Will Social Responsibility Ever Rival SLAs as Outsourcing Consideration?

Ann All

Last summer's recalls of products made in China -- from pet food to children's toys to toothpaste -- had lots of folks pondering cultural differences in outsourcing relationships and how they relate to business ethics, as I blogged back in July.


But since then, such talk has died down. It still remains on the minds of decision-makers, however, based on the International Association of Outsourcing Professionals' selection of socially responsible outsourcing as its top trend in the outsourcing industry for 2008.


Many companies will look beyond standard service contracts to include clauses related to how suppliers interact with their employees, their broader communities and the environment, predicts the IAOP. Says Jagdish Dalal, managing director of thought leadership:

More people are looking at the ethics statements of the companies they do business with to make sure their statements are congruent.

Some executives, such as Ron Kifer, the CIO of California's Applied Materials Inc., are already doing so, reports Computerworld. Kifer says his company is developing guidelines as it goes along, making sure that its suppliers offer safe working environments and do not employ children. But he thinks standards will emerge, as more companies focus on ethical issues in outsourcing arrangements.



Not everyone agrees. Melissa Blakeslee, an attorney specializing in e-business and author of "Internet Crime, Fraud and Tortes," tells Computerworld that few outsourcing customers are considering criteria other than costs, delivery times and data security. A few might ask about workforce diversity, says Blakeslee, because it's standard corporate policy to ask all business partners about it. But, she says, "I have never seen it determine anything."


Yet Kifer and several others interviewed in the article insist companies will pay more attention to ethical issues, as they do have the potential to impact partnerships. Companies that treat their employees well tend to experience fewer problems with retention, for example. Policies addressing ethical issues are "becoming a competitive advantage," says Kifer.

All things being equal, we will select an organization that has a plan and demonstrates [a determination] to use a level of social responsibility that's consistent with our goals and objectives.

Cultural differences are consistently cited as a cause of problems in outsourcing relationships, as in this Accenture survey from 2006. And business ethics are largely dictated by culture. So maybe looking for a similar level of social responsibility in suppliers, as Kifer does, is a good idea.

Add Comment      Leave a comment on this blog post
Apr 28, 2008 1:58 AM Bill Hefley - hefley@cmu.edu Bill Hefley - hefley@cmu.edu  says:
I've been actively involved in sourcing, as a provider, client, advisory and academic, for quite some time. It is these kinds of concerns that lead me to be actively engaged as a member of the US Technical Advisory Group (US TAG) to the development of ISO 26000 - the upcoming ISO standard on social responsibility. I'm currently planning some future research around social responsibility and sourcing. Reply

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