Ethics in IT Outsourcing

Tandy Gold

• Publisher: Auerbach Publications
• Year: 2016
• Print ISBN: 9781138374447
• eBook ISBN: 9781466562295
• Edition: 1
• Topic: Computer Science
• Subtopic: Management
• Index: Computer Science

In IT divisions and organizations, the need to execute in a competitive and complex technical environment while demonstrating personal integrity can be a significant personal and organizational challenge. Supplying concrete guidelines for those at an ethical crossroads, Ethics in IT Outsourcing explores the complex challenges of aligning IT outsour

Chapter 1

Overview of Ethics in IT Outsourcing: An Oxymoron?

1.1 Building a Framework for Ethical Discussion

1.1.1 The Macro View: Follow the Money

The Supreme Court of the United States prevents a vote count for a Presidential election, and the federal government spends billions of taxpayer dollars propping up financial institutions that respond to this largess with higher consumer fees and even higher executive bonus pay-outs. Within such a cultural environment, do we beg the question of ethics, or does it simply become na'ive?

Before we construct a model of IT outsourcing ethics during such challenging times, it may be instructive to first look at the seat of the law. Governmental law represents the ultimate source of recourse for the most blatant of ethical violations. Yet, as any historian knows, the history of United States government is not exactly an innocent one. In May 1856, while sitting at his desk at the senate, Massachusetts Senator Charles Sumner, an outspoken civil rights activist, was beaten by cane until bloody by Representative Preston Brooks, who returned to a hero’s welcome in his home state of South Carolina. And on March 1, 1954, four Puerto Rican nationalists used automatic pistols to shoot 30 rounds from the visitor’s balcony into the House of Representatives during a debate over an immigration bill. President Andrew Jackson, the force behind the death march of 1838—1839 in which 15,000 Cherokees were forced to leave their land and homes, ignored the Supreme Court ruling in Worcester v. Georgia (1832) that found that they could not be forcibly moved. President Jackson himself survived an attempt on his life when two point- blank pistols held by his would-be assassin misfired.

Today, many U.S. institutions appear to have violated the very positions of trust and power originally intended by their authority, including governmental, religious, and not the least, business entities. This is the backdrop in which the question of ethics in IT outsourcing must be grounded. IT outsourcing is just one of many ethical conundrums that generate great emotion, debate, and concern about fairness and equity in a world of the shrinking middle class and scarcity of well-paying jobs.

Oddly enough, the current environment of increasingly overt ethical violations occurs within the context of a U.S. business culture that demands, as a prerequisite for a meaningful professional career, a carefully nurtured public persona based upon a highly specific code of professional ethical conduct. This conduct is most often expressed in terms of building and documenting a professional reputation that reflects extreme loyalty and accountability in the form of achievement of objective job-related results. Within large IT corporate divisions, demonstration of the ability to execute within a complex organization and technical environment in a way that demonstrates personal integrity—in the form of dedicated, against-the- odds commitment to delivery of promised business results—is one of the strongest determinants of professional advancement.

Perhaps this paradox is to be expected—taking pride in fair play while simultaneously—and selectively—rewarding those who compromise their ethics. The key will be to honor and acknowledge both aspects of our collective national split personality. Americans are one and the same the most generous of donors to Haiti and almost completely oblivious to the simultaneous suffering in the Congo. We are both the enthralled audience of the environmentally conscious best-selling movie Avatar, and the voters who look the other way as yet another species becomes extinct or irreplaceable habitat is irretrievably compromised, depriving our children and grandchildren of their precious legacy.

1.2 Outsourcing Fundamentals: The Egoless IT Manager

We begin by defining our terms with as much precision and clarity as possible.

IT outsourcing'll defined as a business transformational process that enables savings from IT (information technology) jobs that are moved to countries external to the United States, or “offshore.” It is understood that, for the great majority of IT outsourcing programs, the outsourced jobs generally reside within large (Fortune 100 and above) firms. This is because the up-front transformational costs and transfer of knowledge generally (not always) make outsourcing a volume play. It is challenging for both the U.S.-based customer and the offshore outsourcing service provider to establish financial gains on relatively small numbers of outsourced IT positions. Small is generally defined as outsourcing fewer than 100 full-time equivalent (FTE) jobs at one time. This volume is for a variety of reasons, including program overhead costs that include the implementation of necessary updates in business processes, security management, communications, and IT methodol- ogy. These are some of the pre-requisites required for a successful shift to offshore outsourcing. The primary drivers behind IT outsourcing, within the context of this volume, are assumed to be about following the money. Immediate monetary savings from labor arbitrage is not the only driver behind outsourcing, but it is certainly one of the primary ones (Tandy Gold, Outsourcing Software Applications Offshore: Making it Work, CRC Press, 2004).

The analysis of offshore outsourcing in this earlier volume concludes that it is the strategic advantages of IT outsourcing that represent the true benefits over the long term. These benefits include widespread IT process formalization resulting in sustained competitive advantages that often outweigh the tactical cost savings— even as large as they are. It is unlikely that outsourcing as a discipline would have become a wide-spread phenomenon; however, without the simple fact that offshore IT workers receive roughly $25 per hour in compensation, rather than the $70 to $90 per hour their U.S. equivalents generally command. Note, however, that not all IT roles are good candidates for offshore outsourcing.

