Ethics Of IT Organization Prepared By:

Kate ManlapazAna Theresa GuecoChristine Joy TulabingCharzonette Mamangun

CHAPTER 10

Problems with Suppliers• Many computer hardware manufacturers rely on

foreign companies to provide raw materials: build computer parts: and assemble hard drives, monitors, keyboards, and other components. While there are many advantages of dealing with foreign suppliers, hardware manufactures may find certain aspects of their business (such as quality and cost control, shipping, and communication) much more complicated when dealing with a supplier in another country.

• 2 such issues that have recently surfaced involve1. Suppliers who run their factory in a manner that

is unsafe or unfair to their workers.2. Raw material suppliers who funnel money group

to engaged in armed conflict, including some that commit crimes and human rights

In February 2009, alarming information came to light about the Meitai Plastics and Electronics factory in Dongguan City, in China’s Guangdong province. The factory, in fact represent an extreme example of a supplier who runs its factory in an unsafe and unfair manner. Meitai Plastics employs 2000 workers, mostly young women who make computer equipment and peripherals such as printer cases and keyboard for Dell, IBM, Leveno, Microsoft, and HP products. Based on research on research conducted between June 2008-January 2009, the National Labor Committee – a human rights organization based on the United States published a report in February 2009 highly critical of the work environment on the factory

Manufactures who use rare raw materials face another ethical issue related to the use of foreign suppliers. How to ensure that their supplier do not funnel money to group that engaged in armed conflict or commit crimes and human right abuse. Manufactures of computers, digital camera, cell phone and other electronics frequently purchase rare materials such as gold, tin, titanium and tungsten for use to their products. Unfortunately, some of these purchases are helping to finance the deadliest war in the world today. The war in the Democratic Republic of Congo. The war began in 1998 and as dragged on long after a peace agreement was signed in 2003. During the war and its aftermath over 5 million have died mostly from disease and starvation making it the deadliest confict since World War II.

Key Ethical Issues For Organization

The following ethical topics that are pertinent to organizations in the IT industry, as well the organizations that make use of IT:

1. The use of non-traditional workers, including temporary workers, contractors, consulting firms, H-1B visa workers, and outsourced offshore workers.

2. Whistle Blowing3. Green Computing4. The electronic and information and

communication technology (ICT) industry.

According to a March 2008 survey the Computer Research Association, the number of the declared undergraduate computer science majors at doctoral-granting computer science departments continued its seven-year decline, with the number of student enrolled in the fall of 2007 half of what it was in the fall of 2000

THE NEED FOR NON-

TRADITIONAL WORKERS

Job related to networking data communications analysis had the highest forecasted growth rate at 50%. As a result, IT firms and organizations that use IT products and services are connected about a shortfall in the number of U.S workers to fill the positions.

THE NEED FOR NON-

TRADITIONAL WORKERS

Facing a likely long term-shortage of trained and experienced workers, employers are increasingly turning to the nontraditional source to find IT workers with the skills that meet their needs; these source include Contingent workers, H-1B workers and Outsourced Offshore workers. Employee face ethical decisions about whether to recruit new and more skilled workers from these source or to develop their own staff to meet the needs of their business.

THE NEED FOR NON-

TRADITIONAL WORKERS

- As a job situation in which an individual does not have explicit or implicit contract for long-term employment. The contingent workforce includes independent contractors, temporary workers hired through employment agencies, on-call or day laborers and on-site workers whose services are provide by contract firms.

CONTINGENT WORKERS

• A firm is likely to use contingent IT workers if it experiences pronounced fluctuations in its technical staffing needs. Typically these workers join a term of full-time employees and other contingent workers for the life of the project and then move on to their next assignment. When they work and how much work depends on the company’s for them. They have neither an explicit nor an implicit contract for continuing employment.

CONTINGENT WORKERS

• Organizations can obtain contingent workers through temporary staffing firms or employee leasing organizations. Temporary staffing firms recruit, train and test job seekers in a wide range of job categories and skill levels, and then assign them to clients as needed.

CONTINGENT WORKERS

• Employee Leasing – a business (called the subscribing firm) transfers all or part of its workforce to another firm (called leasing firm), which handles all human-resource-related activities and costs such as payroll, training and the administration employee benefits. Employee leasing is a type of coemployment relationship, in which 2 employers have actual or potential legal rights and duties with respect with the same employee or group of employee

CONTINGENT

WORKERSEmployee Leasing

• Organizations can also obtain temporary IT employees by hiring a consulting firm. Consulting organization maintain a staff of employees with a range of skill and experience up to and including world-renowned industry experts; thus, they can provide the extract skill and expertise that an organization requires

CONTINGENT

WORKERS

Firm Headquarters

No. of Employee

IBM Global Business Services

Armonk, New York

398,000

HP Palo Alto, California

321,000

Accenture Hamilton, Bermuda

180,000

Deloitte Touche Tohmatsu

New York, New York

165,000

Tata Consultancy Services

Mumbai, India

143,000

Ernst &Young New York, New York

135,000

KPMG New York, New York

135,000

Infosys Technology

Bangalore, India

103,900

Capgemini Paris, France 90,000Cognizant Technology Solutions

Teaneck, New Jersey

63,000

The 10 largest IT consulting

firms

1. It does not usually have to provide benefits such as insurance, paid time off, and contributions to a retirement plan.

