As U.S.-based organizations move into developing countries, they are no longer subject to U.S. employment law and the strict standards that would be required for the equivalent operation in the States and overhead and operating expenses are a fraction of what a State-side location's would be. Even with low pay and harsh working conditions, they find workers eager to fill positions, and that doesn't incentivize improvements in the working conditions. With competition driving down prices in the U.S. while costs are holding steady or rising, the trend has been to relocate manufacturing facilities and even some service centers from the US. to developing countries. There are obvious economic incentives in the reduced operating and labor costs, and the potential for tax breaks and incentives from the host country's government can make offshoring more attractive. Despite the economic benefits, there is evidence that should serve as a cautionary tale. What provides a warning that this is not a good practice to continue?

Question

Quizplus · Accepted Answer

D) This situation describes organizations using the new pool of human resources irresponsibly and without considering human sustainability. As more companies use this strategy, the risk of exploiting the workers and causing harm to their families and communities becomes greater. Without employment law in many developing countries, organizations can create their own pay standards without minimum wages, and until the employment market is saturated, wages for unskilled jobs will remain low because there is no competition for these human resources. There is also little motivation for companies to invest in safety equipment or to take measures for their employees' comfort conditions besides the satisfaction and productivity increases that could result, so working conditions will likely remain poor along with wages. Without health insurance, a workplace injury could spell disaster for a family, and that adds to the dangerous consequences of the working conditions. It is difficult to predict how these practices will impact the communities in which companies operate, but the tragedy of the commons demonstrates the consequences of exploiting attractive resources that may never recover. This should serve as a social wake-up call for the companies' sustainability and for the socially conscious U.S. consumer of these products and services. We don't know the result, but it is not likely to be good.

As US-Based Organizations Move into Developing Countries, They Are No Longer