A 360 Degree View of Ethics in Outsourcing

Many companies have already discovered the benefits of outsourcing, such as remaining competitive and reducing costs. However, the decision to outsource does occasionally have its critics — and some of the most familiar criticisms are often framed in ethical terms.

Should you outsource or not? In this article, Back Office Pro covers all the ethical bases by providing a “triple bottom line” overview of outsourcing ethics — economic, social, and environmental.

What Prompts the Ethics of Outsourcing Debate?

Globalization has made it easier to outsource almost any activity to another country. In any nation, the issue of jobs is an emotional and political one. Especially for labor unions and political parties, the possibility of “losing jobs to outsourcing” frequently ignites the controversy surrounding outsourcing.

The debate often combines outsourcing and ethics and takes on a sports-like mentality of “our team” versus “your team” — examples include pro-American and pro-British sentiments when a U.S. or U.K. company chooses to outsource some of their tasks to overseas providers. 

Outsourcing can become an easy target to criticize when a country’s economy is experiencing economic downturns such as “The Great Recession.”While critics of outsourcing usually attempt to portray outsourcing as the “problem” by speaking of issues related to the ethics of outsourcing, this is not true for most companies choosing to outsource — “Outsourcing is the solution and not the problem” is a more likely portrayal of outsourcing by companies actively using it as a growth-oriented business strategy.

Ethical Issues of Outsourcing

Below are the most important ethical issues of outsourcing:

The Economic Paradigm of Outsourcing and Ethics

What is the appropriate economic goal of a business? Renowned economist and Nobel Prize recipient Milton Friedman described it concisely and candidly when he observed, “The business of business is business.” Over the years since that statement was made in 1970, it has been re-interpreted in many ways — but the critical importance of a profit motive for business organizations remains.

When business owners and managers apply this economic wisdom to outsourcing, the strategic decision should always be profit-oriented — what is best for your company’s bottom line? What is often overlooked in this economic paradigm is that additional profits produced by outsourcing are then frequently allocated to new expenditures for goods and services in the domestic economy. In most cases, this should be described as a “Win-Win Strategy” rather than focusing on the ethics of outsourcing.

The Social Paradigm of the Ethics of Outsourcing

Is outsourcing good for society? Even though most critics admit that outsourcing is neither unethical nor illegal, these same critics repeatedly criticize the ethics of outsourcing when discussing their interpretation of “The Greater Good” for a society. A capitalist society such as the one actively practiced in the United States is more likely to benefit from prudent outsourcing than to be “damaged” by the strategy.

Nevertheless, “the ethics card” is often played by critics of outsourcing — and this is especially seen within the social paradigm. While the government has a genuine role in preserving and improving society, remember that the mission of corporations in a capitalist society is to make a profit that enables the company to stay in business. What is best for your business?

The Environmental Paradigm of Outsourcing Ethics

In an era of climate change, environmental considerations deserve attention. For example, Western consumers are rightfully asking corporations to take responsibility for labor conditions and environmental standards adopted by some outsourcing vendors. The global supply chain often includes multiple opportunities to do a better job within the environmental paradigm.

However, diplomatic moves are also frequently at play when outsourcing ethics are spoken of in conjunction with environmental issues.

For example, high-level discussions between the US and India in early 2015 confirmed the intent to increase outsourcing activities dramatically, involving these two nations. This highlights an important aspect of outsourcing — companies need to choose their outsourcing destinations carefully. For example, outsourcing providers in India (where the headquarters of Back Office Pro is located) are currently ranked among worldwide leaders in outsourcing.

A final environmental point — your company, can frequently reduce your carbon footprint with outsourcing by reducing domestic travel and communicating electronically with outsourcing providers.

Reality Versus Expectations When It Comes to the Ethics of Outsourcing

In the world of outsourcing; capabilities, skills, input, and output are used to differentiate success from failure. As the outsourcing industry has grown, and more services are being offered to the public, business owners have more choices. However, they are also more exposed to false advertising and poor results, which has ultimately led to an outsourcing Ethics Debate. 

When attempting to understand project management and delegation, finding the correct balance for input and output is a crucial step in successful task completion, and is paramount to a company’s image, future, and task satisfaction.

When looking into the morality of productivity, more so than the motivation of profit, the ethical issues of outsourcing are the foundation of any successful process or achievement.

