Question

We have pointed out that the value chain will indicate support areas that should be candidates for outsourcing. These are not essential functions for the primary activity of the company and if done more efficiently or cheaper or better by another firm, that may be the best way to go. Is this a case of "its just business" or is it unethical to outsource certain functions meaning you will lay off long term employees that are very specialized in these support functions? Would this be a good reason to outsource? Your thoughts if you are the CEO or top management in the firm?

Answer 1

It is pertinent to note that it is not unethical to outsource certain functions meaning you will lay off long term employees that are very specialized in these support functions. Outsourcing is done to mainly save time and money. Outsourcing certain business process is done by companies because of the availability of cheap labor in other developing countries. Laying-off long term employees who are very specialized in the support functions are not the only reason for outsourcing. Outsourcing has many benefits such as increased economic prosperity through global trade. Companies can handle these lay-offs in a better way. They can give them other roles in the organization or help them out in their job search by providing references if the company cannot avoid lay-off. Outsourcing is primarily to save cost and time. I personally believe that companies should not lay-off their long-term highly skilled employees as the basis for outsourcing. If I was the CEO, I would handle lay-off in a better way. I would seek outsourcing to save the time and money for highly skilled work. However, the long-term employees would be offered other roles within the company to provide them with a living. According to the Utilitarian ethical theory, an act is morally correct if it does greater good for greater number of people. Outsourcing would benefit the company in terms of money, management for efficient handling, employees with other roles and sustainability in the industry. Hence, it is ethical to outsource the business functions to third parties.