How widespread is offshore outsourcing? Note that roles as referenced herein are not equivalent to IT jobs. It is not uncommon for one U.S. IT worker to perform a variety of roles in a given job. For example, an individual’s job may incorporate the roles of IT programmer, tester, quality assurance, maintenance programmer, and technical mentor. Large U.S. firms—again, the only ones large enough to offshore jobs because of the volume required to make it profitable as an IT delivery model— rarely offshore more than 10% of their IT organizations. This is for a variety of reasons including security and the need for certain roles to function near U.S.-based end users. In a given firm with an IT workforce of 1000, roughly 100 individuals will often work offshore. This is called the co-sourcing model. Co-sourcing refers to an offshore staffing model in which tactical roles such as programming are moved offshore, and strategic and customer facing roles remain onshore. The upshot of all of these factors is that the overall economic impact of off shoring jobs is often described as minimal by economists in their review of broad indicators. Offshore outsourcing has yet to be defined as a definitive contributor to current or past financial downturns. Later in this volume we will review research that, together with public opinion and popular newspapers, appear to contradict these findings. The inconclusive nature of the macroeconomic data is one of many gray areas related to an investigation of offshore outsourcing. Clearly there is no lack of thorny ethical questions that arising from the analyzing the offshore model.

Given this backdrop, what is generally the focus of IT ethics today? If you were to stop a Fortune 100 employee and ask about business ethics, how would he or she respond?

• First, business ethics in a large company environment generally comes under the heading of compliance. Corporate ethics frequently focuses upon addressing illegalities relative to discrimination based upon sex, ethnicity, sexual orientation, religion, or other personal factors. Examples of codes of compliance are the rules of accounting, hiring policies, tax regulations, and corporate by-laws.
• Second, corporate value statements reference the goals of integrity, honesty, and similar principles. These are of limited practical value if they are not modeled seriously by the firm’s executive leadership. Enron probably had a robust corporate value statement. Enough said.
• Third, ethics refers to voluntary corporate ethical participation in programs such as Green IT, by which a firm’s negative environmental impact or “footprint” is minimized.
• Finally, business ethics commonly refers to the active support of worthy causes and charities, along with similar measures of positive corporate citizenship.

These are all worthy expressions of business ethics. For the topic at hand, however, with a special focus on ethics in IT outsourcing, they may serve as means of confusion, or worse, of deliberate obfuscation.

1.3 Ethical Hypotheses: Guideposts on the Investigative Journey

As we start our journey, let’s begin by establishing some hypotheses to test as guide- posts along the way.

Hypothesis 1 — Discussions of ethics are rarely clear cut and straightforward, reflecting our national inconsistencies. All dialogue takes place within the context of subtle, varying shades of gray.

We start our investigation with the realization that we ultimately may end up with more questions than answers, and that the answers we uncover may be somewhat less than definitive. Identifying cause and effect for macroeconomics has never been without debate, and is often laden with rhetoric supporting a specific viewpoint. In Chapter 6, we explore the macroeconomic environment further, and create an ethical framework for IT outsourcing at the level of the broad economy.

Hypothesis 2 — The central ethical issue in IT outsourcing at a macro level is the transfer of corporate labor dollars overseas and the resulting disenfranchisement of U.S.-based workers who are economically impacted through job losses.

As any member of large business in corporate America knows, ethical considerations usually stop short of the dollar. The same company that raises fees 30% without warning, understanding completely that this will negatively affect their poorest, most desperate customers, may see this new business policy as purely financial—the normal course of business undertaken for the benefit of stockholders and employees. This same firm may hold itself proudly as completely ethical because, during the same time period, it launched a Green energy program, issued a new corporate value statement, remained completely in compliance with all human resources laws and regulations, and even contributed millions of dollars to a favorite charity.

How does one apply ethical values as an individual within a corporate environment (the micro level of ethical inquiry)? This can be a challenging question. Even with the broad shades of gray we are painting here, bringing in personal principles relating to ethics gets uncomfortably close to religious beliefs that represent discriminatory compliance factors protected by law in the workplace. Yet ethical principles that are not applied on a personal level are devoid of true expression and power.

When I attended graduate school for Computer Information Systems, I was taught about a principle called the “egoless programmer.” It was understood that a programmer, as the author of computer code, could choose to deliberately confuse his or her IT peers in a misguided attempt to become more important. A programmer could achieve this by writing such poorly written and complex code that he or she literally became the only person who could understand and maintain it. In my many years of consulting at large firms, this scenario is not far-fetched. Literally every large company I worked with retains some portion of program code that is untouchable because it could break and cannot be fixed. The original author’s are long gone, and updating the code represents too much of a risk.

The egoless worker is a valid concept as applied to business in general. Within this framework, the egoless IT worker utilizes their power and authority in the workplace to align with the business goals at hand, in the broadest sense, rather than sacrifice those for self aggrandizement.

Despite its apparent simplicity, the egoless worker can be a relatively subtle concept. For example, for those who cannot tolerate even positive change, displaying aversion to new concepts and ideas may be a not-so-subtle way of ensuring the status quo prevails.

Hypothesis 3 — Egoless decision making is an effective ethical framework at the personal or micro level of ethics.

In Chapter 5, we explore micro ethics further and create a personal decisionmaking ethical framework as it relates to IT outsourcing.

1.4 The Internet: A New Level of Personal and Public Transparency

A discussion of ethics would not be complete without the latest, rather unexpected, ethical equalizer and enforcer—the omnipresent, and at times seemingly omniscient, Internet. A growing public awareness, fueled by the rapid spread of on-line information such as social networking sites, makes it harder and harder for any individual or f...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• Chapter 1 Overview of Ethics in IT Outsourcing: An Oxymoron?
• Chapter 2 The Cost of Ethical Compromise: An Overview of Current and Historical Research and Business Practices
• Chapter 3 A Checklist for New Offshore Programs
• Chapter 4 Alignment of Existing IT Offshore Programs
• Chapter 5 The Ethics of the Personal: Avoidable Ethical Compromise
• Chapter 6 Minimizing Negative Impact
• Chapter 7 Recalibrating the Reality
• Chapter 8 The Future of IT Ethics
• Index