A successful outsourcing venture can generally be placed under two main goals: meeting an employee’s needs, and providing them with a reasonable level of comfort. However, to ensure these goals can be properly executed, effort is required from both the client and the vendor.

Important Ethical Practices for the Client 

Despite the “customer is always right” mentality, there are certain practices that need to be adhered to. Not only for peace of mind as a client but for the benefit of the outsourcing partners too. These practices include:

• Providing Accurate Project Parameters Always In all outsourcing projects, the great majority of success is determined by accuracy in client/vendor dealings. This needs to be adhered to from the first meeting and maintained throughout each task. To protect the client and their expectations, many outsourcing companies provide complete information confidentiality, password protected systems, and virtual private networks that include easy-to-use communication features for project updates and urgent requests.
• Accurate Pricing in All Outsourcing Regards The most common risks in outsourcing are inflated service costs, inaccurate charges, and poor-quality work. To ensure these types of risks are avoided when choosing an outsourcing partner, it is recommended that a client performs professional background searches. Important details to check out – track record portfolios, past client reviews or testimonies, and technical competencies. It is also considered good practice for a company to openly offers this information to the public.
• Timely Payments and Contracts in All Outsourcing Regards Following contractual details, and ensuring all payments are made on time, is essential when wanting to guarantee the best quality and proactivity. Clients should include all payment details in the first meeting, setting clear parameters, and maintaining them. Many outsourcing companies offer different payment plans to assist their clients with this.
• Proper Communication Communication is important when outsourcing a project or task. Taking the time to clearly define a project vision and parameters is essential to ensure that an outsourcing partner can deliver what is expected. It is also advisable to keep communications open throughout the project if one might need to add any additional information. When choosing an outsourcing partner, make sure that they are open and proactive with communication.

Important Ethical Practices for Outsourcing Vendors

When offering outsourcing services, a promise is made to each client that their work will be handled with the utmost professionalism, respect, confidentiality, and quality. To ensure that an outsourcing service is up to standard, a few key factors to consider include:

• Never Overestimating Your Outsourcing Capabilitie Advertising or promising capabilities should always be handled honestly and clearly so that each client understands the limitations. To build trust while working together, a deep motivation for client respect and security will ensure a successful project and attract more clients in the future.
• Quality is Key As an outsourcing vendor, quality should be the main priority in each task and process. A very prominent concern, especially when it comes to outsourcing to other countries or states, is the ethics of offshore work versus local options. To reassure clients, a vendor should provide a public portfolio of successful tasks completed in the past, create a quality promise that clients can see, and ensure to deliver on that promise.
• Always Deliver on Time Some of the main reasons that clients outsource are high workloads and critical time pressures. Therefore, ensuring that your outsourcing team can work quickly and accurately under pressure is vital. Failing to do so could result in the loss of the client and the project, not to mention future clients.
• Task Transparency Company transparency has become highly sought after when clients look for a partner that they can trust. Showing the public that your company is clear and open about your processes, showing an economic mindset, and being proactive towards work, environmental, and social impact can make a difference in how your company and policies are viewed.

Do What Is Best for Your Company

Here is the triple bottom line for most companies that are using outsourcing as an effective business strategy:

• Economic Unless you fail to choose an experienced outsourcing partner and the best outsourcing destination, your business can expect to save time and money while improving quality.
• Societal The long-term benefits for society are likely to be on the plus side when nations such as the United States and India actively work together to enhance mutual outsourcing benefits.
• Environmental Reducing carbon emissions and footprints is a practical reality for many outsourcing scenarios.

Getting Things Done the Right Way with the Right Outsourcing Partner

Your company should “run the numbers” and do a cost-benefit analysis by examining the costs versus benefits of outsourcing. What is the best decision for your business? However, companies cannot afford to lose sight of an important goal that will help them maximize profits when outsourcing — the need to choose an ethical and long-term outsourcing partner.

At Back Office Pro, we have been assisting with outsourcing requirements for over fifteen years, and provide a service supported by highly experienced professionals. Catering to outsourcing ethical concerns should be at the core of each project, and Back Office Pro works diligently to ensure that our client’s needs are met professionally, quickly, accurately, and ethically.

If you need cutting-edge outsourcing, and the benefits it can provide, contact one of our outsourcing providers in India today.

– Back Office Pro