Outsourcing Ethics

Many times, business organizations are faced with the dilemma of ethical decision making. “If a CIO says, ‘I’ve never faced an ethical issue,’ they’re not living in the real world,” says Larry Ponemon, president and founder of the Ponemon Institute, an Arizona-based security and privacy think tank. .

Although business relationships are more economic in nature, their moral and ethical dimensions have the same impact on profitability. When it comes to the ethics of outsourcing, things get more complicated, as the parities involved are continents away. A judicious choice between the right person and the wrong person to do business with will determine the future of your outsourcing company.

Why is it important to do business with organizations that are ethical?

Ethical compliance presents a strong public image and upholds the integrity and character of an organization. Whether personal or professional, not many of us want to associate with unethical people. It makes much more sense to do business with ethical organizations, since it has a direct influence on the overall operation of a company.

When things go wrong!

This is the acid test. The way your outsourcing partner reacts during a crisis is the best indicator of whether or not they are ethical. When there is mutual trust and mutual responsibility, a crisis management mechanism will automatically evolve. Ethics creates a space for itself and to guarantee the proper functioning of companies.

Legal aspects

Legal perceptions can differ from nation to nation and ambiguity can arise when a dispute occurs, leaving both parties in a bind. The association is made easier when the parties have a legal, moral and ethical obligation to fulfill the agreement, with due regard to international law.

information security

The primary concern of outsourcing ethics is the security of confidential information. Privacy and security fall within the ‘uncompromised zone’. Sujoy Chohan, IT Research Specialist Consultant, Gartner Company, says: “If there is any industry that is investing heavily in security, it is the offshore industry, whether in India or elsewhere.”

Privacy Officers are very concerned about good information security practices. If your outsourcing partner does not have adequate information security measures in place, you may want to stay away from them.

How does a subcontractor identify organizations that are doing ethical business?

Everyone claims to be ethical. Although a clear definition of the parameters to identify ethically conscious organizations will be a challenge, some factors are vivid.

supplier reliability

It’s nothing more than trust that makes someone want to outsource. Weigh the trustworthiness and trustworthiness of the organizations you want to outsource to.

A clear definition and practice of the organization’s ethical rules and privacy policies, such as non-disclosure of trade secrets, secrecy, and non-disclosure contracts with staff, external service providers, and visitors, is a prerequisite. This will assure the subcontractor that it is safe to do business with a partner who is miles away.

Employee credibility

Information security will largely depend on the people who handle the information. Organizations that implement strict employee credibility measures have a direct implication on their outsourcing ethics.


Clear and open communication channels are another sign of an ethical company. When a project is not going the right way, an ethical partner will always keep you informed about the problem and the possible solutions and the necessary time.


A thorough inquiry should be made about the organization and its work management nature. Talking to employees and references will give you a clear idea about an organization’s professional approach. Check if your outsourcing partner meets the following requirements:

o Adequate information security systems

o Appropriate quality certifications such as ISO 9000 or SEI CMM

o Appropriate programs to protect the trade secrets of its clients, partners and their customers


oTraining and updating of security skills and awareness of employees.

oSecurity of electronic data storage

oPresence of a complainant

o Appropriate agreement with third party service providers

How does being ethical help reduce the risks of outsourcing abroad?

You can always find companies that offer services at very low costs. An ethical concern might seem like a more expensive option. However, the price difference could be misleading as the variance will only be in the initial cost. In the long run, the total cost will turn out to be much less when you work with an ethical partner.

ethical vs. unethical association

Unethical Association:

oThe cost of maintaining the project and the relationship will be high

oLack of confidence

tense relationship

o Non-disclosure of the facts

oLack of transparency

Ethical Association:

o Reduced costs

o Reduced risk

oCommon approach

oBalance ratio

Know the risks and manage them together

o Appropriate management systems

client responsibilities

Before making an outsourcing decision, the outsourcer must also be clear about the responsibilities that must be shared. This will help build a healthy relationship foundation.

willingness to discuss

manage expectations

last agreed document should be the basis

oBuild flexibility into contracts

opening to intermediate range and price revision

Make sure any gaps that can disrupt the outsourcing process are filled. The benefits of outsourcing will surely appear with safe outsourcing practices.

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