Ethical Offshoring

Question: If you can cut costs by outsourcing work overseas, should you do it?

Sep 1, 2008  

by Fil Fraser

The Case: You know you’re not alone. Other CEOs you know have dealt with the same problem. Your company has a venerable history. You’ve taken it from a small regional supplier to a player on the world stage, becoming a sizable employer. Many families depend on your enterprise.

But your competitors are playing into the now-universal truth that there’s always somebody in some country who can do the work that your employees, your friends and neighbours have done for years, and do it more cheaply, a lot more cheaply. Never mind the working conditions, their countries will often cut terrific deals to get the jobs. You can remain competitive by sending your work overseas or you can keep the jobs at home and try to find new ways to succeed. You know that offshoring (outsourcing manufacturing or services to foreign suppliers) can cut both ways. Your local phone company may provide customer service from a base in India. But when Dell Inc. shut down its Edmonton customer support centre after cashing in on substantial local incentives, it was clear that, for many corporations, the bottom line trumps all other considerations.

What about you? Is it the company or the community? To offshore or not to offshore – that is the question.

The Panel: KEN CHAPMAN: lawyer, blogger and principal in Cambridge Strategies Inc., a public policy consulting firm | JANET KEEPING: lawyer and president of the Sheldon Chumir Foundation for Ethics in Leadership | ANDY KNIGHT: professor of political science at the University of Alberta; executive director, United Nations Global Centre for the Responsibility to Protect

Ken Chapman: The world economic order is changing and the BRIC countries [Brazil, Russia, India and China] are starting to make significant progress based on the tried-and-true principles of the marketplace. The truth is, the corporate marketplace that most Chicago School fans tout means if what you are doing can be done cheaper in the BRIC countries, it will be.

Andy Knight: For better or for worse, we are now living in a globalized world. The phenomenon of globalization has meant that markets are global, production is global and in order for companies to be competitive in this globalized environment, the temptation will be to relocate operations in countries where labour is cheapest, without regard to poor working conditions and negative impacts on the environment in that locale.

Janet Keeping: This is a very complicated question to even think about, but thinking ethically, the biggest complication is answering the question, to whom do I owe the highest duty? Is it to those nearest and dearest – my community and my country? In which case I ought to resist going offshore and refocus my business in a green, ethically sound way which will justify my higher costs to Canadian companies and/or consumers. Or is my highest duty to those in greatest need?

Chapman: So, in the new world order, you now have to be adding value through better quality or serving different needs or serving greater needs differently if you wish to thrive or even survive. It is not just about managing change. It is also about managing to change. If what you are doing can be done better and faster with a computer, it will be. Hardly a market worth staying in if that is all you have to compete with.

Knight: I believe that all business people should consider the responsibility they have to their own community. If moving the operation overseas will cause a tremendous amount of hurt in terms of jobs lost and depressed economic conditions at home, then one should seriously consider not doing so.

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