Ethical Issues in Outsourcing and Off-shoring of Jobs in the Telecommunication Industry - Essay Example

? Ethical Issues in Outsourcing and Off-shoring of Jobs in the Telecommunication Industry Introduction Global companies have been outsourcing their business processes since many years. Contextually, the companies in the present business world, especially the telecommunication industry seem to be more competitive and highly focused on relocating their business units in the low income economies where they can obtain the benefits of easily available workers at a cheaper labor cost. Moreover, the trend of expanding business units to the low developed or developing countries is generally conducted by the global organizations operating in the telecommunication industry with the intention of attaining a significant financial growth. The major benefit of outsourcing and off-shoring of jobs is to reduce the operational costs incurred during the implementation of business activities which in turn also helps the organizations to meet its ultimate obligation towards its stakeholders (Friedman, 2012). Emphasizing upon the present scenario of rapidly increasing trend of outsourcing and off-shoring of jobs in the telecommunication industry, the main objective of this research paper will be to justify the ethical viability of these practices frequently performed by the modern telecommunication organizations. Moreover, the discussion of this research paper would also encompass the current trend in the telecommunication industry concerning outsourcing and off-shoring which tends to form different ethical issues. Therefore, the discussion would be highly focused on representing a fair presentation focusing upon the facts and arguments concerning the ethical issues in the outsourcing and off-shoring of jobs, especially in the global telecommunication industry. Outsourcing and Off-shoring Trends in the Telecommunication Industry The practice of outsourcing can be defined as the process of rendering services of a particular organization to its clients, in a relatively lower price than the core company could provide. On the other hand, the term ‘off-shoring’, depicts the process of operating business functions from other countries which can facilitate the company to reduce its operational costs. In relation to the present observation of the global telecommunication industry, a majority of global firms tend to target economically backward or developing countries which enable them to reduce the overall operational cost by availing requisite resources at a much cheaper cost. In this regard, the process of offshoring business operations also facilitates the organizations to obtain resources, especially the manpower, in a lower cost as compared to the economically developed countries. Due to the fiercely growing competition in the global telecommunication industry, organizations often tend to practice outsourcing and off-shoring of their business operations from and to the other under developed or developing countries. In the present day context, it has been apparently observed that the global marketers seek to relocate their business operations in order to attain greater convenience in terms of paying lower wage which can also facilitate the organization to fulfill the expectations of its potential stakeholders in a cost effective and resourceful way. With regard to the present business strategy in the telecommunication industry, it can be observed that a trend of expansion is highly practiced by the organizations with the aim of accomplishing considerable economic growth and strengthening their global presence in the competitive market scenario (Jaruzelski, Katz & Ribeiro, 2004). While discussing about the current trend of outsourcing and off-shoring in the telecommunication industry, it can be observed as emerging and widely accepted strategies by the modern organizations. This continuous emergence of outsourcing and off-shoring strategies within the global telecommunication industry has been witnessed to be influenced by. For instance, the lower penetration rate of the services in the telecommunication industry is one of the major advantageous facets which enable the organizations to obtain substantial benefit in the respective market through outsourcing and off-shoring. In accordance with the present business strategy of the telecommunication industry, the organizations tend to obtain substantial benefits through operating in under developed or developing countries due to the lower penetrating rate offered by the countries’ economic position. The strategy also helps the telecom service providers to serve a larger number of its potential customers in an efficient and economic way. Moreover, the process also facilitates the telecom companies to achieve substantial benefits due to their low cost of services in the other countries. In this regard, the lower penetration rate in the service facilities can also provide ample opportunities for the telecom companies to bear a minimum risk concerning the economic instability within the host nation while performing off-shoring and outsourcing activities. Therefore, it can be stated that the lower rate of penetration is one of the major cause behind the intention of off-shoring