Global outsourcing of apparel

manufacturing and human

resource exploitation. INB 301

4/3/2015

Groups

# Md. Ariful Haque ----------------------------1321110

# Hamidur Rahaman Bhuiyan-----------------1321107

# Abdullah - Al – Sayem ---------------------1321105

# Vaskor Saha Joy ------------------------------1321903

# Shihab Shariar Muhib ------------------------1330300

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Table of Content

Abstract. --------------------------------------------------------------------------------------03

Global outsourcing on apparel manufacture ------------------------------------------ 03-04

Why outsourcing ----------------------------------------------------------------------------04

Benefits of Global outsourcing -----------------------------------------------------------05-06

How westerns companies exploited in Apparel manufacturer & HR ---------------06-07

10 Major Clothing Brands involve in Shocking Sweatshop Scandals-------------- 07- 10

How Nike Solved Its Sweatshop Problem-----------------------------------------------11

Why those incidents occurred every time? ----------------------------------------------11-12

Top Ten Countries with the Cheapest Labor cost --------------------------------------12 -13

Do they really want to solve those problems? -------------------------------------------13-14

Organizations against human resource exploitation-------------------------------------14

How to make sue Human resources/labors rights----------------------------------------14

Reference -------------------------------------------------------------------------------------15

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Abstract

Increasing globalization and a turbulent economy have sent manufacturing overseas for many industries.

USA and European clothing companies have been hit hard by this trend, outsourcing to help stay

competitive and profitable. The US apparel industry is strongly affected by economic crisis. Outsourcing

is a common business practice, particularly in the fashion industry, as labor can often be found more

inexpensively and at different skill levels in various areas of the world. However, while cost savings

associated with outsourcing work in the clothing industry can be significant, there may also be

drawbacks to this practice, which can adversely affect the industry as a whole.

Global outsourcing on apparel manufacture (1)

A practice used by different companies to reduce costs by transferring portions of work to

outside suppliers rather than completing it internally.

For example, Apple Company signs all its products designed by apple in California but in the

U.S. design is as far as Apple is willing to go. The tech giant outsources hundreds of thousands

of manufacturing jobs to countries like Mongolia, China, Korea, and Taiwan. Apple apparently

outsources these jobs.

A successful outsourcing requires a strong understanding of the organization's capabilities and

future direction.

If we look at the clothing tag on our shirt. Most likely, the shirt is manufactured in developing

countries like Bangladesh, India. China and other countries. This can be explained by two words.

Global outsourcing. Global outsourcing has been a hot topic concerning many Americans since

the early 1990’s. Businesses are always deciding whether or not to take on this great challenge.

This trend can be seen in the textile and apparel industry, companies have moved mass amounts

of production overseas. Although it seems all companies in the textile and apparel industry are

transferring their production to other countries, it is not essential for a business to outsource in

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order to be competitive. Throughout the history of outsourcing, arguments both for the

advantages and disadvantages have been heard, but by looking at two companies such as Liz

Claiborne or American Apparel we can see exactly how outsourcing works

Why outsourcing (2)

Apparel outsourcing is an arrangement in which one company provides services for another company that

could also be or usually have been provided in-house. Apparel outsourcing is a trend that is becoming

more common in information technology and other industries for services that have usually been regarded

as intrinsic to managing a business. In some cases, the entire information management of a company is

outsourced, including planning and business analysis as well as the installation, management, and

servicing of the network and workstations. Apparel outsourcing can range from the large contract in

which a company like IBM manages It services for a company like Xerox to the practice of hiring

contractors and temporary office workers on an individual basis.

The benefits of apparel outsourcing vary greatly, depending on the applications to be outsourced and the

organization’s resources. There are, however, several reasons why apparel outsourcing with Benefit

Concepts makes sense for many employers.

Here are some common reasons:

Reduce and control operating costs

Improve company focus

Gain access to world class capabilities

Free internal resources for other purposes

A function is time consuming to manage or is out of control

Insufficient resources are available internally

Share risks with a partner company

Here early days, cost or headcount reduction were the most common reasons to outsource. In today’s

world the drivers are often more strategic, and focus on carrying out core value-adding activities in-house

where an organization can best utilize its own core competencies. Main factors influencing successful

apparel outsourcing.