2. A company can easily adjust the number of contingent workers it uses to meet the business needs, and can release contingent workers when they are no longer needed.

3. An organizations cannot usually do the same with full-time employees w/out creating a great deal of ill will and negatively impacting employee morale.

CONTINGENT

WORKERSAdvantag

es

They may not feel a strong connection to the company for which they are working.

CONTINGENT

WORKERSDisadvanta

ges

• It should recognize the trade-off it is making between completing a single project quickly and cheaply versus developing people within its own organization.

• If the project requires unique skills that are probably not necessary for the future projects, there may be little reason to invest the additional time and cost required to develop those skills in full-time employees.

• Organization should carefully consider whether or not to use contingent workers are likely to learn corporate processes and strategies that are key to the company’s success.

CONTINGENT

WORKERSDeciding When To

Use

• For example in 2001, Microsoft agreed to pay a $97 million dollar settlement to some 10,000 “permatemps” – temporary workers who were employed for an extended length of time as software testers, graphic designers, editors, technical writers, receptionists, and office support staffers. Some had worked at Microsoft for several years. The Vizacaino V. Microsoft class action was filed in 1992 by eight former workers that they claimed that they and thousands more permatemps had been illegally shut out of a stock purchased plan that allow employeeto buy Microsoft stock at 15% discount.

CONTINGENT

WORKERSDeciding When To

Use

• The Vizacano v. Microsoft lawsuit dramatically illustrated the cost of misclassifying employees and violating the laws that cover compensation, taxes, unemployment insurance, and overtime.

• The following questions can help determine whether someone is an employee:• Does the person have the right to control

the manner and the means od accomplishing the desired result?• How much work experience does the

person have?• Does the workers provides their tool and

equipment?• Is the method of payment by the hour or

by the job?• What degree of skill is required to

complete the job?

CONTINGENT

WORKERSDeciding When To

Use

Question Yes

No

Have you reviewed the definition of an employee in your company’s policies and pension plan documents to ensure it is not so broad that it encompasses contingent workers, thus entitling them benefits?Are you careful not to use contingent workers on an extended basis? Do you make sure that the assignment are finite, with break period in between?Do you use contract designating the worker as a contingent worker?Do you request that contingent workers where, when and how to do their jobs instead work through the contingent worker’s manager to communicate job requirement?Do you avoid training your contingent workers?If you lease employees, do you use a leasing firm that offers its own benefits plan, deducts payroll taxes, and provides required insurance?

Manager’s checklist for the use of contingent employees

• -is a temporary work visa grand by the US Citizenship Immigration Service (USCIS) for the people who work in specialty occupations jobs and require at least four-year bachelors' degree.• Employers often need H-1B

professionals to provide special expertise in overseas markets or on projects that enable U.S business to complete globally.• A person can work for a U.S

employer as an H-1B employee to maximum continuous period of six years.

H-1B WORKERS

Organization No. of H-1B visas approved in 2008

Infosys Technologies 4559Wipro Technologies 2678Satyam Computer Services

1917

Tata Consultancy Services

1539

Microsoft 1037Accenture 73Cognizant Technology Solutions

467

Top H-1B visa

employers in 2008

• The top five outsourcing countries for H-1B workers are India, China, Canada, the United Kingdom, and the Philippines.• When considering the use of H-

1b visa workers, companies should take into account that eve highly skilled and experience H-1B visa workers may require help with they English skills.• Many business managers,

however, say such criticisms conceal the real issue, which is the struggle to find the qualified people, whether they are, for increasingly challenging work.

H-1B WORKERS

• Many IT in the United States have expressed concern that the use of H-1b workers has negative impact on their wages. Research from New York University and the Wharton School of the Pennsylvania examined tens of thousands of resumes as well as demographic and wage data on 156,000 IT workers employed at 7,500 publicly held U.S firms. Their conclusions were “that H-1b admissions at current level as associated with a 5%-6% drop in wages for computer programmers, system anaylsts and software engineers”.

H-1B WORKERS

• Most companies make ethical hiring decisions based on how well an applicant fulfills the job qualifications.• To receive H-1B visa, the

person must have a job offer from an employer who is also willing to offer sponsorship.• Once decisions has been made

it hire a worker who will require an H-1B visa an employer must begin the application process. There are 2 application stages:• Labor Condition Application(LCA)•H-1B visa application.

H-1B WORKERSApplication

Process

• Labor Condition Application The company files LCA with the Department of Labor (DOL), stating the job title, the geographic are in which the worker is a need as well as salary to be paid.• H-1B visa application After LCA is certified, the employer may apply then the USCIS for the H-1B visa, identifying who will fill the position and stating the person skills and qualifications for the job.

