Outsourcing has become a very hot topic in our country over the last few years. Many Americans view this topic as very controversial and unethical. Outsourcing is also known as the offshoring of American jobs. These jobs are being sent to foreign countries all over the world. Under George Bush’s administration the American economy lost 1.6 million jobs.
Outsourcing to other countries is not limited to one business sector or profession; almost all professions are beginning to feel the effects of outsourcing. Many politicians, economists and business people are having very heated debates in regards to outsourcing. There are some who feel that outsourcing is good for the American economy. There are others who strongly disagree and argue that outsourcing is an action taken by greedy companies that disrupt the economic futures of many people and these actions are purely unethical.
Outsourcing experienced in America is highly debatable because we have a moral responsibility to adhere to values in society, and to promote human development. Advancing capitalism, by cutting costs and increasing profits, comes at a cost to society when values and moral standards are neglected.
Outsourcing in itself is not illegal or unethical, but the repercussions of outsourcing experienced in America are considered to be unethical for the following reasons: American citizens, educated in America for the purpose of employment in America, are displaced from jobs by foreign workers; outsourcing lacks regulation to protect personal and sensitive information; and the American government offers no effective solutions to address these repercussions by re-training and re-employing displaced workers, and by offering incentives for businesses not to outsource.
Not only are Americans affected by outsourcing in career and future earnings, but their sense of security is affected too. Businesses that outsource American client information, to be stored and processed in a foreign country, often do so without disclosure to their clients. The foreign country adheres to a different set of regulations concerning data or information protection, and this puts American citizens at risk to identity theft or fraud. The actual long-term damage of job outsourcing on future innovation and individual earning power remains to be determined.
Income levels are frozen and cannot compete with inflation. Workers lose leverage to negotiate fair wage increases or promotion. Foreign employment policies, such as minimum wage, and working conditions differ. Businesses that are outsourcing can set a minimum wage in developing countries that would never be accepted as a minimum wage in America.
When most of us think of outsourcing we immediately think of manufacturing jobs. The loss of jobs in the manufacturing sector has been publicized through the media, which has called upon the ethical issues involved. Ethical concerns for outsourcing manufacturing jobs range from human rights violations to standard of living issues. Even though manufacturing may be the highest sector affected by outsourcing, there are many more professions beginning to feel the effects such as engineering and design, High Tech Jobs and the Accounting Industry.
Engineering and Design
Some may believe that the jobs lost to foreign countries are those that are low paying and those that many would not want anyway. However, this is far from the truth. Highly skilled workers in the engineering and design fields are starting to feel the effects of outsourcing. The decision to outsource engineering services is driven by money and the need to cut costs.
For example, “an office in India provides design and engineering capabilities such as finite element analysis, 2D drafting and 3D modeling, design sheet metal parts and complex molds, kinematics simulation along with other skills.” Engineering firms are beginning to see the benefits to outsourcing to foreign companies to do design work.
Tom Epply, president of Continental Design and Engineering stated, “my view is that I’m trying to save a business for my customer. It’s either this or he can have his head stuck in the sand and possibly lose the business. I’m trying to look at the bigger picture. The engineers in India can do the routine work, while the engineers her can do the research.” Many engineering consultants feel the same way as Tom Epply, outsourcing is inevitable and we need it to survive. But does this make it ethical?
Outsourcing engineering services can save companies money, however, there are many that disagree. The NSPE (National Society for Professional Engineers) has issued the following statement: “the outsourcing of engineering should be done only when the talent cannot be found in the US. If outsourcing of engineering work is done, it should be done using the same rules, regulations, and laws that employers and employees are subject to in the US.”
If a company outsources because of corporate greed and selfishness of top executives then this is very unethical but if outsourcing is done out of competitive necessity and the needs of the employees, it should be considered and viewed as ethical. There are some who believe that there is a shortage of American engineers and this might contribute to the haste in outsourcing engineering work. However, there are plenty of people here in the US who can do the work.
There are few engineering firms around the country that are struggling with the issues of outsourcing work or keeping their work inside the US. These companies will be forced to weigh the pros and cons and decide what is ethical for their firm.
