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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. (http://www.wsa1.org) "Developing nations...benefit by providing local viable careers for their educated populations, attracting foreign investments in their infrastructure, and a general increase in the standard of living." (http://cseserv.engr.scu.edu) These advantages make a strong case for outsourcing, but there are many disadvantages that are being discounted or overlooked.

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. (http://www.wsa1.org) There is also the possibility of a negative impact to the American job market. Issues surrounding this impact to our job market are not frequently mentioned during discussions about whether or not to send business overseas. Finally, there are many ethical questions and dilemmas involved with these decisions. These ethical dilemmas affect individuals in America as well as those in the overseas countries. In spite of these disadvantages, many major corporations have decided to outsource to foreign countries, indicating that the advantages are worth the risk.

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." (http://www.saigon.com/~nike/) Cooperation between US labor groups and Vietnam organizations was by the intervention of the Nike Corporation. It is alleged that Nike sent a letter to a government official "accusing US labor activists of harboring a secret agenda to change the government in Vietnam." (http://www.saigon.com/~nike/) Many workers' rights and anti-sweatshop organizations are working together in an attempt to convince Nike Corporation to treat its overseas workers fairly. (http://www.saigon.com/~nike/)

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." (http://news.bbc.co.uk) ExxonMobil denies all allegations brought against the corporation. Due to the possible impact of these allegations to the United States, adjudication of this case has been postponed several times. (http://www.laborrights.org/)

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." (http://news.bbc.co.uk) According to the suit, Coca Cola and PanAmerica Beverages used these forces to "kill, torture, and kidnap union leaders in Columbia." (http://news.bbc.co.uk) Coca Cola, of course, denied all allegations related to this law suit.

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. (http://www.nlcnet.org) Most of the allegations surrounding these companies relate to the "sweatshop" environment the employees are forced to work in, and the slave wages they receive for working there. It has also been alleged that police and government officials in areas surrounding these factories are compensated for looking the other way while these companies exploit the workers.

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 employee's 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

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