business activities in the developing countries (Friedrich, Weichse, Miles & Rajvanshi, 2009). In addition, the present business trend of the telecommunication industry also focused on the relocation of business into the lower developed country which facilitates the organization to reduce a larger amount of operational costs. Moreover, the strategy of off-shoring business units into the developing countries facilitates the organizations to avail a larger number of workers at a more feasible cost due to the lower economic position of the country. It is worth mentioning in this context that majority of telecommunication organizations are focused on off-shoring and outsourcing their activities into the lower developed countries where they can avail the workers as well as the requisite amount of resources in a more feasible cost facilitating greater profitability in terms of cost efficiency (Marvin, n.d.). Moreover, the lower economic development in the developing countries also facilitates the telecommunication companies to gain substantial revenue due to the lower income level of the employees. In addition, the lower economic development of the countries also facilitates the telecommunication companies to obtain a substantial amount of resources in a considerable lower rate which further enables the organizations to attain a strong economic growth in the host countries. The particular advantage also facilitates these organizations to strengthen its position in the global telecommunication industry as well (Friedman, 2012). Furthermore, the increasing rate of unemployment in the lower developed countries also creates opportunities for the telecommunication firms to relocate and gain potential human capital in a considerably lower wage. In the context of present employment scenario of the underdeveloped or developing countries, it can be observed that the unemployment rate of the countries is fiercely growing which enables the service industries such as the telecommunication firms to obtain greater opportunity of availing large number of workforce. For instance, the major outsourcing countries in the Asia Pacific region have been witnessing a continuously increasing unemployment rate, which has further attracted a larger number of outsourcing companies from developed nations (Palugod & Palugod, 2011). Contextually, the major contribution of Information and Communication Technology (ICT) has also been influencing the modern outsourcing and off-shoring activities of the telecommunication firms. The rapid transformation of technological features and continuous innovation of communication facilities have been playing a crucial role for the telecommunication firms to develop their business process. In keeping with the increasing pace of computing and internet accessing, the communication technology has enormously urbanized the overall telecommunication process in the global scenario. With this rapid transformation of ICT within the telecommunication firm, the organizations have increased their potential capabilities to identify and address the needs and desires of their respective clients. In relation to the present developing environment of ICTs, the business process of the telecommunication firms can be observed as focused on developing their services which may enable the organizations to obtain a better competitive position in the international arena. Therefore, the continuous development of the modern ICT can also be considered as one of the major influential factors for the telecommunication industries to successfully accomplish the outsourcing and off-shoring activities (OECD, 2006). Challenges and Obstructions Faced by the Telecommunication Industry in terms of Outsourcing and Off-shoring of Jobs In accordance with the present continuous development of the global business environment, it has been observed that the practicing of outsourcing and off-shoring activities play a pivotal role among the telecommunication industry players. However, the industry has also faced various obstacles and challenges in terms of practicing outsourcing and off-shoring activities. From a generalized perspective, it can be observed that the organizations, when outsourcing and off-shoring tend to face challenges concerning economic value while procuring resources or performing various business operations (Friedrich, Weichse, Miles & Rajvanshi, 2009). Moreover, the business operations of the telecommunication companies are also destructed due to the discriminatory factors concerning to the culture, language as well as other external business environment attributes. Nevertheless, the business operations of the telecommunication industry often involve ethical issues which can also impose a significant effect on the organizations while it tends to perform any outsourcing and off-shoring activity. Contextually, with regard to the various obstacles and challenges in the outsourcing and off-shoring performances, the global telecommunication industry can be identified as a major challenging area in the present business environment (SAGE Publications, 2008). Decline in Employee Morale In relation to the ethical challenges, business outsourcing and off-shoring practices are often regarded as a major controversial topic. Studies