Eric Newton 11/29/14

To Offshore or not to Offshore

Outsourcing is a method that is becoming more of a normal business technique each and every year. The root definition of outsourcing is to transfer different operations of business to outside suppliers that provide lower costs. Examples of this would be companies giving an independent accounting firm the right to maintain their books because it may be cost beneficial as opposed to hiring an accounting department. A real life example would be Apple obtaining computer chips from their rival Samsung instead of making their own. In the last couple of decades, many more companies have been utilizing a different form of outsourcing, that is offshoring. Offshore outsourcing is essentially just outsourcing, in different countries where the quality of work may be better or cheaper. Larger companies typically use offshore outsourcing because the cost of transporting items or products overseas wouldn’t seem as material as would with a low-income company. Some different types of offshore outsourcing are manufacturing, research and development, accounting, human resources, and more (IWDRO). One of the more common types is manufacturing, and it is also one of the more controversial because some major companies such as Nike have been known to take advantage of the cheap labor overseas by not obliging to the human rights standards. Is it ethical for companies like Nike to overload all of the dirty work (manufacturing) to areas in Asia where labor is cheap?

There are many reasons why companies like Nike like to move a big chunk of their production overseas. Nike chose countries in Asia like China and Vietnam mainly because labor was cheap and the markets there were untouched so Nike could make a name for itself in the most populous continent in the world, Asia. Labor in these Asian countries were producing the same shoes and clothing as in the United States but at a fraction of cost, any businessman with any sense of the cost benefit rule would take advantage of this. When Nike first went to Asia they got to build their factories from scratch, determine what they wanted them to look like and who would run them, it was an easy decision for Nike back in 1975. All was well in the corporation with investors loving the strategy, as their stock price rose to it. Until the early 90s when the public became knowledgeable about what really went on in these Nike “Sweatshops” (Stanford.edu).

“They throw shoes and other things at us, they growl and slap us when they get angry”. This is something that a worker in the embroidery division at an indonesion shop said about how the management treats them. And it is not just her, there have been and endless amount of reports of these types of comments ever since Nike moved the majority of its production to Asia.