11.6 Managing ethically

It is important that any book concerned with the globalization of work should address ethical concerns and questions. Standards for global ethical practice have been proposed by three main groups:

• Private sector

• Public sector

• Societal groups.

Private sector standards include ISO which focuses on internal management systems, addressing such topics as conflicts of interest, disclosure and employee conduct. Codes of ethical practice also exist for the IS and computing profession such as the ACM, IEEE and British Computer Society (BCS) (Spinello 1995; Johnson 2000). Public sector standards at a high level are proposed by UN (www.unglobalcompact.org) and OECD (www.oecd.org) guidelines for multinationals. Societal and non-governmental organizations (NGOs) such as research and academic institutions focus on the harmful effects of globalization. A popular text critical of the impact of globalization is Klein (2000), who outlines many of the concerns of societal and NGO groups, often categorized as ˜antiglobalization . Klein and other authors (such as Korten 1995; Faux and Mishel 2000; Shiva 2001) critique the power of MNCs with operations in developing countries and the inequality and ecological catastrophe associated with unbridled global capitalism . Shiva (2001) asserts that globalization is not merely a geographic phenomenon that is tearing down national barriers to capital but also tearing down ethical and ecological limits on commerce. A specific concern of Klein is the ˜sweatshop conditions and exploitation of cheap, sometimes bonded, labour in developing countries. Shiva (2001) draws attention to environmental issues and the export of dirty, polluting industries to ˜places where life is cheaper . This point is also echoed by Beck (1992) in his discussion on the ˜redistribution of risk , often starkly exposed through cases such as the Union Carbide chemical disaster in Bhopal in 1986.

Dealing with such risks raised by the ˜anti-globalization groups requires a serious consideration of ethics in developing management action. The criticisms of the ˜antiglobalization groups against MNCs are important, even if viewed only from a pragmatic perspective of not tarnishing the corporate image. The work of NGOs such as Green- peace has had adverse public relations (PR) consequences for MNCs, as reflected in examples of direct action such as burning genetically modified (GM) crops and organized protests at Starbuck s coffee shops and Disney toy stores. Such protests are not good for recruitment, share price or investor confidence.

However, no complete code of ethics currently exists for the conduct of GSW. In the discussion to follow we therefore argue the important need to establish such a code, drawing on the standards of the three groups outlined above and laying down the tenets of what issues such a code of ethics should address.

The international GSW market is generally not prone to the worst excesses of ˜sweat- shop conditions or bonded or child labour. At the time of writing a global IT skills shortage has helped further to legitimize outsourcing strategies. In GSAs, managers need to deal with concerns over PR image arising from widespread unease about job losses and immigration ; these issues have become particularly pertinent following the 11 September attacks in New York. At the lower end of data-processing outsourcing, low pay, high surveillance, and high pressure may raise ethical concerns similar to those raised by other forms of global work. Although difficult to characterize as ˜sweatshops , some outsourcing software houses may work on precarious employment contracts, Taylorized work processes in software factories without the support of union organization and poor attention to health and safety. The Taylorized form of work and the principles of switching of resources, on which it is based, render work mobile that can be moved without much fuss to cheaper production centres (Mowshowitz 1994; Pearson and Mitter 1993; Korten 1995). In the emerging GSW supplier market, the consequence may be a spiralling ˜race to the bottom in which companies try to cut each other s throat on prices in order to gain international contracts. The consequences of this price-cutting could lead to declining labour standards, poor wages and social conditions tending towards ˜worst rather than ˜best practice.

Current developments in offshore call centres are also a cause for ethical concern. Call- centre workers may be asked to introduce themselves with Western names , neutralize their accent and work nights under high-pressure conditions with extensive surveillance and limited union protection. Implications of the movement of this kind of work to the cheapest possible locations and the effects on job losses are not yet fully understood . The ethics of a cosmetic subterfuge of accents, Western names and the range of activities that offshore call centre operatives perform need to be actively debated in a framework that balances economic considerations with broader societal impacts. Such debates could lead to the formulation of sensitive regulatory mechanisms which also need to take into account that call centre-work does not need to be static, and could lead to other kinds of future activities. A process perspective that has been emphasized in our analysis permits us to visualize this future potential. For example, while medical transcription work can currently be criticized for Taylorization, the future might open up the possibility of higher-end telemedicine-based activities that could draw upon the potential of a highly competent source of Indian medical doctors to provide expert consultations.

At a policy level, there are significant undercurrents of unrest about the activities of MNCs. A column in the Times of India (Dubashi 2002) argued that under the cloak of globalization and liberalization, power was being transferred to foreign business led by MNCs. Indian policy has a history of suspicion towards MNC power and companies like IBM and Coca-Cola were asked to leave in the 1970s. While the government through its liberalization policies in the early 1990s acknowledged the simplistic nature and adverse effects of previous policies, the culture of suspicion is not yet buried: MNCs are still viewed by some, especially within government circles, as representing a new wave of colonialism that will undermine the interests of the poor. Such MNCs are seen to have as a primary objective foreign shareholder satisfaction and maximization of profits. Hutton and Giddens (2001) discuss the concentrations of transnational power and call for a reworking of the role of the WTO as a power that ˜underwrites and polices a basis framework of rules of capitalist engagement rather than enshrine free trade as an absolutist principle (2001: 220). State and national governments have an important role to play in ensuring that MNCs operate in an ethical manner. Progressive states such as Andhra Pradesh are playing a lead role in this regard by attempting to draw up adequate regulation through legislative acts, while at the same time providing conditions in which MNCs can operate in an enabling environment. How this balance between regulation and enablement is met in practice is an open empirical question, and it should be unhesitatingly recognized that governments must play a lead role.