H-1B WORKERSApplication

Process

• Most H-1B workers are brought to the United States to fill a legitimate gap that cannot be filled with the existing pool of workers.• Although such logic may

appear sound for short-term hiring decisions, it does nothing to develop the strong core of permanent IT workers that the U.S will need in the future

H-1B WORKERS

Using H-1B workers instead of U.S workers

• Even though companies applying for H-1B visa must offer a wage that is not 5% less than the average salary for the occupation some companies use H-1B visas as a way to lower salaries.

• An H-1B worker may be classified as an entry-level IT employee and yet fill a position of a experiences worker who would make $10,00 to $30,000 more per year.

• The stopgap nature of the visa program can be challenging for both sponsoring companies and applicants.

• Many of these foreign workers, finding themselves suddenly unemployed, are forces to uproot their families and return home.

H-1B WORKERS

Potential Exploitation of H-1B workers

• - is another approach to meeting staffing needs.

• - is a long-term business arrangement in which company contracts for services with an outside organization that has expertise in providing a specific function.

• In the 1970s, IT executives started the trend toward outsourcing as they began to supplement their IT staff with contractors and consultant.

• This trend eventually led to outsourcing entire IT business units to such organizations as Accenture, Electronic Data Systems, and IBM which could take over the operation of company’s data center as well as perform other IT functions.

Outsourcing

• Offshore outsourcing is a form of outsourcing in which in the services are provided by an organization whose employees are in foreign.• Any work done at a relatively

high cost in US may become candidate for offshore outsourcing – not just IT work.• As result and because a large

supply of experienced IT professionals is readily available in certain foreign countries that employ offshore outsourcing in the IT field is increasing.

Outsourcing

Offshore Outsourcing

• American Express, Aetna, Compaq, General Electric, IBM, Microsoft, Motorola, Shell, Sprint, and 3M are examples of big companies that employ offshore outsourcing for function such as help-desk support, network management, and information systems development.

Outsourcing

Offshore Outsourcing

Country CommentsIndia Relatively low cost, high skilled

labor pool.Canada Close to US, no language

barrier, highly skilled labor poolChina Low cost, large pool of skilled

labor, lack of English- language proficiency

Poland Low overall cost business operations

Czech Republic

An emerging contender

Russia Unpredictable political and business climate

Leading countries for

providing offshore IT

services

Firm No of employees

Headquarters Location

Tata Consultancy Services

143,000 Mumbai, India

Infosys Technologies

103,900 Bangalore, India

Wipro Technologies

97,810 Bangalore, India

Satyam Computer Technologies

25,000 Hyderbad, India

HCL Infosystems

5,750 New Delhi, India

EPAM systems 4,500 Newtown, PALucoft 3,000 Moscow,

RussiaAplana Software

250 Moscow, Russia

Hubport Interactive

N/A Davao City, Philippines

Interxion 192 Amsterdam, the Netherlands

Partial list of

offshore IT

outsourcing firm

• Benefit of offshore outsourcing is its potential to dramatically speed up development efforts.• Offshore outsourcing can save

a company in terms of labor costs, it will also result in some new expenses.• Offshore outsourcing tends to

upset domestic staff , especially when a company begins to of a department can become bitter and nonproductive and morale can become extremely low.

Outsourcing

Pros and Cons

• Successful project require day-to-day interaction between software development and business terms, so it is essential for the hiring company to take a hands-on approach to project management.

• To improve the chances that an offshore outsourcing project will succeed, a company must carefully evaluate whether an outsourcing firm can provide the following:1. Employees with the required expertise

in the technologies involved in the project.

2. A project manager who speaks the employer company’s naïve language

3. A pool of staff large enough to meet the needs of the project

4. A state-of-the-art telecommunications setup.

5. High-quality on-site managers and supervisors.

Outsourcing

Strategies for Successful Offshore

• The following list provides several tips for companies that are considering offshore outsourcing:•Develop and use a dictionary of terms to encourage a common understanding of technical jargon.• Implement a formal version-control process, coordinated through a quality assurance person

Outsourcing

Strategies for Successful Offshore

• A whistle-blower usually has personal knowledge of what is happening inside the offending organization because of his or her role as an employee of organization.

Whistle-Blowing

• Many computer manufacture today are talking about building a “green PC”, by which they usually mean one that buses less electricity to run than the standard computer; thus its carbon footprint on the planet.

Green Computing

• Electronic Industry Citizenship Coalition (EICC) was established to promote a common code of conduct for the electronics and information and communication technology (ICT) industry. The EICC focuses on the area of workers safety and fairness, environmental responsibility, and business efficiency.

ICT industry Code of Conduct

• 5 areas of social responsibility and guiding principles covered by the code:• Labor• Health and Safety• Environment• Management System• Ethics

ICT industry Code of Conduct