Ethical Implications of Companies in North America Outsourcing (Research Paper Sample)

Outsourcing
The ethical implications of companies in North America outsourcing low-skill jobs to other countries
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Executive summary
Outsourcing is a common practice among many North American companies. Over the years the trend has grown tremendously. The report examines the benefits ensued from outsourcing, its ethical implications, and the future trends of the practice. Outsourcing should be done in an ethical manner to ensure it retains its benefits while still benefitting the parties involved.
Contents TOC \o "1-3" \h \z \u Executive summary PAGEREF _Toc458686790 \h 2Introduction PAGEREF _Toc458686791 \h 4Benefits of outsourcing PAGEREF _Toc458686792 \h 5Provision of cheap labor and creation of jobs PAGEREF _Toc458686793 \h 5Reasons for outsourcing PAGEREF _Toc458686794 \h 5Outsourcing is cost saving and boosts profits for the company PAGEREF _Toc458686795 \h 5Ethical implications of outsourcing PAGEREF _Toc458686796 \h 7Outsourcing ethically PAGEREF _Toc458686797 \h 7Positive ethical implications PAGEREF _Toc458686798 \h 7Negative ethical implications PAGEREF _Toc458686799 \h 7Future trends in outsourcing PAGEREF _Toc458686800 \h 9Global labor market in the next ten years PAGEREF _Toc458686801 \h 9Recommendations PAGEREF _Toc458686802 \h 10References PAGEREF _Toc458686803 \h 11
Introduction
Over the past years, outsourcing has been a common practice among several companies in North America. The companies outsource low-skill jobs to other countries in the world, and this trend has attracted various ethical implications since only a given section of the parties involved benefit. Outsourcing is defined as the contract between different organizations regarding the operation and management of the other’s business operations. Most companies in North America have diverted to outsourcing to remain relevant in their operations of activities.
Outsourcing low-skill jobs to other countries mostly those that are developing has proved to be beneficial since the amount of costs associated with they are low, and this tends to enhance competence and flexibility among the companies involved. Additionally, outsourcing increases flexibility and quality of goods provided by the company. When a company outsources its low-skilled labor to less developed countries it is likely to attain operational flexibility, resource flexibility, and demand flexibility. Flexibility will increase the quantity of goods and services offered while ensuring that the quality is maintained. Additionally, outsourcing is important in the reduction of risks since it provides a platform where by the company shares risks with its suppliers. Outsourcing puts a company on a global map because the partnerships that result from outsourcing enables a company to be a world-class performer in its production of goods and offering of services.
Benefits of outsourcing
Provision of cheap labor and creation of jobs
North American companies engage in outsourcing to ensure that they are restructured since the low-skill jobs are given to the specialists in other countries to perform. The technicians usually perform the jobs to their best hence this move seems to be strategic. Outsourcing, therefore, is beneficial to the North American companies as they benefit from the efficiency they receive from the different specialists. Additionally, outsourcing is also beneficial since it provides jobs to people who are in need of them. The North American companies that engage in outsourcing not only benefit themselves but also provide jobs to many jobless people in other parts of the world (Hira & Hira, 2008). Many people in developing countries consider the jobs that are outsourced to them by the companies to be well paying since the economies of the countries where the companies are located, and the developing countries are wide apart.
Reasons for outsourcing
Some of the reasons why several businesses in North America engage in outsourcing include lack of skilled labor, rising health costs, high labor costs, market pressure, availability of cheaper labor, abundance of a skilled and highly talented workforce in other countries, pressure from investors, and expansion of global presence. Over the recent years, many companies have been sourcing for talent on a global scale. Multinationals such as Google and Microsoft have constantly lobbied the U.S government to ease visa sanctions to allow for more foreign workers in the United States. The shortage of talents and skilled laborers are among the driving factors for outsourcing among many companies. A survey conducted in 2013 indicated that many employees in the United States found it difficult filling jobs especially the ones that required skills. To cater for this gap, many companies consider outsourcing as a means of sourcing talent and skills. Moreover, the rising health costs have driven outsourcing. Many companies in North America are required to cater for health costs of their employees. With the rising health costs many companies outsource to countries where there are no strict health regulations or where it is cheaper.
Outsourcing is cost saving and boosts profits for the company
Outsourcing that is cost driven occurs when the costs by suppliers is low enough such that the supplier can manage to deliver a product at a lower price despite the added transaction costs, overhead, and profits. Specialization and mechanism of scale is used to achieve enough savings for the supplier. Cost savings due to outsourcing are quite beneficial for many companies in North America. It helps in strengthening businesses through boosting profits. Several gains have been recorded by companies from North America that have engaged in outsourcing. For example, in the U.S, a gain of 33 cents per dollar is recorded when jobs are outsourced to India (Ching, 2009). It is argued that outsourcing is healthy for any given company to avoid wasting resources on issues that could be easily outsourced since there are countries that have the required labor at cheaper costs and this would, in turn, be cost friendly to these companies. In case these companies engage in outsourcing, there is a likelihood that they will reduce expenses incurred and at the same time assist people from the countries through the creation of jobs. Additionally, companies in North America are driven by the desire to save indirect costs. Indirect costs are attributed to infrastructure and support systems a company may require to provide labor. Therefore, having less number of employees’ saves on infrastructure and any support systems a company may require.
Ethical implications of outsourcing
Outsourcing ethically
For outsourcing to have long-time success, practices that adhere to ethics are necessary. Employees are likely to perform better if a company is transparent and treats them with integrity. A company that maintains the integrity of its employees boosts morale which translates to increased profits and a good reputation for the company. The increased outsourcing of low-skill jobs to other countries by the various North American companies has been faced with several positive and negative ethical implications.
Positive ethical implications
Outsourcing low-skill jobs to other countries has various benefits associated with it. First, outsourcing is a two-way practice that benefits the parties involved. An example is in the United States’ companies that outsource their services and in turn get other services outsourced to them by the same countries. Statistically, other countries outsource to the United States approximately $200 billion service jobs more than that which the state outsources (Vagadia, 2012). Also, outsourcing helps in the lowering of prices of commodities and services which in turn is beneficial to the consumers. Several jobs can be done through outsourcing at cheaper costs, and this helps the users from the countries where the companies are located to enjoy the benefits of the practice through purchasing goods at reduced prices due to the low production costs associated with them.
Additionally, the idea of outsourcing jobs to other countries help in the globalization of the companies making them be competitive in the global arena and, in turn, stay in their various businesses. Outsourcing is also responsible for various employment opportunities as most people can perform the low-skill jobs offered by the different companies. In consideration of the benefits that are associated with outsourcing by the companies from North America, it is evident that the companies benefit more from the practice (Hira & Hira, 2008). An example of a way in which the companies benefit is through the reduction of costs that they incur when they outsource the low-skill jobs .In most circumstances, the people that perform these jobs are usually highly qualified and in