Is Outsourcing An Ethical Practice?

The ethical debate on outsourcing often centers on supplier workplace conditions.

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Outsourcing is the practice of hiring an outside firm or individual to perform contracted work as an alternative to paying employees to do it. Many companies use outsourcing based on expertise and cost-of-labor advantages. As with other ethical areas, discussing outsourcing ethics covers a lot of gray areas. Globalization contributes to the debate.

Outsourcing and Pro-American Sentiment

From a global perspective, the mere utterance of the word "outsourcing" sometimes incites controversy. Some people believe companies have a moral obligation to protect jobs for Americans above all else. Outsourcing often serves as a major topic of debate during presidential elections, as both parties suggest that their candidate is more equipped to preserve American jobs and boost domestic employment. Companies sometimes use ads to point out when competitors hire a significant amount of foreign workers. The goal is to invoke pro-American sentiment and to hammer the image of the targeted business.

On the Surface

The simple practice of outsourcing certain elements of a business operation fits into the free enterprise system. As part of strategic competitive planning, companies must strike a balance between quality processes and affordability. Outsourcing isn't always a global move. Some small businesses outsource transportation and logistics domestically, for instance. In general, outsourcing simply means you find it more beneficial to contract out tasks rather than hire full-time staff, which doesn't seem to compromise company ethics.

The "Sweat Shop" Problem

One of the main reasons some people immediately frown upon outsourcing is the first thing they associate with this practice is sweat shops -- a slang expression used to describe manufacturing facilities in foreign nations where employees receive unfair wages and work in poor conditions, relative to American laws and ethical standards. Companies that source products from these foreign firms often become the center of public relations firestorms. Nike famously had to overcome image issues in the late 1990s when it first detached itself from "sweat shop" criticism, but then advocated higher standards when massive public boycotts hurt the company.

Other Implications

During periods of high unemployment, some companies face media and public scrutiny whether outsourcing domestically or abroad. Fair or not, this pressure stems from the perspective of some citizens that a business should promote employment rather than choosing lower-cost contractor relationships. The way a company treats its outsourcing partners has ethical considerations as well. In general, your business practices reflect on your associates as well as your own company image. Outsourcing puts pressure on your business to monitor and maintain high-quality standards if you want customers to perceive you as a top provider.

About the Author

Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.

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