This article examines the ethical dilemmas and coping strategies of social workers in Iran who face challenges due to the outsourcing of care centers. Based on qualitative research and semi-structured interviews with sixteen social workers, the study shows that outsourcing, by creating financial shortages and inefficient bureaucracy, has exposed social workers to ethical dilemmas. These dilemmas arise in three dimensions: interactions with service users, relationships with colleagues, and organizational procedures. Some social workers adopt strategies such as resilience, risk-taking, professionalism, and adaptive prioritization, consistent with the ‘ethics work’ framework, while others rely on ‘denial and submission’. Coping strategies are influenced not only by organizational structures and administrative procedures but also by personal characteristics and professional competence. This study highlights the crucial role of individual moral courage, alongside institutional support, in maintaining ethical practices and offers policy recommendations. These include strengthening social work education to foster moral courage, offering institutional support through professional and academic associations, and reforming state regulatory approaches. Examining the impact of institutional reforms on social work practice within different political and policy contexts, such as Iran, contributes to the growing body of knowledge internationally.