have revealed that outsourcing and off-shoring can significantly affect employees’ morale within the organizations and also lower the degree of loyalty of the workers by a substantial extent. Moreover, the expectations as well as self willingness of the employees are also affected while the organization aggressively performs outsourcing and off-shoring of jobs creating employment opportunities in the host nation. It is worth mentioning in this regard that the reduced employee morale due to the off-shoring and outsourcing activities can broadly affect the overall process of the organization which can also diminish its overall productivity as well as the quality of services rendered. In major instances, it has been observed that the employees tend to obtain job opportunities with other potential employers as soon as it is obvious that the organization might be off-shored. The departure of highly skilled and experienced employees can further be expected to have an impact on the overall process of the organization causing the stakeholders’ dissatisfaction (SAGE Publications 2008). Therefore, the declining of employee morale can be a major affecting factor for the telecommunication firms in terms of practicing outsourcing or off-shoring business. Loss of Innovation Loss of innovation is one of the major risks that a telecommunication firm usually faces while it tends to practice outsourcing and off-shoring activities. In accordance with the competitive notion of global business environment, human expertise as well as innovation can be considered as one of the major strengths for any organization to achieve competitive advantages. It is in this context that extensive practicing of off-shore outsourcing in the telecommunication industry can cause potential risks for the organizations. Therefore, it is also important for the telecommunication firms to build up an effective human expertise to improve the process activities which shall further enable the organization to attain substantial benefits through innovation. However, to build a strong and savvy workforce within the organization, it may also cause the limitations of more time consuming and costlier strategic implementation process, thus minimizing the advantages obtained through cheaper labor force. It is worth mentioning in this context that telecommunication organizations mostly emphasize on outsourcing and off-shoring to less developed nations which even though offers the benefits of cheaper labor force but lacks in assisting with ample amount of highly skilled workers that would be required to facilitate innovation (SAGE Publications, 2008). Therefore, it is of utmost importance for the telecommunication firms to retain their skilled employees and make them more innovative which can enhance the efficiency and effectiveness of the overall process within the organization. Public Reaction towards Corporate Citizenship In relation to the fiercely competitive business environment, organizations are often identified to be challenged in terms of maintaining adequate and good citizenship within their respective fields. It is often observed in this context that majority of organizations are highly focused on strengthening their corporate standings; rather than focusing on their governance mechanisms which can enable them to strengthen their long-term sustainability within the host market. In relation to the present day context, it becomes more essential for any organization to maintain its corporate citizenship which can enable it to achieve long-term sustainability. The approach is not only executed to attain social benefits, but it also applied with the motive to ensure adequate value as well as profitable outcomes for the overall business performances including the business process involving community and other stakeholders groups. Moreover, the concept of corporate citizenship also helps the organization to gain its public loyalty towards its offerings in the host nation (SAGE Publications, 2008). In relation to the off-shoring activities performed by the telecommunication companies, it is often observed that the firms tend to overlook the practice of informing communities and societies regarding its different off-shoring and outsourcing activities (Friedrich, Weichse, Miles & Rajvanshi, 2009). This type of overlooking activities may also affect on the organizational image on the community within the host nation which can further increases risks for the organizational reputation outsourcing and off-shoring in the country. Issues concerning Quality and Standards Inadequate level of quality control process as well as standards can also be considered as other potential constraints allied with off-shoring and outsourcing activities practiced by the telecommunication firms. In relation to the present competitive business world, reliability as well as adequate quality of services has become considerably vital for the telecommunication firms to attain substantial growth. Failure of system or any related obstacle hindering the technological processes can affect on the overall operational functions and the competitive strengths of the firm. Moreover, in the context of telecommunication industry, customer service as well as customer satisfaction imposes strong