Case studies in Corporate Social Responsibility and the Practice of Outsourcing

Despite becoming more common (Pries-Heje, Baskerville, & Galina, 2005), the practice of outsourcing is often reacted to with knee-jerk negativity. It is construed to take away jobs, and drain a local economy of the business created by the multiplier effect. In the United States, more than 8 million manufacturing jobs have been outsourced since the 1970s (Spoerri, 2012). Other concerns are: loss of management control, hidden costs, threat to proprietary security and confidentiality, lack of quality assurance, being tied to the fortunes of another company, and bad publicity should things go wrong (Bucki, N.D.). A good working definition of outsourcing is: “a strategy by which an organization contracts out major functions to specialized and efficient service providers” (Handfield, 2006). It should be noted that outsourcing occurs both within and outside of a country’s borders.

However, if internal or local sources are not available, outsourcing can be an extremely useful tool that is beneficial to the success of a company by allowing it to grow and keep costs down. We will look at the evolution of a sterling silver direct marketing company called Silpada, established in 1997 by two mothers (Avon Products Inc., 2010; Silpada Canada 2011), and the amazing success it has had in its 14 year’s existence, largely as a result of outsourcing. The company was acquired by Avon in 2010 for a cost of $263 million (Articles Base, 2010).

The history of outsourcing as a practice is ancient and comprises the economic use of one’s core competencies by not trying to tackle all aspects of a business oneself (Handfield, 2006). Some of the earliest forms of outsourcing were for accounting and legal services as both disciplines are quite tech...

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Silpada Canada. (2011). About Us. Retrieved February 20, 2012, from Silpada Canada: http://silpada.ca/public/aboutUs/index.jsf

Spoerri, M. (2012, January 27). Global Ethics Corner: Made in the USA: The Return of American Manufacturing. Global Ethics Corner (Weekly Multimedia Program). Carnegie Council for International Ethics. Retrieved February 22, 2012, from http://www.carnegiecouncil.org/resources/audio/data/000738

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Xinhua. (2012, February 21). Avon Bribery Scandal Bodes Poorly for Multinational Companies. Retrieved February 22, 2012, from Xinhuanet: http://news.xinhuanet.com/english/china/2012-02/21/c_131423535.htm