I always believe transparency and honesty are key business attributes, but I wonder how far that needs to go. For example, most people charge out a greater rate than their costs. This is basic economics; money in greater than money out equals happiness. They don’t tell customers that they are paying this much for this or that and this is my mark up; please pay this amount thank you.
But, we still live in a society where there are expectations, a customer walks into a store and sees the staff and the stock and somewhere in the back of the brain there is an association that what they pay is going to cover what they have purchased and the experience they have with the staff and intuitively we know we are also covering the costs of the business. If we are very conscientious purchasers we might also consider where the products have come from and whether there is a ‘fair trade’ component or an environmental aspect to the purchase.
My ethical dilemma comes when a business outsources its services and how much does the customer need to know about this? When you take an appliance in for servicing it may be sent back to the manufacturer for repair or replacement. Generally, we would know if this is happening or your purchase decision might be based on having a local manufacturing and repair service.
But what about another example – let’s take accounting. I must get monthly, if not weekly, emails from offshore businesses wanting me to contract them to do my clients accounts, this is called outsourcing. These are typically from India, Philippines, or other low wage economies. Their fees are considerably less than it would cost me to employ someone in my office and is an opportunity for me to significantly increase the number of clients without overloading myself, and increasing my profits. Sounds like a great idea, but do I tell the clients that come in to meet with me that I don’t actually do their accounts but I send all their information offshore and only check it when it comes back to me and for that wonderful service I’m going to charge you this much, thank you? Or do I tell clients that I contract out the work (I could be economic in my explanation), is that ok with you? Do clients really care, do they just want the compliance work completed and don’t bother me with the details, just get it done?
Outsourcing is becoming a very common practice not just for accountants. I know of business’s that have staff/contractors stationed around the world so that work is being done 24 hours a day – send in a document for typing at the end of your day and it’s back in your inbox when you turn up for work in the morning. Do clients care that the work is being done outside of the office they are familiar with?
I’m interested to know what people think.