Introduction: The Case
Any person, irrespective of whether he or she is concerned with the information technology sector or not, is least likely to be unaware of what outsourcing is and what it takes into account. Those who are a bit involved with these affairs must know the facilities as well as the worries associated with outsourcing. When outsourcing came to be introduced, the worries that it involves did not seem to be so much prominent or important to anyone. There is nothing unnatural about it since it happens in almost all cases of anything novel being introduced. There are, of course, some foreseeing persons who foresee the threats and predict them. Again, as it happens in all times, people are so much steeped in the immediate profit that they simply deny to accept the truth though it is always there glaring in front of them.
It is only in the recent times the people have come to realize what impact people of the outsourcing country have to experience due to such business. The raising questions about the ethical perspectives of outsourcing testify to this fact. These days, people are even stronger in their feeling that outsourcing is morally unethical. Before we go into the critical analysis of the moral and ethical perspectives of outsourcing let us have an overview of what exactly outsourcing is.
Outsourcing happens to be the practice of hiring an organization of a different country to serve the purpose of performing some business function or the other (Hartman, n.d). The advent of this practice resulted in the birth of various offshore outsourcing companies. The United States of America and the United Kingdom are the nations that are exceptionally remarkable in business process outsourcing that they are treated as the pioneers in this field (Brown, n.d).
Let us now have a look at the services that are generally outsourced by the outsourcing countries. Customer support is one of the major services that are outsourced by nations like the United States of America, The United Kingdom and Australia. Computer programming, website designing, data entry, mobile application, software development and different kinds of information technology services are outsourced by these countries. Later on knowledge processes also started being outsourced from overseas nations. Contents for the websites are outsourced in huge quantity form abroad. In the recent times outsourcing has come to take into account many other services like game development, animation, medical transcription, and network solutions. Where do these nations outsource the services from? The list of nations from which services of a wide range of variety are outsourced includes countries like India, Ukraine, Brazil, Argentina, China, Pakistan, Russia, Nepal, Bangladesh, Bulgaria, Malaysia, Romania, Indonesia, Egypt, Philippines and Panama.
A very relevant question that may crop up in this regard is if it is at all necessary to outsource business services from some other country? Before business outsourcing came into existence or during the initial phase of outsourcing being introduced, it must have been felt as necessary. Otherwise it could not have been so much wide spread as it is now. The very next query that spontaneously springs after this is why was did the business owners felt it necessary to outsource services from the companies of a different countries. The reason that drove them into outsourcing business processes is the very basic thing that a businessman concentrates on. The word is ‘profit’. It would have been much expensive had they bought the business function services from their own country. On the other hand, if they resort to a company in a different country in order to get the same business services that they need, it becomes much cheaper. If one can get something at a cheaper rate, why isn’t it that he would go for outsourcing? It definitely brings him a better and higher profit and that is the purpose with which he has embarked in the business world.
Ethical Issues of Outsourcing
Now that the issues related to the moral as well as ethical dilemmas have come up, it may occur to many what ethical and moral problems are there that it is stated straightway that outsourcing is morally unethical. The entrepreneurs in nations like the United States, the United Kingdom and Australia are looking for a better profit. They can gain more if they resort to outsourcing the services form some other country. As independent human being they have the right to do so. And this is no crime that they are committing by outsourcing services form abroad and by looking for higher profit since they are doing no harm to anyone.
Yes, these arguments are logical but aren’t they somehow crossing the bars of ethics? Let us analyze some of the perspectives related to information technology outsourcing, business process outsourcing, knowledge process outsourcing, legal process outsourcing and some other service outsourcing, as well. It will be then quite clear why the moral as well as ethical dilemmas are paid so much heed in the recent times. It will also be comprehensible if the arguments against the outsourcing are justified or not.
Information Privacy and Security
Lack of privacy when dealing with social security and bank numbers is one of the factors that go can raise voice against outsourcing. Though both the parties in outsourcing, that is, the recipient of the service and the service provider sign a contract assuring the privacy of the information that they deal with, there have been instances in the recent past where it is very evident that information is not that much secured as it is thought or promised to be while being outsourced. One of such issues starred the entire world on 22nd October in 2003 when it was discovered that a Pakistani medical transcriber dealing with the medical information of the clients threatened a San Francisco medical center stating that she would post the medical records of the patients online if she was not paid the amount of money that was due to her (Mintz, 2004). What is even more important is that fact that was published in the news articles related to this issue. The news articles revealed that the medical center had no evidence to be sure that the medical records of the patients were destroyed or not.
