Offshoring will continue to be a crucial tool for managing and deploying global human resources notwithstanding these drawbacks. The tendency is, if anything, accelerating. Forrester Research has predicted that 830,000 US service employment will leave the country by 2005, up from its November 2002 prediction of 588,000 positions by 50%. In addition, Forrester predicted that by 2018, US businesses will outsource 3.4 million service positions (Geewax, 2006). According to a UNCTAD poll, four out of every ten European companies have already moved their service activities overseas (UNCTAD, 2006). Although subcontracting gives MNCs that operate internationally important flexibility in their human resource practices, it also necessitates the coordination and management of the intricate relationships that result from it.
Offshoring will therefore likely not diminish and is likely to become more prevalent. What can management experts add to this discussion and, more crucially, to government decision-makers and business leaders who are debating the best course of action? Diana Farrell suggests using an insurance program created by Kletzer and Litan to help employees who have been let off due to outsourcing (Farrell, 2008; Kletzer and Litan, 2003). However, issues with global sourcing and the outsourcing of jobs go beyond the financial hardships that those who are laid off will experience. Offshoring instead calls for a more thorough investigation of the corporate obligations throughout the world.
According to Wood (1996), corporate social responsibility (CSR) refers in part to a company's efforts to make social contributions, which may or may not also increase investor returns on investment. In the current global environment, many MNCs are facing pressure from civil society and nongovernmental organizations (NGOs) to be more receptive to the variety of social needs in developing countries. This pressure includes addressing concerns about the working conditions in factories or service centers and attending to the environmental impacts of their activities. Recently, Dunning (2004) has argued for a more responsible form of global capitalism that takes into account the interests of people, businesses, NGOs, governments, and supranational organizations.
Multinational corporations like Nike, Levi's, United Fruit, and others have come under fire for their sourcing practices in developing nations, which are alleged to exploit low-wage workers, take advantage of lax workplace and environmental standards, and otherwise contribute to social and economic degradation. Offshoring companies for business processes have also been linked more recently. Numerous governments, international organizations, and local as well as international NGOs have criticized the low-cost labor seeking behavior of MNEs in developing countries, suggesting that such companies search the world for the least expensive, least regulated, and most exploitative situations in which to source raw materials and semi-finished goods (Singer, 2005).
A helpful heuristic for examining potential prohibitions related to the externalities mentioned in David Levy's article is global corporate responsibility, which refers to the acts, practices, rules, and procedures controlling the conduct of businesses while conducting business worldwide. Governments, NGOs, and other members of civil society have encouraged MNCs to sign agreements and codes of conduct in which they promise to uphold specific standards in their local and international activities (Doh and Guay, 2006).These agreements, which include, among others, the UN Global Compact, the Global Reporting Initiative, the social accountability 'SA8000' standards, and the ISO 18000 environmental quality standards, offer only limited guarantees that businesses will uphold a minimum level of social and environmental standards in the workplace and community in which they operate when they increase production in developing nations. These guidelines aid in reducing the actual or perceived risk that businesses relocate operations in order to avoid stricter labor or environmental regulations in their home markets. By 'exporting' norms from emerging nations and multinational corporations to their host nations and local businesses there, they may also help raise standards in the developing world.
However, when offshoring also includes outsourcing by contracting out services that were previously a part of a firm's operations, the application of these standards is made more difficult. For businesses, tracking the standards of their contractors, subcontractors, etc. is challenging but not impossible. However, there are a number of examples that show such initiatives are not beyond the power of MNCs. For instance, importers must confirm the products' origin using a very technical process in order to comply with the rules of origin under the North American Free Trade Agreement and other trade agreements. In many cases, this requirement can only be met with the cooperation of producers, contractors, subcontractors, etc.The Transparent Agents Against Contracting Entities (TRACE) standard was created in the area of anti-corruption and applies to business intermediaries such as sales agents, consultants, suppliers, distributors, resellers, subcontractors, franchisees, and joint venture partners so that final producers, distributors, and customers can be sure that no party within a supply chain engaged in corruption. This standard was developed after a review of the practices of 34 companies.
CONCLUSIONS
At the end of the day, offshore is only the logical progression of a centuries-old practice. Ironically, both the advantages and shortcomings of economic globalization are reflected in the seeming acceleration of outsourcing. Now, not only capital but also labor is a mobile factor that can be quickly deployed and redeployed.
Other institutional norms and rules, however, which are intended to thwart the possible unfavorable effects of capitalism, are not as adaptable. The social fabric that surrounds our collective productive capacities has not become uniform, causing an asymmetrical distribution that has had disruptive and dislocating effects on some regions, businesses, and workers while providing additional economic stimulus to others. While all human capital has, to some extent, become itinerant. These standards are formalized via the ratification of agreements and codes of conduct controlling labor and environmental practices as well as the formulation of global corporate responsibility standards.In doing so, these activities could assist in assuaging individuals who are most worried about some of the most severe disruptions brought on by offshore.
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