Ethical Concerns and Obligations in Global Outsourcing Practices

This report provides a comprehensive analysis of the ethical concerns associated with outsourcing production processes in a globalized business environment. It examines the motivations behind outsourcing, such as cost reduction and access to cheap labor, while highlighting the ethical dilemmas that arise. The report focuses on key areas of concern, including ensuring fair working conditions, protecting basic human rights, and addressing issues of bribery and corruption. It emphasizes the moral obligations of international organizations to uphold ethical standards, even when manufacturing is outsourced to third parties. The report discusses the impact of outsourcing on labor markets and the importance of aligning business objectives with global justice and ethical principles. Examples of ethical violations, such as hazardous working conditions and exploitation, are provided to support the arguments. The report concludes by emphasizing the need for companies to prioritize ethical considerations and integrate them into their global operations, promoting sustainable and responsible business practices.

OPERATIONS

Introduction
With the increased globalisation, the business practices have become even more complex. In
the race of the competiveness, the companies are increasingly engaged in the creation of
goods and services at the low costs for the provision of the same to the consumers. One such
popular practice involved therein is the practice of outsourcing of the section of the
production to the countries that have a cheap labour cost. However, such a practice is
surrounded with numerous ethical concerns. The objective of the following work is to
elaborate the ethical concerns in the said areas. The discussions would be conducted on the
lines of the global justice and globalisation, and would be followed by an overall conclusion
on the relevancy of the same.
Analysis
Most of the major corporations are engaged in taking the benefits out of the differential
wages in different parts of the world and thus, moving the part of the production processes to
the developing countries like that of India, China, Mexico and others. It has been observed
that the labour laws present in the said countries are not stringent enough like in the other
developed countries. There are numerous companies that have shifted their production
processes to the cheap labour cost countries like that of the AT&T shifting its production of
the residential telephones from United States to Singapore, Apple shifting its production
processes to Finland and others. The aim is not only to benefit from the cost economies but
also to save the tax on the total production. Following are presented a brief set of the
advantages for which the companies indulge in the relocation of the production activities to
the foreign countries. Firstly, the areas like China has vast population in search of the
employment and thus, the organisations are exposed to the benefits of the competitive job
markets, and the lower payroll taxes. Secondly, in spite of the lower wages, the
competitiveness of the labours is still great as seen in the case or the products of the global
companies like that of Apple, whose major products are manufactured at China (O’Brien,
2014).
Ethical and moral obligations of the international organisation in the manufacturing
locations
There are present numerous ethical obligations in the said outsourcing of the manufacturing
activities as described below. The prime ethical obligation in the said moving of the
production activities is to ensure the fair working conditions of the labours in the said

countries. It is vital to note that there are various global laws and standards to be complied
with in the conduct of the business in an ethical manner. For instance, the Sustainable
Development Goal number 8 states that the organisations must ensure the decent work
conditions and the economic growth of the employees and the labours involved in the
organisation (United Nations, 2020). Accordingly, it is the moral duty of the organisations to
ensure the adequate protection and safety measures and the avoidance of the uncomfortable
and hazardous environments. This is because though the production processes have been
relocated to the other regions, the responsibility of the welfare of the stakeholders involves
and the efficiency in the production processes is still that of the entity itself. In a popular
incident that took place in Bangladesh, one of the garment factory had collapsed, and the
incident is regarded as one of the worst incidents in the history of the world garment industry
(The Associated Press, 2013). The reason for the said collapse as was later discovered came
out to be hazardous working conditions in the low cost manufacturing areas like Bangladesh.
It was stated that the reasons for the grim working conditions in said regions are desperation
for jobs, illegal structures of the building to accommodate more workers, installation of the
heavy equipment and an overall industry indifference. Various local and national trade unions
had campaigned for the said hazardous work conditions. Thus, it is the duty of the
organisations to ensure the working environment matches the basic standards of safety for the
employees.
The second key issue in the protection of the basic human rights issues in the production
processes of the entity. It is vital to note that the companies engage in the relocation of the
manufacturing activities in an attempt to access the cheap labour. The ethical issues in such
scenarios are the result of the economic exploitation, forced labour and the absence of the
protection of the basic human rights. In a recent incident, the workers of the company
Foxconn that is the trade partner of the global mobile phone giant Apple was accused of
various legal violations in China such as withholding bonus payments of the employees,
employment of more temporary workers than as allowed by the Chinese labour laws, and
rolling back safety training (Albergotti, 2019). The fact that the company had employed more
number of temporary workers breaching the law was later accepted by the entity. It was
alleged by the regulators that the said means are employed by the global entities with an aim
to absorb the costs associated with the tariff charges on the services and products of the
companies. It is efficient to note that while the developed countries have stringent labour
laws, the developing countries do not often have the sound legal framework for the regulation

