Galaxywire Case Study

MEMORANDUM

TO: Galaxywire Board of Directors

FROM:

RE: Ethical Issues in Outsourcing

DATE: 27 October 2012

_____________________________________

INTRODUCTION:

For the past seven years, Galaxywire has fulfilled its commitment to the community of Green Fork, Illinois, and has created a great relationship with its employees. However, this organization is now facing the possibility of outsourcing to India due to increasing labor costs and the possibility of maximizing profits. If this organization were to be outsourced to India, it would save the organization $10 million yearly. The issue presented here is the promise made to the citizens of the city of Green Folk and the commitment as an organization to keep jobs within the United States. I realize that an organization should seek out what is in best interest for the company and its shareholders, but this should not go against the commitment it promised to retain. In the following, I will present the situation that Galaxywire is facing as well as the ethical issues involved. In conclusion, I will present the alternatives and make my recommendation for course of action.

FACTS SUMMARY:

Outsourcing to India could possibly save the organization $10 million a year. In addition to huge savings, India offers skilled, technology-based employees as well as a high rating amongst software engineering. Many of Galaxywire’s competitors have already begun outsourcing to India. The city of Green Folk realized the loss of Galaxywire could be devastating to its workforce as well as its financial stability. The workers along with the city, initially offered Galaxywire a deal presenting a total savings of $7 million for the first year and increasing to $9 million on the third year. The city also offered extended tax abatement, and the employees agreed to a 15% tax cut along with benefit reductions. Galaxywire turned down this offer and the workers presented another negotiation. The city and...