It is unclear what the future role of the WTO will be and whether it will be able effectively to act as ˜global policemen protecting against the worst excesses of globalization.

There is clearly a need for managers involved in GSA in various relationship forms, on both sides of the relationship, seriously to consider issues of corporate and social responsibility. This should involve a full and explicit consideration of the economic, social and human rights of various stakeholders, that transcends not just the shareholders interests but also includes the concerns of society at large. The code of ethics should address the various accountability concerns raised by NGOs, governments, citizens and employment law.

The Gowing case provides some illustrations of failure in corporate responsibility. The GSA was used to facilitate change and exert power and control over UK employees ; this subsequently led to the layoff of existing staff, avoiding the stipulations of UK employment law. Both Gowing and Eron failed to consider issues beyond the pure economics of the situation and actions of management can be seen as an illustration of the globalization critique where the power of large organizations overrides the concerns of workers in the pursuit of increased profits. The case paints a picture of globalization as a relentless economic machine. From the perspective of anti-globalists, there is a need to protect the local from organizational actions that can potentially lead to adverse societal effects.

Ethics is not an exact science, and what is lawful may not necessarily be ethical . Starting points for promoting an ethical approach to GSA need to consider the corporate and social responsibilities and obligations to various stakeholders (Spinello 1995). In this context, De George s (2001) seven moral guidelines for MNCs can be seen as instructive for those setting up GSA-based subsidiaries:

1. Do no intentional direct harm

2. Produce more good than bad for the host country

3. Contribute by their activities to the host country s development

4. Respect the human rights of employees

5. Pay their fair share of taxes

6. Respect the local culture and work with it not against it

7. Cooperate with local government in the development and enforcement of just background institutions for tax, health and safety, etc.

The basic moral norms in points 1 “3 suggest that MNCs will do good only if they help the host country more than the harm it and avoid exploitation. Point 4 relates to setting minimum standards for pay as well as health and safety issues. Trends in ˜reverse globalization (as emphasized in the Gowing case) imply that the rights of employees in developed countries, through job losses for example, must be considered on a par with those in developing countries. MNCs inevitably produce some changes in the cultures in which they operate and this can be advantageous through the spread of best practices. However, rather than simply transplanting global or North American or UK ways of working, MNCs need to adopt an ethical framework that takes into account local needs and customs ; such a framework could go a long way towards hybridized models of work that aim to celebrate rather than suppress diversity.

In outsourcing arrangements, building hybridized models is easier said than done, as companies on both sides need to emphasize stakeholder interests while dealing with conditions of extreme organizational complexity and turbulence. Despite these contextual conditions, serious attempts need to be made to consider the basic moral principle of doing no intentional harm. From a practical perspective, ethical issues can be emphasized by categorizing them into concerns of IP, privacy and surveillance/ security:

• IP is an important issue in GSA that in developed countries is legally enforced through trade secrets, patents and copyright laws. Many countries take a different legal and ethical approach to IP: the legal position in Korea and Japan considers that ideas should be shared freely for the good of society since knowledge is communal and belongs to the public domain.

• Privacy and surveillance/security issues are of importance at the employee level. The methodologies used at Gowing to reflect transparency in project activities and the bugfixing systems at GlobTel are examples. Gowing s system of developing transparency involved displaying on the Intranet the name of the individual assigned the task of fixing the bug and the time taken to do it. Building transparency in one setting may, however, infringe laws in another; in Germany, it is not legal publicly to display the name of an individual. Other issues concern the privacy of confidential information that may be passed between companies and into the environment, with potentially deleterious consequences. Security and protection of customer data from hacking, and deliberate damage of the software code through viruses or otherwise may be particularly pertinent in the event of staff attrition and the moral responsibilities an individual should display.

As well as pressure from NGOs and consumer groups, unions are also voicing concerns about the implications of GSA for local job losses. We witnessed these concerns at a workshop that we organized in Berlin on the topic of international IT skill shortages. If companies do not self-regulate, employment law will be needed to deal with various forms of offshore outsourcing. Articulating a GSA oriented ethical policy with respect to job losses is a broader responsibility of software industry associations in both onshore and offshore locations. The role of government is also important to prevent the ˜race to the bottom through undercutting of prices by competing software firms both within the country and globally. Indian firms are competing with each other and also the new and lower-cost locations of China and Vietnam, for example. While MNCs face competitive pressures for survival, there is an important role for governments to ensure that the competitive basis of firms actions is not attained at the cost of the lowest ethical position. Most importantly, policy responses from the GSA participants themselves in a statement of corporate responsibility can be included in outsourcing contracts within the framework of a service-level agreement.

In developing a perspective for managing ethically and appreciating implications, there are five key questions that need to be considered, summarized in box 11.5.

Box 11.5 Key questions: managing ethically

• What is the firm policy on GSA corporate responsibility? How can it be articulated and disseminated?

• How can firm policy on ethical and social responsibility be realized practically within both partner organizations?

• Who are the ˜visible and ˜invisible stakeholders? What are the different impacts (broader than economic) of the GSA on these groups?

• What is the policy framework in the host countries ( related to anti-piracy , for example) to recognize and protect ethical concerns?

• What is the role and power of industry associations to advocate and legislate ethical concerns?