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Benefits of Global outsourcing (3)

There are many benefits in outsourcing. Companies that decide to outsource do so for a number

of reasons, all of which are based on realizing gains in business profitability and efficiency. The

advantages are.

Cost benefits: The most important benefit is cost savings and outsourcing brings about. We

can get our job done at a lower cost and a better quality as well. Due to the difference in wages

between western countries and Asia the same kind of work that is done over there can be

Bangladesh at a fraction of the cost. There is a cost savings of around 60% by outsourcing your

work to Bangladesh. The quality of the services provided is high thereby ensuring that low-cost

does not mean low-quality.

Risk-sharing: One of the most crucial factors determining the outcome of a campaign is

risk-analysis. Outsourcing certain components of your business process helps the organization to

shift certain responsibilities to the outsourced vendor. Since the outsourced vendor is a specialist,

they plan your risk-mitigating factors better

Reduced Operational and Recruitment costs: Outsourcing eludes the need to hire

individuals in-house; hence recruitment and operational costs can be minimized to a great extent.

This is one of the prime advantages of offshore outsourcing.

Flexibility: Some manufacturing companies have gained increased flexibility by outsourcing

their production. Typically, production gets outsourced to a contract manufacturer, or a company

that produces goods under the label or brand of another firm. Contract manufacturers might

produce goods for two or more companies, and even for competitors within the same Industry.

Focus: Some companies have experienced extreme paradigm shifts that have prompted them to

outsource their manufacturing. A company that realizes its core competency, the thing it does

best, is the sales and marketing of its product and not the production of its product may often

choose to outsource its non-core activity, or the manufacturing of its goods. With the production

outsourced, the company can now focus its resources, both human and financial, on the areas that

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increase revenue and profit. Normally, outsourcing reduces manufacturing costs, so if the

company increases its revenue through a better focus on sales and marketing, it increases its

profit margin as well.

How westerns companies exploited in Apparel manufacturer & HR (4)

Exploitation means the action or fact of treating someone unfairly in order to benefit from their

work. Exploitation takes on many forms. It is with different political structures, different cultural

tolerances, and with varying perspectives that we recognize exploitation around the world, even

in our own backyard. The roaches that exploit desperate people for underpaid labor are scattering

from North America to Asia into Africa.

While not the only contributing factor, outsourcing in the last several decades has spawned an

industrial revolution across Asia. The desire to maximize profit is a function of every business

model, and outsourcing to cheaper labor markets continues to be a logical move for many

companies. The problem is when profit ceilings are not defined by basic ethics, and workers are

exploited or worse, enslaved.

High wages to Low Wages: Because clothing manufacturing remains a labor-intensive

process, the cost of labor is an important consideration. Large retail buyers have been able to

take advantage of the availability of a global pool of workers who differ in their wages for

historical, institutional as well as economic reasons as well as outright repression of workers'

rights in some cases. Companies bring these workers into competition with one another by

relocating production from high-wage areas to low-wage ones, by contracting out the industry

term is outsourcing aspects of production to companies already operating in low-wage

areas, or by forcing the movement of low-wage workers to high-wage areas in conditions where

they cannot demand higher pay.

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Using Subcontractors: Apparel manufacturing, the middle segment of the fashion chain,

is the most fragmented, least technologically sophisticated, and most geographically dispersed.

In an effort to drive down costs, clothing manufacturers primarily from the United States but also

East Asian and some Latin American ones have increasingly opted to work with subcontractors

in low-wage areas. These garments are manufactured by thousands of small companies, mostly

contractors and smaller retail chains who rely on low wage labor.

Using child Labor: Many Developing country , North industrialized countries and In Africa

contractors uses child labor for assemble the production . Mother company aren’t monitor on

contractor Working condition. Most workers have to work on Sweetshop.

Violating Multiple Labor Law: Some Contractors, Sub- contractors companies have

even been accused of hiring suppliers who place workers in poor-working conditions, pay below

minimum wage, and violate other labor laws.

The universe of apparel companies is characterized by manufacturers, jobbers and contractors.

