Ethics and Outsourcing

Outsourcing

Definition: obtaining goods or services from an outside or foreign supplier, especially in place of an internal source

Outsourcing applications

specific functions within a supply chain (micro-level), or gradual outsourcing entire industry (as in, with global trade)

Why do companies outsource?

Reductions in costs

Examples of reducing costs

• Lower costs of labor and materials

• Lower taxation

• Less regulatory compliance costs

• Access to resources and energy

• Lower transaction costs

Efficiencies counterarguments

Cost-cutting leads to a “race to the bottom,” where suppliers neglect employees, the environment, and quality to produce at the lowest costs

Efficiencies Counterargument 2

Overtime, ethical failures lead to loss in institutional trust

• Distrust in capitalism

• Distrust in certain supply chains

Efficiencies Counterarguments 3

Outsourcing leads to loss in U.S. jobs

• Increase in job restraining would be needed to retool shift in industries

Efficiencies Counterarguments 4

In order to produce sustainably, outsourcing companies must increase monitoring costs

Efficiencies counterarguments 5

Commodization, over time, leads to “fast food” approach where customers no longer are willing to pay higher prices for goods

Rights/Virtues Based Arguments

Global trade tends to lead to spread in education, human rights, and democracy, as spread of technology and cultures introduce concepts to citizens of cultures with more heavy control

Rights/Virtues based arguments 2

Increase trade leads to job and economic stimulation in impoverished economies

Rights/Virtues Based Arguments 3

Combining resources leads to new discoveries

Rights/Virtues Based Arguments 5

Focuses on global citizenship - less wars, etc. because we become interconnected

Rights/Virtues Counterarguments

Workers overseas are underpaid and overworked; foreign governments cede their power to foreign corporations

Rights/Virtues Counterarguments 2

In reality, some parties prosper while others are hurt. Wage gaps have widened over the years as globalization occurs Cou

Rights/Virtues Counterarguments 3

Expansion of supply/consumption leads us to environmental overburdening

Rights/Virtues Counterarguments 4

Results in loss of cultural heritage