Human Resources Outsourcing

It is a concept that has evolved from a manufacturing perspective to a strategic perspective, which views the concept as a way for organizations to focus and be more competitive. The basic premise of outsourcing is that a specialist organization can perform a particular service more efficiently than can internal operations because a specialist organization has an inherent advantage in producing and delivering a service. Superior technology, management skills, or economies of scale may contribute to this perception. The type of sourcing relationship depends on whether a long-term or short-term need exists. To save funds used for benefits for regular employees, temporary workers are hired. In this case, the organization (outsourcer) provides all necessary resources except the workers, who are provided by the vendor. For long-term services, the vendor has full responsibility for delivering the service; the outsourcer provides only a liaison.

Outsourcing has become an integral part of many organizations today. Outsourcing has its advantages and disadvantages that organizations will have to weigh to decide whether or not outsourcing is the best possible solution to their current problems and business operations. Outsourcing refers to the process of hiring external provider to operate on a business or organization function (Venture Outsource, 2012). In this case, two organizations or businesses enter a contract where there will be an exchange of services and payments. This paper will discuss the possible risks an organization may encounter in outsourcing in relation to the use of an external service

Outsourcing is that a product or service provided by outside vendors which but was previously provided internally or that could be provided internally(Pearlson, 2001).It is an effective approach for information system implement in a business organization but a risky one.

The vendors are investing in their employees by various training programs on different technologies. This gives a chance for the vendor to provide the outsourcing services to a company with the help of the well trained employees who are ready to work on the projects. Before outsourcing some of its products and services to a third part vendor, the company has to analyze all the factors that might result from the outsourcing decision, the advantages and disadvantages of the company both in short term and long term due to outsourcing. According to Aubuchon, outsourcing some of its products can be a good thing for a company and the judgment to outsource the services must not only based on the cost factor, but the company has to take all other significant factors into consideration (Aubuchon, 2014).

Outsourcing has become a very common part of business around the world. Outsourcing is when a corporation

(Greaver, 1999) proclaims that outsourcing is of a strategic nature and that the decision-making process of a company should take this into account. He then goes on to define outsourcing as the act of transferring some of company’s recurring internal activities and decision rights to outside providers, as set forth in a contract. Because the activities are recurring and a contract is used, outsourcing goes beyond use of consultants.

Outsourcing, and in particular offshore outsourcing, is absolutely necessary and helps our country 's economy. Outsourcing helps a company focus on those things it does best and hence increase its "top line" revenues while reducing costs. Outsourcing has provided organic growth to the United States corporations and enabled them to compete more effectively in global markets. This paper seeks to explore what outsourcing is, what the difference between outsourcing and offshoring is, what effects it has on individuals, firms, countries and the world as a whole, the controversy surrounding outsourcing, trends of outsourcing and the necessity for it.

In today’s competitive markets companies have increasingly looked to outsourcing to increase their competitive edge, market share and profits. Models back in the 90’s were centred on the concept of one huge firm that does all the processes up until the end product. The result was that a firm had all the support services in house and this model was up until now a viable option. As the markets became more complex and competitive the need for cost cutting measures led to aggressive outsourcing in most sectors of the economy. Most companies saw that spending all resources on core processes was a competitive advantage. Outsourcing was not formally recognised as a business strategy until 1989 (Mullin 1996).

Global outsourcing is used by companies to help enhance and develop the business. Global outsourcing also taken by a firm to help solve problems that occur in an Organizations. Global outsourcing is helping organizations to take some expertise from outside which takes outsourcing locally and internationally during the recent years. Global outsourcing is a prime example in the development of the industry. It has become common place among the companies, and the world is more global now than ever before. It is inevitable outsourcing has led to a growing demand for such items as it contracts or contract negotiations, and continue to create demand for more advanced technology throughout the business. Global outsourcing occurs when a business decides specific contract tasks or services to other businesses. Global outsourcing comes as a result of economic necessity, and transpires when a company specializing in the service or product that can perform or produce a more cost-efficient than a larger company. Projects of this great company submitted to the company more cost efficient. What many do not realize that it is important to enter into contracts and contract negotiations when outsourcing to a successful transaction.

There are a variety of factors that outline the significance of outsourcing and its rapid growth over the years. Firstly, there has been an “increased desire on the part of organisations to focus efforts on core activities, which are the source of competitive advantage” (Wilton, 2011). This allows the organisation to invest all efforts

In response to the question, global corporations should outsource transactional HR functions but not the whole HR department, and still it depends on the organization’s core competencies in the business environment. HR outsourcing has been a prevalent topic since 1980’s, MNC’s have been outsourcing various HR functions such as legal activity, recruitment, pension, benefits, payroll etc. as a means to cut costs and shift it to the expertise service providers. The literature on HR outsourcing consists of ample evidence that shows the importance of maintaining an in-house strategic function, despite HR outsourcing according to the firm’s activities in the value chain (Heikkala and Cordon,2002), However, with the change in business strategy

Over the past decade or more, outsourcing is becoming an essential success factor. Many multinational organizations rely on outsourcing for a variety of products and services such as technology, customer support, automobile, clothes, telecommunication products and many more (Gottschalk, 2006). Outsourcing is an excellent process when it comes to cost advantage. Additionally, it provides organizations the time and workforce to focus on organization’s core business capabilities (Gottschalk, 2006).

The profound result of how HR outsourcing affects in an organization serves as a two-edged – double sword. That is to imply that, the employees can be highly challenged to do their best in the organizational performances or become highly demoralized to execute their roles and responsibilities. The HR outsourcing practices impact on challenging the employees as they feel charged to do better than the currently are doing to improve their performance than the outsourced employees (Ketter, 2007). For the permanent employees, it is not good to show the management that an external employee can do better than a permanent employee. In turn, one may risk losing their job to the outsourced employee, hence, feels challenged to do the best they can to outdo the outsourced employee.

In this era where the world is globally evolving, due to the nature of the roles, functions and responsibilities on HR in organizations, it outsources some of its organizational activities to line managers to carry out. Although, this form of practice does not involve training, hence I will say it is quite cheap for organizations to carry out because it relieves itself from some duties but it tend to limit the capabilities of the HR practitioners in organizations i.e. instead of adopting the need to in-source, they outsource. This practice has helped in relieving HR department in organizations from heavy workloads overtime (Armstrong 2009). Human resource activities such as recruitment and selection, workers’ payroll, learning and development just to mention a few are now very much outsourced to consulting organizations to carry out and bear whatever risks involved (Taylor 2008).

Handling a variety of HR activities besides the core activity by employers would not bring useful consequences for organisations. Thus, by outsourcing, they can concentrate on their core competence which might be included in the application of various policies in different businesses. For instance, as stated by Belcourt (2006) designing products is one of the major activities in NIKE. Contracting out non-core HR tasks provides free time for managers to pay more attention and attempt to the value added activities such as leadership development, innovation and customer services. Hence, diminution of HR administrative duties like employees’ pension, benefits and payroll helps mangers to be strategists to improve companies’ competitive advantages.