Manufacturers carry out the whole process from design to finishing to marketing. They contract

out work when demand suddenly peaks. Jobbers design garments, acquire fabric, and arrange for

the sale of finished clothes, but they carry out production by cutting fabric and hiring contractors

to assemble the clothes. Contractors are companies that receive already cut garment in bundles

from the jobbers and process it into finished clothes. The contracting sub-segment of the apparel

chain allows companies in the fashion industry to expand production to meet increased demand,

avoid large capital outlays, and prevent workers sitting idle when demand drops off. Sub-

contracting is also done more and more by large retailers like the Gap that sell their own brands

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10 Major Clothing Brands involve in Shocking Sweatshop Scandals (5)

Clothing is something we buy when we either need it or when we are having impulses telling us

to buy a nice shirt even if it might be a little pricier than we would like. But more often than not,

we buy it without taking into account where it’s coming from and what kinds of people are

making it. Unfortunately, many clothing brands tend to have their products manufactured in

sweatshops in impoverished areas of the world, with young children found working in dangerous

working conditions and with the factories they work in not being well-constructed.

Even more sad is the fact that so many big-name brands rely on the services of sweatshops in

countries like Bangladesh to manufacture their clothes. However, many companies have been

caught doing such practices and have suffered the consequences as a result. With this top 10 list,

we’ll be talking about 10 of those major companies that have done exactly that, and the fallout

they suffered after being caught.

Some companies are known mainly in their home territory while others such as Nike and Gap are

brands that are staples in multiple countries worldwide. Furthermore, some companies have

responded emphatically to accusations of sweatshop labor, while others haven’t responded nearly

as quickly or as effectively. Whatever the end result is, it’s still a controversial issue in the sense

that these workers get paid extremely minimal amounts of money and work many hours a week

for the sake of designing the newest trendy pieces of clothing.

Whether you buy clothing from these companies often or you don’t buy them at all, it’s still

shocking enough to make you think twice about where your newest threads come from. Here are

10 of the most shocking examples of major clothing companies and sweatshop labor.

1.H&M : H&M advertise itself as a pro-green company, It has a spotty track record overall, ith

a 1997 TV documentary in Sweden accusing the company of putting young children in the

Philippines through child labor to produce their cloths. In 2010, it was revealed that a factory in

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Bangladesh supplying to Swedish based clothing retailer H&M had caught fire with the fire

exits blocked and with inefficient equipment to stop the fire and killed 21 workers.

2. Nike: Nike has been promoter of ethical practices and workers rights, their track record. But

recently it faced world boycotting campaign for unethical working conditions. their use of

sweatshop labor has gone back to the ‘70s, with reports of labor workers in several Asian

countries.

3. Wal-Mart: After a factory building in Bangladesh collapsed in April of 2013, it was

reported shortly after that Wal-Mart was one of the major companies that the factory building

supplied to. After the collapse that the use of the factory to manufacture their clothing wasn’t

even authorized. Before that, Wal-Mart was accused in 2008 of forcing Bangladeshi workers to

work 19-hour shifts while only earning about $20 or so a month lower than the legal minimum

wage in Bangladesh. The incident caused the company to issue biannual ethical sourcing reports

after it had stopped doing so in 2004.

4. The Gap: One of the most recognizable jean brands in the world, The Gap was caught up in

a scandal involving workers in India in 2010 when an investigation showed that those workers

had been working 16-hour days with extremely minimal and illegal pay, to the tune of less than

40 cents per day. The company claimed that all of its factories needed to stick to its non-

negotiable standards. This is hardly the first time the company has been involved in such a

scandal but The Gap announced in 2013 that it would partner with 20 other companies to

improve working condition in Bangladesh

5. La Senza : Although the lingerie brand La Senza is a largely Canadian company, it is far

from immune in terms of its relation to sweatshops. In April of 2005, the Spectrum-Sweater

factory located in Savar, Bangladesh just northeast of the capital city of Dhaka collapsed with

64 recorded fatalities and with some people permanently handicapped. Furthermore, in 2006, the

company was called out for abandoning workers in a bra factory in Thailand and moving their

production to another factory, as the one in Thailand was seen as actually having good working

conditions. La Senza isn’t the only company specializing in lingerie to be caught using

sweatshop

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6. Victoria’s Secret: In 2007, the lingerie company Victoria’s Secret a company that has

vouched for free trade – was caught in a sweatshop scandal of its own when it was revealed that

conditions regarding their workers in Jordan were far from ideal. In fact, such conditions

involved their workers being slapped and/or beaten if their production was sub-par. Furthermore,

those workers were found to have been forced to work five or more overtime hours per day,

without being given the overtime pay they were legally obligated to receive. A few years later, it

was revealed that their lingerie was made by cotton picked by children working in Burkina Faso.

