perspective

¶ … 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.

Effects of Outsourcing

Among the people most affected by outsourcing in recent years are white collar employees, whose resumes are now flooding the market as eager job seekers attempt to find positions that will pay them a fraction of what they were paid working in corporate America (Shaw, 2004). Companies seeking to modernize operations and reduce labor costs are more and more turning to outsourcing and the results are compelling; more than "one third of all households have seen a family member lose a job" and more than 40% of people have reported knowing someone that has recently been laid off do to outsourcing (Shaw, 2004: 137).

Critics suggest that many companies are downsizing without giving thought of whom they are downsizing, suggesting they are doing so blindly to save money, and the results are often a poorer quality product, reduced output and "frayed relations with customers" (Shaw, 2004:137). Case in point is Delta Airlines that eliminated more than 10,000 positions and its record of on-time performance "fell to the bottom of the list for a major airline" (Shaw, 2004).

From a statistical standpoint studies conducted by the American Management Association show that of the corporations that have actually downsized, "fewer than half the firms have succeeded in raising profits" and an even smaller portion have bolstered productivity (Shaw, 2004: 137).

Doig, Ritter, Speckhals & Woolson (2001) suggest that too many companies have 'rushed' to jump on the outsourcing bandwagon, and as a result have realized that outsourcing in actuality delivered much less value than originally promised. They point out that outsourcing rose 18% alone between 1999 and 2000, yet companies have yet to realize a larger share of profits as a result (Doig, et. al, 2001). In addition more than one fifth of executives that have outsourced key positions have admitted they are "Dissatisfied" with the results of their outsourcing campaigned whereas another fifth remain neutral, and a study conducted by Dun & Bradstreet shows that up to 25% of outsourcing relationships fail within a two-year period, and 50% within ten years (Doig, et. al, 2001:25).

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.