influences on the organization’s reliability and efficiency to perform the information system. Therefore, it is crucial for the telecommunication firms to effectively control the quality and standards of their services which can further ensure the enhancement of the performance of the organization, especially while it is associated with off-shoring and outsourcing (Hartman, 2006). Issue concerning Culture and Communication The issue concerning culture and communication is also a major risk factor for the telecommunication firms in terms of practicing off-shoring and outsourcing. The process of off-shoring and outsourcing is highly influenced by an effective culture and well-built communication process which significantly increases the level of understanding and cooperation within the local community. In relation to the present day context, the telecommunication firms often face different challenges due to their inadequate capability of understanding the local culture and communication processes in the host country. The organizations face more complexities in terms of communicating which further impact the identification of the needs and desires of the clients with an in-depth understanding. Moreover, cultural diversity being influenced by the increasing globalization and internationalization effects can also create major difficulties for the telecommunication firms to successfully accomplish the process of off-shoring and outsourcing. The impact of culture and communication often addressed by the organizations in an unconscious manner in terms of time and cost have further been noted to result in adverse affects on the overall off-shoring processes of the organization (Hartman, 2006). With due regard to the aforementioned challenges and obstructions, it can be stated that when focusing on the implementation of off-shoring and outsourcing strategies, it is important for the telecommunication firms to take the challenging factors as the major consideration aspects to be benefitted with the growth opportunities in the host nation. It is worth mentioning in this context that in common instances, telecommunication organizations might involve ethical issues relating to economic value, labor cost and discrimination of workforce when focusing on off-shoring and outsourcing activities. From an in-depth perspective, it can be evidently observed that when focusing on off-shoring and outsourcing activities, telecommunication organizations often have to face ethical issues relating to employment discrimination, quality control as well as cultural differences. In accordance with the present competitive business environment, the notion of outsourcing and off-shoring of jobs have often been regarded as an advantageous business strategy of achieving desired economic growth through internationalization. However, the process of off-shoring and outsourcing also threatens the organizational long-term viability regarding its responsibility towards stakeholders and employment loyalty (Patel, Lawson-Johnson & Patel, 2009). Critical Review and Justification With reference to the above discussion, it has been witnessed that the trend of outsourcing and off-shoring of jobs in the telecommunication industry faces different challenges which tend to impose drastic affects on the respective industry. However, it can also be observed that the trend of offshore outsourcing is generally followed by the modern telecommunication firms in order to strengthen their presence in the global business environment. In contrast, the ethical dilemma has also been identified as the major constraints for the modern telecommunication firms while they are planning to off-shore and/or outsource their practices (Plunkett, 2006). The following discussion of this paper will demonstrate the efficiency of practicing off-shore and outsourcing activities and major ethical issues affecting the modern telecommunication firms in the current day global scenario. Effectiveness and Efficiency of Outsourcing and Off-shoring Initiatives In accordance with the present fiercely increasing competitive global business environment, it has been apparently observed that the organizations seek to perform outsourcing and off-shoring of business resources in the modern day telecommunication industry. The major intention of the organizations has been indentified to be reducing the operational costs of the organization and obtain economic growth in turn. In general, the trend of off-shoring and outsourcing is strategically followed by the telecommunication firms as relocating operational process into a less developed country. It is worth mentioning in this context that the process of off-shoring provides significant benefits to the organizations in terms of obtaining a large number of qualified and skilled workforces in a feasible and cost effective mechanism which can further enable the telecommunication firms to achieve its financial goals. Moreover, the trend of internationalization through off-shoring and outsourcing also facilitates the firms to meet the desired expectations of their stakeholders by a larger extent (Kumar & Salzer, 2010). While saving a large amount of operational cost is often regarded as the primary reason of outsourcing, the extent of efficiency in