According to Palugod & Palugod (2011), Offshoring is moving a business from one country to another. In the 1960s, a standard definition of this term meant investment in developing countries by major Western companies. Outsourcing is when a company hires another company or group of individuals from another country to be responsible for a particular activity.
In this paper, I will discuss these two concepts from the perspective of work ethics.
Offshoring:
According to (Douglas, 2017), the advantages of offshoring lie in the availability of skilled labor at lower costs abroad and more savings in workers' compensation costs that are much lower than in the United States, in addition to the tax benefits outside the United States provided by certain countries, the ethical dilemma here is the impact on jobs in the United States and the loss of a large part of them abroad, this causes a massive crisis in the unskilled labor who will not find suitable jobs in light of the competition of skilled labor, which causes part of the unemployment crisis and many cases of divorce or family separation another dilemma is the return of profits to the United States and the collection of taxes from these companies which in turn finds a way out by investing in these countries (Bottini, Ernst & Luebker, 2007).
Outsourcing
The advantages of outsourcing lie in the low cost of labor abroad and the ability to invest working hours more effectively within 24 hours. However, the ethical dilemma is the lack of complete control over outside labor, quality problems, and following the standards of the home country in another country. In addition, the feeling of job instability among the home country employees may be replaced (Nelson & Nygaard, 2018).
Example of Offshoring
According to Dossani & Kenney (2009), IBM India Private Limited employs about 131,000 employees from India. These employees actually serve the parent company in the United States in software development and systems control, but in spite of that, IBM USA is carrying out its duties as a major company that contributes to the national economy and the development of American society in addition to its various programs in sustainability activities.
Example of Outsourcing
According to Xing & Detert (2010), the iPhone is designed in California but made entirely in China. A business plan was proposed to move the iPhone industry to the United States, and the result was that one device would cost $30,000. Despite the previous criticism of Apple and the poor conditions for OutOutsourcinghe, the company fixed the glitches and became a reputable company.
Conclusion
There have been, and still are, continuous attempts to solve the ethical problems resulting from Outsourcing & Offshoring, for example, the proposed legislation "The No Tax Breaks for Outsourcing Act" and who wants to require companies operating abroad to pay the same taxes that local companies pay (Whitehouse Senate, 2019), Democratic presidential candidates Hillary Clinton and Bernie Sanders have also proposed "smart deals" to limit the harms of Outsourcing & Offshoring (Douglas, 2017), however, the available solutions lie for companies to support the national economy in other commercial activities that can absorb local labor.
References
Bottini, N., Ernst, C., & Luebker, M. (2007). Offshoring and the labor market: What are the issues?. Internat. Labour Office.
Dossani, R., & Kenney, M. (2009). Service provision for the global economy: the evolving Indian experience. Review of policy research, 26(1‐2), 77-104.
Douglas, W. A. (2017). The Ethics of Offshoring. Challenge (05775132), 60(1), 83–97. https://doi.org/10.1080/05775132.2016.1268475 Retrieved from EBSCO multi-search in the TUW Library
Nelson, O. N., & Nygaard, A. (2018). The ethics of outsourOutsourcingcompanies fail at responsibility. The Journal of Business Strategy, 39(5), 7-13. Retrieved from ProQuest One Academic in the TUW Library
Whitehouse Senate. (2019). Whitehouse, Doggett Author Bills To End Trump Tax Breaks For Exporting Jobs & Profits, https://www.whitehouse.senate.gov/news/release/whitehouse-doggett-author-bills-to-end-trump-tax-breaks
Xing, Y., & Detert, N. C. (2010). How the iPhone widens the United States trade deficit with the People's Republic of China.