7. Disney Although Disney is one of the most recognizable brands in the world, especially

among children, their history with sweatshop labor is in stark contrast to their image. Sweatshops

in countries like China, Bangladesh and Haiti have been known to produce clothing for the

company, with Chinese labor workers in particular being paid 33 to 41 cents an hour, with

numerous employees being as young as 14 years of age with no health benefits or a pension

included with their employment. In Tazreen, Bangladesh, a fire at a sweatshop producing Disney

clothing as well as brands associated with Sears and Wal-Mart caused the deaths of 114

workers.

8. Sears: Also caught up in the scandal surrounding the fire at the factory in Tazreen is the

North American retailer Sears. The factory producing its clothing before the fire had locked fire

exit doors and poor fire extinguishing equipment, and the workers were told to get back to work

when the first fire alarm went off. Although Sears was one of the companies whose products

were made at that factory, its track record with sweatshop labour in general isn’t that great. In

2003, a story was published in The Guardian about a Vietnamese worker moving to the

American Samoa to make clothes for the company, only to be starved and beaten while in

working

9. Joe Fresh: Once a clothing company that had come through Loblaw Inc. in Canada, Joe

Fresh has since grown a massive presence in the United States. However, the company’s

manufacturing was done in a sweatshop building in Bangladesh, which collapsed last year,

killing nearly 400. In response, Loblaw Inc. announced that it would send representatives to the

country with the intention of offering compensation to the victims’ families. After being accused

of protecting their trademark but not their workers, the company vowed to be a “force for good”

Bangladesh.

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10. Marks and Spencer This U.K. company makes this list not necessarily because of how

big their brand is, but because of how much of a surprise their sweatshop scandal truly was.

Although they have often been praised for their emphasis on ethical practices, they and several

other companies such as Gap were discovered in 2010 to have been caught up in a scandal where

Indian workers were forced to work overtime in other words, 16 hours a day in shifts while

being paid just under 25p an hour. A spokesperson for the company responded by saying that

they took “ethical sourcing and trust in our brand extremely seriously.

How Nike Solved Its Sweatshop Problem (6)

Nike faced protest in 1997 which was mainly organized by College students by followed that

1998 Nike faced again a problem that is weak demand and brutal criticism and realized that they

needed to change theses thing. According that Nike started In 1999 ,the Fair Labor Association,

a non-profit group that combines companies, and human rights and labor representatives to

establish independent monitoring and a code of conduct, including a minimum age and a 60-hour

work week, and pushes other brands to join. If they did not do that they would lose their market

in world and faced some pressure from world people’s and country leader. They were also stated

to visit adults factories to cheek their system in 2002 even they repeated visit to the problematic

company to solve their standard and force. They continued this work till 2004. Also in 2004

Human rights activists acknowledge that increased monitoring efforts at least deal with some of

the worst problems, like locked factory doors and unsafe chemicals, but the scenery is still in the

same stage. 2005 Nike published a fresh company list which they contrast with and

published 108-page report . In that report they described the conditions and pay in its factories

and acknowledging widespread issues, particularly in its south Asian factories. In that way Nike

actually solve their sweatshop issue.

Why those incidents occurred every time? (7)

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Everybody knows about human resource exploiting around the world. How the exploit here we

already know about it, but we want to know why? Why this problem does exist in this world.

Poverty and unemployment: Worker mostly exploits by the wages or if I won’t to

explain it elaborately the wages the worker get is very cheap but the importer of that product sell

in to the final customer in high price so there is a big gap but they have no other options. The

link between poverty and cheap clothes in Bangladesh, India and other developing countries has

been well established. But the clothes people buy in the developed countries in a high price.

Millions of workers around the world, mainly women, suffer poverty wages and exploitation

producing cheap fashion for us.

Lack of Education: Most of the worker who works in apparel industries are illiterate and

doesn’t have any basic education, that’s why only a few workchoices available for them. For

example, people who work in apparel industries they have no other better option than garments

because other sectors are not out exploitations.

Local companies: Local exporters like in Bangladesh, China, India and other countries who

take the order from their buyer they always focus on how to maximizing their profit.Thets why

HR exploitation still exist in the world.