terms of business functions in the other territory also remains as the major considerable subject for the modern telecommunications firms. With this regard, it can be stated that the notion of off-shoring and outsourcing often enable the organizations to establish their presence in the global nations more competitively as observed in the application of other internationalization strategies. In this context, it can frequently be observed that the trend of off-shoring and outsourcing has been found to be more effective strategy which facilitates the organization to strengthen its brand position. This particular aspect further increases the organizational competencies of acquiring a large number of potential stakeholders. To be summarized, the processes help the telecommunication firms to avail greater convenience of acquiring resources, communication facilities as well as adequate business supports than that obtainable from the economically developed countries (Kumar & Salzer, 2010). Therefore, it can be stated that the integration of off-shoring and outsourcing provides substantial benefits for the modern telecommunication firms to save its overall operational costs. In addition, the integration of off-shoring and outsourcing in the organizational process also rewards the potential benefit of obtaining a significant number of cheap employees into the operational functions. In relation to the present day context, the higher rate of computer-literate and system expertise individuals in the less economically developed countries also enable the global organizations to improve their operational activities through the help of off-shoring and outsourcing initiatives adopted by the telecommunication industry players. Moreover, the notion of offshore outsourcing also enables the telecommunication firms to obtain high skilled workforces at a considerable cost which further plays a contributory role to enhance the quality of services rendered by the organizations (Davies, 2004). In addition, the flexibility of working hours has also been regarded as a major beneficial aspect for the modern telecommunication firms to practice off-shoring and outsourcing operations. Due to the difference of time zones, especially when the US firms attempt to initiate off-shoring strategies in the Asia Pacific countries, it becomes more convenient for the organizations to provide adequate services to its respective clients at a lower cost but increased efficiency (Davies, 2004). Hence, with respect to the above mentioned factors, it can be considered that the practice of off-shoring and outsourcing activities provides major benefits for the telecommunication industry to enhance the efficiency of their business operations. However, the notion of off-shoring and outsourcing of jobs is also identified as a major concerning area when justifying its nature based on ethical concerns. With this regard, the following discussion will demonstrate the major ethical issues concerning the practice of off-shoring and outsourcing of jobs in the telecommunication industry. Ethical Issues behind the Trend of Outsourcing and Off-shoring of Jobs The practice of off-shoring and outsourcing is often argued on the ethical grounds with regard to its nature and notion. Correspondingly, it has been observed that the practice of off-shoring and outsourcing of jobs frequently involves the issue concerning the diminishing employee morale in the home country owing to cultural differences and job insecurity. Recent studies have explained in this context that the aggressive trend of outsourcing in the telecommunication industry has potentially hindered the morale of the employees being highly focused on replacing and hiring new employees for the operational process in another country. In this regard, the existing employees are likely to lose their respective jobs and thus suffer from hindered morale, loyalty and job security in their workplaces (Mintz, 2004). Moreover, the outsourcing and off-shoring of jobs in the telecommunication industry includes the process of unexpected lay-offs of the organizational workforce, which further diminishes the income source of the employees also affecting their retirement packages. The process could also push-back the retirement as well as the salary and compensations of the workers to a considerable extent which can be attributed as another major unethical practice caused due to the outsourcing and off-shoring practices in the telecommunication industry (Mintz, 2004). Conclusion and Recommendations In relation to the increasing pace of the global business environment, it is quite apparent that modern organizations attempt to adopt extensive outsourcing and off-shoring decisions which can enable them to lower their costs. The organizations in the present business world have thus been identified to reduce operational costs through seeking low-cost sources of employment which are further expected to facilitate the organization to achieve a competitive position in their respective industry. In relation to the telecommunication industry, the firms are highly focused on profit maximization by reducing their operational costs that can meet the desired expectations of the stakeholders. In order to reduce the possible ethical issues