Ethics in Information

Technology, Fourth Edition

Chapter 10
Ethics of IT Organizations

Presented by:
Engr. Frederick Von A. Ibasco, MSIT
 Objectives

• As you read this chapter, consider the following

questions:
– What are contingent workers, and how are they
employed in the information technology industry?
– What key ethical issues are associated with the use
of contingent workers, including H-1B visa holders
and offshore outsourcing companies?
– What is whistle-blowing, and what ethical issues are
associated with it?

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 Objectives (cont’d.)
– What is an effective whistle-blowing process?
– What measures are members of the electronics
manufacturing industry taking to ensure the ethical
behavior of the many participants in their long and
complex supply chains?
– What is green computing, and what are organizations
doing to support this initiative?

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 Key Ethical Issues for Organizations

• Ethical topics are pertinent to organizations in the

IT industry and organizations that make use of IT
– Use of nontraditional workers
– Whistle-blowing
– Green computing
– ICT code of ethics

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 The Need for Nontraditional Workers

• Bureau of Labor Statistics (BLS) forecast

– Network systems and data communications analysts
will be 2nd fastest growing occupation from 2008-
2018
– Employment of computer software engineers will
grow 34%
• Concern about a shortfall in the number of U.S.
workers to fill these positions
• Several IT positions in the top-ten paid majors for
2010-2011 bachelor’s degree graduates

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 The Need for Nontraditional Workers
(cont’d.)
• Long-term shortage of IT workers
– Employers turning to nontraditional sources
• Sources include:
– Contingent workers
– H-1B workers
– Outsourced offshore workers
• Ethical decisions about whether to:
– Recruit new/more workers from these sources
– Develop their own staff to meet their needs

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 Contingent Workers

• Contingent work is a job situation in which an

individual does not have an explicit or implicit
contract for long-term employment
• Contingent workers include:
– Independent contractors
– Temporary workers through employment agencies
– On-call or day laborers
– On-site workers provided by contract firms
• Needed for pronounced IT staffing fluctuations
• Workers hired for the life of the project only
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 Contingent Workers (cont’d.)

• Sources
– Temporary agencies
– Employee leasing
– Consulting organizations
• Firms that provide temporary help:
– Recruit, train, and test their employees in a wide
range of job categories and skill levels
– Assign them to clients

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 Contingent Workers (cont’d.)

• Employee leasing
– Business outsources all or part of its workforce to a
professional employer organization
– Subject to special regulations regarding workers’
compensation and unemployment insurance
• Coemployment relationship
– Two employers have actual or potential legal rights
and duties with respect to the same employee or
group of employees

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 Contingent Workers (cont’d.)

• Advantages of using contingent workers

– Business does not pay for benefits
– Can continually adjust the number of contingent
workers to stay consistent with its business needs
– Does not customarily incur training costs

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 Contingent Workers (cont’d.)

• Disadvantages of using contingent workers

– Workers may lack a strong relationship with the firm
• Low commitment to the company and its projects
• High turnover rate
– Workers gain valuable practical experience working
within a company’s structure and culture
• Lost when workers depart at the project’s completion

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 Contingent Workers (cont’d.)

• When deciding to use contingent workers:

– Recognize the trade-off between:
• Completing a single project quickly and cheaply
• Developing people in the organization
– When staffing is truly temporary:
• Use of contingent workers is a good approach
– Think twice about using contingent workers:
• When they are likely to learn corporate processes and
strategies that are key to the company’s success
– Worker’s next assignment may be with major
competitor
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 Contingent Workers (cont’d.)

• Deciding when to use contingent workers

– Can raise ethical and legal issues
– Potential liability for:
• Withholding payroll taxes
• Payment of employee retirement benefits
• Payment of health insurance premiums
• Administration of workers’ compensation

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 Contingent Workers (cont’d.)

• Deciding when to use contingent workers (cont’d.)

– Can be viewed as permanent employees by:
• Internal Revenue Service
• Labor Department
• State workers’ compensation agency
• State unemployment agencies
– Vizcaino v. Microsoft lawsuit
• Deciding factor is degree of control company
exercises over employees
• Employers must exercise care in the treatment of
contingent workers
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Ethics in Information Technology, Fourth Edition 16
 H-1B Workers

• Temporary work visa

– U.S. Citizenship and Immigration Services (USCIS)
– For people who work in specialty occupations
• H-1B workers
– Meet critical business needs
– Have essential technical skills and knowledge not
readily found in the U.S.
– Employers must pay H-1B workers the prevailing
wage for the work being performed

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 H-1B Workers (cont’d.)