High Tech Jobs
The need for technology and IT (information technology) firms has grown rapidly and will continue to grow in the future. These firms have been hit hard with outsourcing to foreign countries. There was a time when someone with a degree in computer programming did not have to worry about having a job. Most everyone thought that computer programmers were in demand and would always have a job. In 2000, the unemployment rate for computer programmers was 2.0%.
By 2004, this number rose to 9.5%. One company that US jobs are being sent to is India Web Developers. This company’s website has an entire section devoted to convincing companies of why they should outsource their web development needs to India.
In the past America was seen as a global leader in regards to technology. Now the question is: Is the US losing their position as the technology leader by outsourcing these jobs? In order for the US to keep their high status, there will need to be more investment in education and teaching of math and science. Without education and a capable workforce, we will lose high-tech jobs and our place as innovators globally.
The Accounting Industry
The outsourcing of accounting functions, such as tax returns, book keeping and auditing, have become a multi-million dollar industry around the world. Reports of the scope and size of the outsourcing market vary greatly, but the largest outsourcing companies claim that thousands of returns were processed during the 2003 tax season.
Estimates indicate that totals now may be well into the hundreds of thousands. Accounting firms are feeling more and more pressure to outsource some of their work and lower their costs. On the website for SurePrep, which is an offshore provider for tax return services, they provide the following pitch to CPA’s and accounting firms: What if you could prepare a thousand more tax returns without adding even one more staff member? And what if you could prepare those returns for up to 50 percent less than what it costs you right now? You can with SurePrep.
And with virtually unlimited ability to prepare and process returns, you can increase volume, multiply profits, and grow your practice. This proposal is definitely hard for any firm to pass on. What company would pass up increasing their volume and profits without adding staff? There are many additional benefits that an outsourcing firm may provide for accounting firms including : 1. Qualified part time help
2. Huge cost advantage to outsourcing
3. Faster turn- around time and increased productivity with returns coming back in less than 48 hours. 4. CPA firm freed up due to reduced tax preparation workloads. Leaving time for staff to find ways to offer clients new services. 5. Tax outsourcing can serve as a catalyst for business transformation, enabling a firm to outsource other accounting functions such as bookkeeping. Due to these benefits, many firms are beginning to outsource overseas. Although these benefits may seem great, there are still some risks and ethical concerns related to outsourcing.
According to the AICPA (American Institute of Certified Public Accountants), the chief concern is the Code of Professional Conduct that CPA’s are required to follow. According to Richard Miller and Alan Anderson, “AICPA members have responsibilities related to the practice of using third parties to provide services in engagements for clients. Primary among them are security and confidentiality of information, due professional care and compliance with provisions of the Code of Professional Conduct. In addition, members must monitor security procedures that third-party providers have put into place to ensure they remain effective.”
It will be difficult for accountants to ensure that financial information of their clients remain confidential and secure. Also, firms will find it hard to ensure that the outsourcing companies are qualified to complete the job. According to the AICPA, firms need to “exercise due care” to make sure their clients information are handled correctly and securely. They also state that “there is no specific ethical requirement that the member disclose to the client that they are using the services of an outside provider.” Conclusion
Outsourcing is a legal business activity affecting America. And it is an inevitable response to globalization and international trade. The outsourcing of American jobs will continue to be a great subject to debate here in the United States. Our politicians will continue to debate the topic and decide if there should be laws set to help or hinder companies from outsourcing jobs. There are many officials that believe that outsourcing will help our country and economy and that nothing bad could come from outsourcing.
“It is a general rule in economics that in order for an economy to grow, old jobs must be destroyed so that new jobs can be created.” There are also those who believe we should at all cost protect our current jobs. High unemployment in America has renewed complaints that outsourcing to countries such as India hurts American workers.
It seems that outsourcing American jobs is not going away and will only increase. Knowing this there are a few questions we should all ask ourselves, Is outsourcing an ethical practice, Is outsourcing for the sole purpose of reducing cost ethical and What responsibilities do US companies have to the employees they have laid off due to outsourcing? George Bush once said, “What do you say to someone in this country who has lost his job to someone overseas who’s being paid a fraction of what that job paid here in the United States?” Good question!
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