behind the outsourcing and off-shoring of jobs in the telecommunication industry, the firms should highly be focused on developing effective plans and communication processes taking into account the differing perspectives and cultural diversity of the workplace into concern. The decision of outsourcing and off-shoring of jobs should be prepared in a transparent way which will neither hinder the morale of the existing workforce nor create any discrimination within the outsourced employees. With this regard, the management of the firm should possess an apparent and clear communication process to the employees regarding its future outsourcing and off-shoring activities. Moreover, the employees of the firm should be communicated regarding their expected financial returns when developing the decisions of outsourcing and off-shoring the business activities which would prove beneficial in preserving higher degree of employee morale. Moreover, the organization can also provide the opportunity to the highly experienced and skilled workers to relocate them with the organizational processes in the other country with adequate growth opportunities (Hartman, 2006). Summary In accordance with the modern business competitiveness, it has been witnessed that the practice of outsourcing and off-shoring of jobs considerably provides adequate facilities to the telecommunication firms. For instance, it rewards the benefit of reducing operational costs to the organizations by acquiring resources, especially in terms of the potential labor of the firm. Moreover, the trend can also facilitate the telecommunication firms to reduce possible constraints relating to the legal aspects, working regulations as well as social responsibility related guidelines by taking the virtues of globalization. In addition, the outsourcing and off-shoring of jobs in the telecommunication industry can also enable the firms to improve the standard and quality of its services through integrating skilled employees at a lower cost. However, the trend of outsourcing and off-shoring can also create significant ethical issues which may affect the image as well as reputation of the firm. The nature of outsourcing and off-shoring significantly focuses on replacing workforce of the organization with newly appointing workers from another culture and regional background which can be stated as the major concerning factor which might be termed as a major causing factor for the diminishing financial benefits of the existing employees. Moreover, overlooking prior communication process regarding outsourcing and off-shoring might also be treated as unethical in nature that hinders the career prospects the employees. It is worth mentioning in this context that hindrances in terms of employee dissatisfaction, management complexities and cultural conflicts are few of the most apparent ethical issues witnessed by telecommunication organizations when implementing off-shoring and outsourcing initiatives. References Davies, P. (2004). What's this India business?: Offshoring, outsourcing, and the global services revolution. Boston: Nicholas Brealey Publishing. Friedman, W. H. (2012). On justifying outsourcing and offshoring. American International Journal of Contemporary Research, 2(4), pp. 58-64. Friedrich, R., Weichse, P., Miles, J. & Rajvanshi, A. (2009). Outsourcing network operations maximizing the potential. Retrieved from http://www.booz.com/media/uploads/OutsourcingNetworkOperations.pdf Hartman, J. (2006). Ethics and outsourcing. Retrieved from http://www.ece.ufl.edu/academics/undergraduate/scholarships/essays/2006/hartman.pdf Jaruzelski, B., Katz, R. & Ribeiro, F. (2004). Outsourcing trends in the North American telecommunications market. Retrieved from http://www.booz.com/media/uploads/Outsourcing_Trends_in_the_North_American_Telecommunications_Market.pdf Kumar, P. & Salzer, O. (2010). Advantagee and disadvantages of outsourcing and offshoring to India. Retrieved from http://www.salzer-3dengineering.eu/PDF/AdvantagesDisadvantagesOfOutsourcingToIndia.pdf Marvin, K. T. (n.d.). Global trends in outsourcing and their impact. Retrieved from http://www.wpi.edu/Pubs/E-project/Available/E-project-042711-161931/unrestricted/MarvinIQP.pdf Mintz, S. M. (2004). The ethical problems of outsourcing. Retrieved from http://www.utsandiego.com/uniontrib/20040806/news_lz1e6mintz.html OECD. (2006). The share of employment potentially affected by offshoring – an empirical investigation. Retrieved from http://www.oecd.org/sti/ieconomy/36187829.pdf Palugod, N. & Palugod, P. A. (2011). GLOBAL trends in offshoring and outsourcing. International journal of business and social science, 2(16), pp. 13-19. Patel, D., Lawson-Johnson, C. & Patel, S. (2009). The effect of cultural differences on software development. Retrieved from http://cit.mak.ac.ug/iccir/downloads/ICCIR_09/D%20Patel,%20C%20Lawson-Johnson%20&%20S%20Patel_09.pdf Plunkett, J. W. (2006). Plunkett's outsourcing and offshoring industry Almanac 2007: Outsourcing and offshoring industry market research, statistics, trends and leading companies. Houston: Plunkett Research, Ltd. SAGE Publications. (2008). Outsourcing and offshoring information system projects. Retrieved from http://www.sagepub.com/upm-data/27211_11.pdf Read More