• Maximum continuous period of six years

– After six years, the foreign worker must remain
outside the United States for one year before
another H-1B petition can be approved
• Continued use of H-1B workers
– Symptom of a larger, more fundamental problem
– U.S. not developing sufficient IT employees

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 H-1B Workers (cont’d.)

• Top five outsourcing countries

– India
– China
– Canada
– Philippines
– Korea
• Federal cap of 65,000 for number of H-1B visas
– Applies only to certain IT professionals
– Large number of workers are exempt from cap

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 H-1B Workers (cont’d.)

• English as a second language

– Workers who are not fluent in English:
• May find it difficult and uncomfortable to participate
• May create their own cliques
• May stop trying to acclimate
• Can hurt a project team’s morale and lead to division
• Managers and coworkers should:
– Strive to help improve H-1B workers’ English skills
and cultural understanding
– Be sensitive to workers’ heritage and needs

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 H-1B Workers (cont’d.)

• H-1B application process

– Employer making job offer must also offer
sponsorship
– Application has two stages
• Labor Condition Attestation (LCA)
• H-1B visa application
– If H-1B are more than 15% percent of company’s
workforce:
• Must prove that it first tried to find U.S. workers
• Must prove not hiring H-1B after laying off similar U.S.
worker
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 H-1B Workers (cont’d.)

• American Competitiveness in the Twenty-First

Century Act (2000)
– Allows current H-1B holders to start working for
employers as soon as their petitions are filed
• Using H-1B workers instead of U.S. workers
– Good for short-term hiring
– Long-term hiring
• Lessens incentive to educate and develop U.S.
workforces
• Does nothing to develop strong core of permanent
U.S. IT workers needed in future
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 H-1B Workers (cont’d.)

• Potential exploitation of H-1B workers

– Salary abuse by unethical companies
– Some H1-B workers are paid $10,000 to $30,000
less than U.S. workers in the same job
– Visa Reform Act (2004)
• Defined a modified wage-rate system
– At end of the six-year visa term:
• If no green card, firm loses worker
• Suddenly unemployed worker must return home

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 B - 1 Visa Controversy

• B-1 visitor visa for people who wish to enter U.S.

temporarily:
– For pleasure or medical treatment
– To travel for short periods of time to consult with
business associates; attend convention or
conference; negotiate a contract; or install or
maintain machinery
• B-1 visa faster, easier, and cheaper to obtain
– Lot of gray area in the use of B-1 visas

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 Outsourcing

• Outsourcing
– Approach to meeting staffing needs
– Long-term business arrangement
• Company contracts with an outside organization that
has expertise in providing a specific function
• Rationale
– Coemployment legal problems are minimal
– Lower costs
– Obtain strategic flexibility
– Keep staff focused on core competencies

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 Offshore Outsourcing

• Variation of outsourcing
– Services provided by an organization whose
employees are in a foreign country
• Companies reduce labor costs
• Increasing in IT industry
• As key processes move offshore, U.S. IT providers
are forced to lower prices
• Common to use offshore outsourcing for major
programming projects

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 Offshore Outsourcing (cont’d.)

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 Offshore Outsourcing (cont’d.)

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 Offshore Outsourcing (cont’d.)

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 Offshore Outsourcing (cont’d.)

• Pros and cons of offshore outsourcing

– Low wages
• Demand for offshoring driving up salaries
– Dramatically speeds up development efforts
• Make progress on a project around the clock
– Can also result in new expenses
• Additional time to select an offshore vendor
• Additional costs for travel and communications
– Same ethical issues as H1-B and contingent workers
– Difficulty of communications over long distances and
differences in culture and language
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 Offshore Outsourcing (cont’d.)

• Strategies for successful offshore outsourcing

– Expertise in technologies involved in the project
– Project manager speaks native language of
employer
– Large staff available
– State-of-the-art telecommunications setup
– High-quality on-site managers and supervisors

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 Whistle-Blowing

• Effort to attract public attention to a negligent,

illegal, unethical, abusive, or dangerous act by a
company
• Whistle-blower
– Usually has personal or special knowledge
– Risks own career
– Might even affect lives of friends and family
– Must choose between protecting society and
remaining silent

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 Whistle-Blowing (cont’d.)

