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The Ethical Complexities of Outsourcing in India

Abstract of the Student #Thesis: Marion Hilpoltsteiner

Globalization has been a dominant force for many years, impacting individuals, societies, institutions, and states. This interconnectedness has highlighted the advantages of exchanging products, ideas, transactions, knowledge, concepts, and projects. Today, globalization is a reality that industries and companies must accept and navigate. Managers must recognize the global nature of business and strive to understand and collaborate with other market participants, nations, and cultures.


Outsourcing is a significant aspect of globalization that is becoming increasingly prevalent. But what exactly does "outsourcing" mean? A company engages in offshoring when it transfers tasks or functions to a foreign country, distinct from where its headquarters are located. This strategy is crucial for maintaining international competitiveness. The primary objective of outsourcing, whether for production or service tasks, is to reduce overall expenses and labor costs. This is feasible because the target countries typically have lower costs than the domestic market. In many cases, the quality of work, whether in production or service, is performed by equally qualified employees at a lower cost.


However, the ethical implications of outsourcing have sparked debates. Media reports and documentaries often highlight the challenging living conditions of local workers in low-wage countries, contrasting with the relatively comfortable lives of employees at headquarters or Western subsidiaries. This study focuses on India as an example to explore whether economic advantages justify neglecting ethical principles. It seeks to determine if it is acceptable to pursue cost-saving measures by offshoring company functions to low-wage countries, considering that the same work is being performed by human beings for lower compensation and fewer rewards.


This study also aims to assess the working conditions in India for employees handling offshored tasks. It is crucial to determine whether companies are acting responsibly by providing financially attractive products or services while also considering the social and ethical dimensions.


The main aim of this research is to explore whether economic advantages are so dominant that ethical standards are overlooked, or if both economic and ethical considerations are equally important for companies. In the initial stage of this research, a theoretical content analysis will define what "outsourcing" means. A qualitative and quantitative analysis will follow to develop preliminary assumptions. These theories will be verified through interviews with individuals working for companies that outsource to India, as well as Indians who will provide their perspectives on ethical standards in their country regarding working conditions.


The analysis of these interviews will focus on two aspects: the economic reasons why India is considered a top outsourcing destination, and the ethical considerations involved. Information from moral philosophy will be used to assess whether breaches of ethics are justified by adherence to moral standards. Based on the results, the study will conclude whether outsourcing, driven by financial advantages, is justifiable in terms of human morality and ethical compliance.

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