Ethical Issues of Offshoring/Outsourcing
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Ethical Challenges with Offshoring Karlis Lucs Andrejs Pašņevs Gurubhaskar C. Vishal Verma November 22, 2012 Riga Business School, Riga LV
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Transcript of Ethical Issues of Offshoring/Outsourcing
Ethical Challenges with Offshoring
Karlis LucsAndrejs PašņevsGurubhaskar C.Vishal Verma
November 22, 2012Riga Business School, Riga LV
Why are we here?
Offshoring brouhahaDifferent stakeholders, expectations
No one approach is right
3 things
JobsWorker conditions
Environment
1st issue: Job Export
What do the people think?
Loss of jobs = unethical move
What does media say?Goldman Sachs is set to cut 250 jobs across its
global operations as it moves some work to India.
Tax break fuels anger over outsourcing-related layoffs in Fla.
Forrester Research: Outsourcing jobs outflow estimated to hit 3.3 million by 2015.
What do economists say?
Short term job loss = cheaper goodsCheaper goods = more money savedMore money saved = More money
spent elsewhereMore money spent = new jobs
What’s the truth?
Semi skilled workers – worst affected1/3 No job
1/3 Less money1/3 Life’s the same!
What’s the truth?
Lose-Win?China ≈ Germany
min 25k yuan/yr - 77% (2008) 10% (2015): FDI(2003) = 82x FDI(1983)
What’s the truth?
Offshorers ≠ Biggest job creators (2% - 1990 - 2008)
Increased efficiency = More hirings than layoffs
(2000 – 2007)
What’s the truth?
Low unemployment?1983-10.4%, 1992-7.3%, 2008-5%
SMEs save the day
So what’s the conclusion?
Offshoring ain’t all that bad.
2nd issue: Work conditions
What do people think?
Offshoring = bad work conditions = unethical
What does media say?
Forced to stand for 24 hours, suicide nets, toxin exposure and explosions': Inside the Chinese factories making iPads for Apple
H&M, Walmart, Abercrombie & Fitch, the Gap, Nike, Limited Brands, Calvin Klien, Phillip Morris, Victoria’s Secret, KYE, Forever 21,
Aeropostale, Toys ‘R’ Us, Hershey’s
What’s the truth?8 Samsung factories
>100 hrs overtime; 36 hrs legalSalary = ½ overtime money
Standing work – 11 to 12 hrsNo labor contracts
What’s the truth?
10 Foxconn factories>50% dispatch workers
Local min. wage300 hrs/month
Max median age: 32
What’s the truth?
Top 10 factoriesMin. wage not sufficientOvertime = 36-160 hrs
Exceedingly high labor utilization; one action every 3 seconds
No labor contracts1/3 workers < 18
Here’s the proof
http://www.youtube.com/watch?v=pOg8QbKEkL8
http://www.youtube.com/watch?v=Jk-xqPKOxl4
What do the workers feel like?
Chinese least job-satisfied among Asians despite max. jobs
Only 49% consider their job ideal
So what’s the conclusion?
Offshoring hurts people.
3rd issue: Environment
What do people think?
Offshoring = bad environment = unethical
What’s the truth?
Top CO2 emitters: China, US, EU, India, Russia
What’s the truth?
Offshoring = low CO2 emission from US
What’s the conclusion?
Offshoring = Movement of carbon footprint
Offshoring = Pollution anyway!
4th issue: There is no 4th issue
Final Picture+ve stakeholders -ve stakeholders
Jobs Companies (short run) Home people (short run)Home people (long run)Host peopleHost govt.
----------------------------------------------------------------------------------------------------------------------
Worker Home businesses Host peopleConditions
-----------------------------------------------------------------------------------------------------------------------Environment Home businesses (short run) Everyone
Home people (short run)
Thank you!