• Protection laws allow employees to alert authorities

to employer actions that are unethical, illegal, or
unsafe or that violate specific public policies
– No comprehensive federal law
– Each law has different:
• Filing provisions
• Administrative and judicial remedies
• Statutes of limitations

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 Whistle-Blowing (cont’d.)
• False Claims Act (“Lincoln Law”)
– Enacted during the Civil War
– Enticed whistle-blowers to come forward
– Offered a share of the money recovered
• Qui tam provision allows private citizen to file in
name of government
• Violators are liable for three times the dollar
amount the government is defrauded
• Provides strong whistle-blower protection
• Complexity requires advice of an attorney

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 Whistle-Blowing (cont’d.)

• Whistle-blower protection for private-sector workers

– Many states, not all, have laws that prevent workers
from being fired because of an employee’s
participation in “protected” activities
• Whistle-blowers can file claims against their
employers for retaliatory termination
• Whistle-blowers are entitled to jury trials
• If successful at trial, can receive punitive damage
awards

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 Whistle-Blowing (cont’d.)

• Dealing with a whistle-blowing situation

– Assess the seriousness of the situation
– Begin documentation
– Attempt to address the situation internally
– Consider escalating the situation within the company
– Assess implications of becoming a whistle-blower
– Use experienced resources to develop action plan
– Execute the action plan
– Live with the consequences

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 Green Computing

• To manufacture truly “green” products, companies

must:
– Produce product that requires less electricity
– Reduce the amount of hazardous materials used
– Increase amount of reusable or recyclable materials
– Help consumers dispose of their products in an
environmentally safe manner at the end of the
product’s useful life

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 Green Computing (cont’d.)

• Personal computers and cell phones contain

thousands of components composed of many
different materials
– Some harmful to humans and environment
– Workers along the entire supply chain at risk
– Users can also be exposed to these materials

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 Green Computing (cont’d.)

• EPEAT (Electronic Product Environmental

Assessment Tool)
– Enables purchasers to evaluate, compare, and
select electronic products
• Based on a total of 51 environmental criteria
• Products are ranked in three tiers of environmental
performance
• European Restriction of Hazardous Substances
Directive
– Restricts use of many hazardous materials in
computer manufacturing
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 Green Computing (cont’d.)

• How to safely dispose of obsolete computers

– Many states have recycling programs
– Some manufacturers have developed programs
• Greenpeace environmental activist organization
– Issues quarterly ratings of manufacturers according
to the manufacturers’ policies on toxic chemicals,
recycling, and climate change
• Manufacturers have long way to go to meet the high
standards

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 ICT Industry Code of Conduct

• Electronic Industry Citizenship Coalition (EICC)

– Promotes common code of conduct for ICT industry
– Focuses on the areas of:
• Worker safety and fairness
• Environmental responsibility
• Business efficiency
– Coalition membership is voluntary
• Code of conduct defines performance, compliance,
auditing, and reporting guidelines across five areas
of social responsibility

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ICT Industry Code of Conduct (cont’d.)
• Guiding principles of social responsibility
– Labor
• Must uphold the human rights of workers
– Health and safety
• Must provide safe and healthy work environment
– Environment
• Adverse effects minimized
– Management system
• Ensures compliance with code
– Ethics
• Must uphold the highest standards of ethics
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 Summary

• Contingent workforce includes:

– Independent contractors
– Temporary workers through employment agencies
– On-call or day laborers
– On-site workers provided by contract firms
• Outsourcing
– Long-term business arrangement
– Contract for services with outside organization
– Expertise in providing a specific function

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 Summary (cont’d.)
• Whistle-blowing
– Effort to attract public attention to negligent, illegal,
unethical, abusive, or dangerous acts by company
– Whistle-blowing process
• Assess the seriousness of the situation
• Begin documentation
• Attempt to address the situation internally
• Consider escalating the situation within the company
• Assess the implications of becoming a whistle-blower
• Use experienced resources to develop an action plan
• Execute the action plan
• Live with the consequences
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 Summary (cont’d.)

• Green computers
– Use less electricity
– Include fewer hazardous materials
– Contain reusable or recyclable material
• Manufacturers must help consumers:
– Dispose of products in an environmentally safe
manner at the end of the product’s useful life
• EPEAT (Electronic Product Assessment Tool)
– Purchasers can evaluate, compare, and select
– Based on 51 environmental criteria
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