of the human values and the labour rights. Forced labour, child labour, slavery are some of
the basic labour standards that are needed to be respected by the companies in the light of the
global justice practices and the lawful business activities. As per the International Labor
Organization, there are various basic minimum standards to be complied with by the global
business organisations and the eight standards are stated to be the essential core standards on
the lines of the discrimination, forced labour and the child labour. The organisations must
necessarily abide by the said professional standards to provide the acceptable conditions to
work, occupational safety and health and the minimum wages.
The third issue in the said relocation of the production services of an entity is the ethical
issues in the form of the bribery and corruption. One of the major issues that has surfaced in
the recent times in context of the foreign operations is that the public officials and the foreign
regulators are often bribed in relation to the settlement of the issues relating to the labour
exploitation and to produce the profits with the unethical means. Thus, the laws of the
developing countries are exploited because of the lack of the strict measures and the same do
not form the part of the financial statements and thus, the other stakeholders are satisfied too.
For instance, in context of the United States the Foreign Corrupt Practices Act lays a
prohibition on the US companies to pay the bribes to foreign officials of the foreign
regulators to ensure business advantages, the same must be complied with.
Differences in the morality when the manufacturing is outsourced to the third parties
It is significant to note that a company is still responsible to ensuring the fair conditions to the
labours even when the work is outsourced to the third parties, in the light of the brand
management and the ethical principles. When the manufacturing process is outsourced to the
third parties, the same leads to the laying off numerous workers in the home country or the
same are transferred to the host locations which presents yet another ethical and moral
challenge. It is important to note that around 2.7 million jobs were outsourced to China by the
United States between the year 2001 and 2011 in context of majorly the textile industry
(McIntyre and Weigley, 2012). This resulted in the millions of the labours losing their job in
America. This was presented as one of the most significant social concerns in the country
United States back then. It would not be wrong to state that the third party outsourcing is
fruitful only when the cheaper labour is provided by the third party, together with the less
regulation and fewer taxes and it is ensured that workers are treated fairly along with the

provision of a safe working environment and an improved quality of life. The companies can
devise a code of conduct to implement such practices in real life.
Conclusions
The discussions conducted in the previous parts lead to the conclusion that the entities are
increasingly engaged in the relocation of their production activities to the countries with low
labour costs and the low labour compliances. This has resulted in the exposing of the
companies to numerous ethical and moral concerns in the said relocation because of the grim
conditions of the industries and companies in the said regions. It has been assessed in the
work that there are various motivations behind the said relocation of the production activities
such as economies of the costs, reduced tariffs, reduced adherence to laws, and the abundant
cheap labour. Some of the major ethical concerns that have been identified are the harmful
work conditions, complacency in the compliance of laws resulting the loss to the labours and
others. The examples of each of the moral and ethical concerns have been provided in the
work to support the arguments. It has been further stated in the work that the companies must
abide by the ethical requirements and streamline the objectives with the global justice
practices and the principles of globalisation.

References
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