Matters related to the outsourcing of tax information are even more serious. The clients have the least idea about the fact that their financial data, their bank account numbers, brokerage account numbers and even the Social Security numbers are no secret even in nations abroad. Though Rule301 of CPA dictates that a member in public practice must not disclose any kind of confidential information about the client if the member does not have the consent of the client, the incident of the Pakistani medical transcriber blackmailing the medical center, points to the reliability and faithfulness in outsourcing. The clients do have an ethical right to know if their personal as well as confidential information are passed to some other people while it is promised to them that the information will remain secured. It may be argued that all the employees are not as unethical as the one who has turned out to be extremely unethical and immoral. However, the clients must not like to take any risk, especially when it comes to the matter of their personal confidential information that matters a lot.
Unemployment in the United States
What demands special mention in this regard is the present problem of unemployment in the United States. With outsourcing increasing, the American youths are becoming more and more afraid of remaining unemployed. Unemployment in the United States is on the high not for the reason that the people aspiring for jobs are not efficient enough. There are a number of countries like India, Hong Kong, Manila, China and Panama, where the natives speak English. Business Companies or organizations in the United States are outsourcing services from these countries for the sake of more and more profit. Profit is obvious since they can get the job done paying an amount which is much less than the amount that they might have spent had they got the job done by workers in their own countries. Natives in the mentioned countries are also being facilitated a lot since the price offered for the services seems to them to be higher than those offered to them for jobs in their own countries.
There is, now, no scope for denial to the fact that it is outsourcing of services is one of the major factors that play a key role in the increase of unemployment in the United States. Isn’t it natural that if jobs fly and ship abroad, there will be few jobs in the United States? This fact becomes even more evident if the number of jobs that have left the United States is brought under consideration. Since the year 1986 nearly fifteen million jobs have left America only because services have been outsourced from other developing countries. All if these fifteen million jobs are high paying ones.
Misery of The Working Class And Middle Class
What is even more amazing that those who have a job are in fear of losing their jobs. It no more remains merely an apprehension since lots of instances of American workers losing their jobs can be cited. It is not that they are losing their jobs because of the fact that they are inefficient in the jobs they are doing. The reason is the same. The services that they have been providing so long are, at present, being outsourced from service providers in other countries. The upper class people of the United States can manage the thing to some extent. The argument, in no way, hints at the fact that they are not the victim of outsourcing. Again, it has also to be admitted that the upper class Americans do not depend much on the jobs that can be outsourced from some other countries. Rather, it may be discovered that the businessmen who prefer to outsource the services from abroad forms the majority of the upper class or the aristocratic class in the United States. Even if there are some upper-class Americans who have fallen victim to the practice of outsourcing, they can somehow manage their situations by the wealth they already have. On the contrary, the conditions of the middle class, especially of the working class who depends entirely on their jobs for their livelihood, are really miserable. The present economic condition and the consistent fall in the share market throughout the world, especially in the United States have added to the misery of these people even more.
Environmental Standards in Developing Nations
It is a very evident fact that most of the nations from which the tax information services or business process services, knowledge process services or even Legal process services are outsourced are developing countries. Even it may seem to be unethical to think that the services provided by the nations from which the services are outsourced are of an inferior standard only because they are developing countries. Again, it is also true that the US CPA does not have the scope to supervise the service processes directly only for the distance between the countries. Therefore, the standard of the professional working on the service, the techniques applied, the technical subject matter involved and the capability to apply the sound knowledge in performing the professional services cannot be evaluated or supervised directly. Since there is no evidence the only way left is to rely upon the outsourcer that assures that a competent standard is maintained.
The working condition in the developing countries has also to be regarded in this regard. With due respect to the efficiency of the countries from which the services are outsourced it can be stated that the working atmosphere in those countries can hardly be better than that in the United States. Isn’t it unethical to opt for outsourcing services from the other countries, only because of a monetary profit, ignoring the possibility that the services may be of an inferior quality? Isn’t it the duty of the businessmen or the proprietors to serve the country be getting their jobs done be service providers in their own country? It is not that they are suffering a big loss by getting the job done by workers who happen to be their fellow countrymen. The fact is that they have to compromise to a little extent with the amount of profit that they enjoy. Moreover, there is also no denial to the fact that the equipments used in the developing countries can hardly expected to be more sophisticated that those used in the United States. And the importance of the equipments and technology, especially in the fields like information technology, software development, website development and web-programming is needless to mention.
Difference of Culture
It would be quite unwise to deny the cultural difference between the two countries. The difference of culture may not have any impact on the services in the technological field. But it is certainly a great factor in the field of knowledge process outsourcing and legal process outsourcing. A professional born and brought up in a completely different culture and atmosphere can hardly have the true perception of what things are like in New York or California. The information on the internet can provide him with the factual information. He can get a description of the culture of the American people. But that knowledge is dry since the feel cannot be there. A person who has never been to a Halloween party can describe the costumes and how men and women dress themselves. But he would hardly be able to depict the charm of the party. A content writer in Pakistan or Bangladesh may feel hesitant while jotting down dating tips. Or in his bid to feel the way the Americans feel about dating, he may chance to make a mess by imagining things to such an extent, which it is not in reality.