Government monitory policy: Countries like Bangladesh, India, China and other

countries who are the big exporter of apparel most of them are developing countries and

unemployment problem are the big problem for them, that’s why government also feels hesitate

to take any kinds steps to ensure their rights.

Countries with the Cheapest Labor (8)

With the world getting smaller by the minute because of the never ending advance of modern

technology, companies have deemed it wise to outsource the manufacture of its products and the

service that it provides to countries where the labor is dirt cheap, despite all these tangible and

intangible costs, the labor cost of these countries are so low that even if add all these things

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together, everything will still come out lower than the astronomical labor costs in Western

countries that amount from $19 and above

These are the top 10 countries with the cheapest labor rates.

Madagascar $0.18 per hour

Bangladesh $0.23 per hour

Pakistan $0.32 per hour

Ghana $0.32 per hour

Vietnam $ 0.39 per hour

India $0.48 per hour

Kenya $0.50 per hour

Senegal $0.52 per hour

Sri Lanka $0.62 per hour

Egypt $0.80 per hour

Do they really want to solve those problems? (9)

Most of the company likes Nike, mark & Spencer, Sears Victoria’s secret, the gap Walmart and

H&M are mostly Involve to the sweatshop. For those companies outsourcing some problem are

really created in outsourcing company. Mostly these company try to solve those problem not to

lose their market share because these kind of problem sometime decrease their sell and

downstream their reputation. Even they can face the protest of the whole world which can stop

their outsourcing benefit.

After the sweatshop problem these companies are always try to solve outsourcing related

problem but in the past they were not think about these too much for that

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But some reason or some factors that these companies not show too much interest to solve

outsourcing reacted problem In that not only the western company but local companies are also

responsible to create these problems. Companies want to make more money by that they can give

their workers low wage and they earn a lot of profit, just by doing this. The Big Companies

doesn’t need to worry about life insurance or medical insurance for their workers. They also not

provide the good environment and not a good place to work. The owners can do whatever they

want to do their workers like hitting them and forcing them to work longer. More and more big

businesses and even small ones for that matter increase the bottom-line profit, while making their

product affordable through hiring or sub-contracting manufacturing units in third world countries

Organizations against human resource exploitation: (10)

Clean Clothes Campaign

International Labor Rights Fund

International Labor Organization

Institute for Global Labor and Human Rights

Green America

United Students Against Sweatshops

Free the Children

Not for Sale Campaign

How to make sure their right? (11)

Western company becomes more serious about Human resource right. After RANA PLAZA

incident they are now ensure their full rights. Following their rights western company are forcing

to the outsourcing company to provide the all workers a better work environment and life

Provide the safe work environment and free from undue dangers

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The right to Fair pay, meaning at least a minimum wage and overtime for any hours

worked over 40 hours a week

the right not to be discriminated against on the basis of marital status, gender identity,

sexual orientation and other characteristics

provide all personal protective equipment provided

Avoid the child labor

Reference

3. http://www.forbes.com/sites/xerox/2013/07/12/the-benefits-of-outsourcing-finance-and-

accounting/

http://www.thehindubusinessline.com/news/international/bangladesh-is-still-attractive-for-

garment-outsourcing/article4766013.ece

http://viewpoints.kalypso.com/entry/apparel-manufacturing-outsourcing-recent-trends-and-

opportunities-in-the-us/

https://www.enterprisenation.com/blog/posts/made-in-the-uk-the-pros-and-cons-of-outsourcing-

clothing-manufacture-overseas

4. Hector Figueroa , Assistant researcher, The Service Employees International Union .

North American Congress on Latin America. WWW.nacla.com

#Matt Wesley, World Affair Council Report on Apparel Industry

5. http://www.therichest.com/rich-list/most-shocking/10-major-clothing-brands-caught-in-

shocking-sweatshop-scandals/?view=all

6. http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5

7. http://www.triplepundit.com/2013/04/7-reasons-sweatshops-persist/

8. http://www.therichest.com/rich-list/poorest-list/countries-with-the-cheapest-labor/

9. http://www.customwritten.com/.../balwant-brian-singh-fraud

10. http://www.nmass.org/campaigns/

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11. http://employment.findlaw.com/legal-help-and-resources/protecting-the-rights-of-

workers.html