Global Outsourcing Of American Products And Services
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Global Outsourcing of American Products and Services
Global outsourcing of American products and services is a trend that is becoming increasingly popular with large corporations. For the same services provided in the United States, corporations are finding quality work in other countries for a fraction of the cost. The country currently at the forefront of this trend is India. This paper will discuss companies that outsource business to foreign countries and also why they are chose to. The ethical implications to both countries in these situations will also be discussed.
Many corporations are experiencing significant cost savings by outsourcing work to developing countries across the globe. Some advantages of global outsourcing are: technically skilled, inexpensive labor; multi-lingual workforce; potential 24/7 global tech support; global prestige; local market access advantages; lower duties and tariffs; low cost delivery; and after sales service. (
Some disadvantages noted by corporations are: political risk; loss of quality control over manufacturing, brand, and support; misrepresentation of the company; IPR concerns; brand management; channel conflict (gray market, territory); stricter labor laws; bribery and kickback pressure; and productivity. (
Several corporations have already experienced difficult situations associated with working in these developing countries. For example, the Nike Corporation was recently under attack over allegations of poor labor practices in Vietnam. In 1996, workers from the Vietnam plant reported cases of “physical abuse, sexual abuse, salary below minimum wage and debilitating quota systems.” (
In 2001, an international human rights group filed a lawsuit against the ExxonMobil Oil Company. In this law suit, ExxonMobil was accused of “actively abetting human rights abuses in Indonesia.” ExxonMobil hired local army units to protect their natural gas fields in the Aceh province. These military units were supplied with the equipment necessary to build interrogation and torture centers, and dig mass graves. “The case brought on behalf of 11 Achenese villagers, accuse ExxonMobil for their involvement in the murder, torture, and sexual abuse of the local population.” (
In 2001, Coca Cola was targeted with a relatively similar law suit when trade union leaders in the United States claimed that Coca Cola hired “right-wing death squads to terrorize workers at its Columbian bottling plant.” (
Several US based companies have also faced allegations of unethical or illegal practices In China: Timberland, Wal-Mart (Kathie Lee Gifford handbags), Huffy, Keds, RCA, Fubu, Deep E, Spiegel, New Balance, and Alpine. (
The ethical implications of these issues alone are astounding. If even half of the claims are partially true, there is a severe injustice being done. The stories of sweatshops run by American conglomerates are horrific. Local individuals are employed in these factories. They are paid so little that they cannot afford to live anywhere but the dormitories provided by the company. The dormitories look like concentration camps with many people crammed into small rooms sleeping on small cots that are stuck in every available inch of space. Money is taken from the employees paycheck to pay for these living quarters. If the employee wants to eat, they are charged to eat the bland meals served by the company. These people are company employees, yet they are not even treated as well as prisoners. Some of these individuals make as little as 15 cents per hour. Allowing for the significant difference in the cost of living, the average wage in one of these facilities is still about one-fifth of the amount necessary to afford a meager existence outside the walls of the factory. These individuals are forced to work unreasonable hours and meet impossible quotas. It is not uncommon for a worker in one of these factories to work 10 to 14 hours a day.
In these circumstances, there are national laws in place that should protect these workers. Unfortunately, those who are supposed to enforce these laws are frequently paid off in return for their silence on these issues. Ethically, the government is responsible to take care of its own people. Since this is not happening, the US based corporations should step up to the plate and take responsibility. These people are human beings, and should be treated with respect. Not only are these conglomerates