Management Ethics Perspective
The operational management system in any business or any organization takes into account certain aspects that are essential for ensuring the high quality of the products or the services that the firm or the company or the organization deals with. It is the management team that defines the design, operation and also the improvement of the products or the services. What is even more important is the fact that this kind management of the functions of a business a continual process so that production process become more effective and efficient. Improvement of quality is the keyword. Tough and crucial decisions are to be made by the management teams. When a company or an organization keeps outsourcing the products or services, the only way left is to rely upon the management team of the company or the firm that is producing the product or the service. And, management is something regarding which none can rely upon the other since it has to be done with thorough awareness of how things are going on in the production house. Even an exceptionally excellent communication between the management team of the firm or the company that is in charge of producing the products or providing the services and the management of the outsourcing company may not be sufficient to live up to the standard that is expected to make a production process effective and efficient. On the other hand, if outsourcing had not been an option, the management team could have kept a constant vigil, which is the most important for improvement of products or services, on how things are going on. They could even have the scope to take some immediate decision if they felt necessary, which is not possible if the process of production of the products or the providing of the services is outsourced.
Alternative Solutions and Conclusion
Provided the factors discussed above it appears very definite that outsourcing that, in the initial stage, was used as a means for cost saving, has turned out to be a big threat for the economy of the nation, necessitating some alternatives to it. Considering the extent to which outsourcing has developed, especially in the modern times, it is really very difficult to find out alternative ways to replace outsourcing of services and products. Making outsourcing cease to exist is no big deal if bills against it can be made to pass. But that certainly is not the solution to the problem. Rather it would give birth to a number of other problems that would be quite hard to cope up with. Moreover, it has been a set up since a long time. A sudden transmogrification of the system may bring about a disaster in the economy system of the United States that is already in financial trouble, owing much to the instability in the share market, which has created a grave concern in all around the world. It has got to be a very slow process to shift form outsourcing to the alternative solutions. For this the alternative solutions to outsourcing have to be pointed out.
If the companies and firms or other organizations in the United States that are into the practice of outsourcing at present, are made to stop outsourcing and forced to buy services from or get the jobs done by people from their own country, the business owners may suddenly find themselves at a great loss. The situation may even lead to the extent of their failure to run the business any more. Moreover, those who have been resorting to outsourcing since such a long time and have become prosperous may not spontaneously agree to stop outsourcing very spontaneously since it is going against their means of their making profit.
The alternatives to outsourcing should be pointed out from the same perspective as it has come to be produced from. The main purpose of outsourcing products as well as services is nothing but the cost saving factor. If means are found to cut the costs down, they can be effective alternatives to replace outsourcing. Considering the financial statement of a business or a production house so that cost saving is facilitated can be an effective way to replace outsourcing. Some of such ways can be cutting down the employee benefits, bringing down the salary paid to the employees and reducing the vacation time that are given to the employees are some of the possible ways to cut down the costs, though these ways may seem to be the most unpopular ways, especially to the employees.
Another very effective alternative to outsourcing of services as well as products can be rural sourcing (Hart, 2006). If the middle class rural Americans are employed by the companies or the firms in the United States, the cost saving perspective will not be ignored. On the other hand, the working class and the middle class in the rural areas in the Unites States can, to some extent, get rid of the extremely wretched condition they are presently in. let us see what rural sourcing can offer to the business firms and the production houses in the United States. The most important among what it offers are high quality information technology services, low cost, and cost saving ranging from 30% to 50% (Hart, 2006). If the cost savings in rural sourcing of products and services is regarded a bit introspectively, they might not appear to be quite competitive in comparison to the cost savings in case of outsourcing. But if the ‘hidden costs’ that form an essential part of the whole process of outsourcing products and services, rural sourcing will definitely emerge as a very fruitful alternative to outsourcing, though the cost savings in rural sourcing, in no way, more lucrative than it is in outsourcing. However, this amount can be treated as a sacrifice for the sake of the economic development of the country, especially when it is going through a financially tight situation that it fails to manage.
Brown, C. (n.d). Future Belongs to Outsourcing. Retrieved 13 November, 2008 from http://ezinearticles.com/?Future-Belongs-to-Outsourcing&id=1387569
Hartman, J. (n.d). Ethics and Outsourcing. Retrieved 13 November, 2008 from http://www.ece.ufl.edu/academics/undergraduate/scholarships/essays/2006/hartman.pdf
Hart, S. (2006). Rural Sourcing - An Alternative to Outsourcing. Retrieved 13 November, 2008 from http://www.hartsteve.com/2006/07/03/rural-sourcing-alternative/
Mintz, S. (2004). The Ethical Dilemmas of Outsourcing. Retrieved 13 November, 2008 from http://www.nysscpa.org/cpajournal/2004/304/perspectives/nv1.htm
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