What changes in global work supply have taken place that contributed to the the situation of Gap and its global workforce?
Over the last few decades, the world has been experiencing massive changes in the manner in which organizations operate. Initially, organizations were based in specific geographic regions. As a result, the products that these organizations were manufacturing and the services that they were offering conformed to the needs and requirements of their local market. However, through globalization, organizations have started to expand their operations across borders.
Firms that were mainly based in the USA and Europe have moved their operations into developing nations such as India, China, Indonesia, Brazil, and so on to take advantage of benefits such as the availability of raw materials, the presence of a ready market (due to the high population of target nations), and most importantly, the presence of cheap labor. The presence of cheap labor has made large multinational corporations (MNCs) such as GAP and NIKE to outsource technical labor from developing nations.
As a result, these organizations have opened manufacturing plants in these nations or have contracted local companies to manufacture products under their brand name as a means of reducing operating costs through the value chain process. Thus, through outsourcing, MNCs have been able to reduce their operating costs by seeking cheap labor in developing nations.
What are possible forces that might contribute to an MNC’s lack of a sense of responsibility toward workers in different parts of the world who produce its products or deliver its services? What external forces can even interfere with this sense of responsibility?
Most MNCs do not like to be affiliated with its outsourced labor force even though it is these individuals who manufacture their goods and services in their names. In most cases, outsourced employees are regarded as the contingency workforce of MNCs on a global scale. A major factor that might affect the relationship that develops between MNCs and their outsourced labor is the political impact that outsourcing has on the economy of the host nation.
In most developing countries, MNCs usually gain the political support of the government by employing its citizens on a part-time basis. These governments view MNCs as a source of employment hence playing a critical role in economic development.
On the other hand, the lack of affiliation between MNCs and employees plays a significant role in maintaining the brand image of a given company. MNCs usually do not want to be associated with the negative reports that are affiliated with outsourcing. In the study that was conducted by UNITE, for instance, it was found that even though the subjects of the study manufactured Gap products, they were technically not employees of the organization. This tactic thus plays a significant role in maintaining the brand image and consumer loyalty that MNCs have worked hard to attain.
Is this opening scenario dealing only with a global phenomenon? Can you think of local work outsourcing arrangements where there is a clear gap be- tween the nature of treatment and benefits of an organization’s regular em- employees and outsourced or contracted workers who also supply labor to meet the organization’s work demand?
Outsourcing is not a global phenomenon. To meet their production needs, domestic companies also outsource some of their work to contingent employees. This phenomenon is quite common in developing nations such as China and India. In these companies, permanently employed individuals receive more benefits as compared to contingent employees. Consequently, contingent employees are overworked under harsh conditions to meet set targets and tight deadlines. In early 2013 for instance, a fire broke out at night in a garment-manufacturing factory. In the process, seven individuals lost their lives and many others were injured.
All of the employees who were present during the fire were contingent workers. It also emerged that the factory was locked and no emergency exits were present in the factory hence leading to more casualties.