Contemporary Management Outsourcing - Assignment Example

?Contemporary Management Article on outsourcing In a recent BBC article, the issue of outsourcing was highlighted. The plan of three police forces tooutsource services to private contractors fell through when the police and crime commissioners rejected the plan (BBC News, 2013). The Bedfordshire, Cambridgeshire, and Hertfordshire forces were the supposed beneficiaries of the plan if it was approved; and they were likely to benefit by contracting G4S to ensure joint IT and human resources. The decision was however made for the forces to resolve their work issues through international collaboration (BBC News, 2013). The G4S indicated that the outsourcing would have saved the three forces about 100 million pounds over the span of 10 years. The G4S declared that some elements of the police support services can best be managed by the private sector. The three PCCs secured an agreement in an earlier meeting with the three commissioners ending negotiations with the G4S. Originally, the three PCCs planned to secure an agreement with G4S for a 10 year outsourcing plan. This plan was established in order to manage a significant funding gap which would have impacted on about 1100 staff (BBC News, 2013). Following the initial outsourcing contract with G4S during the Olympics, significant failures were observed on how the G4S handled the security situation. The G4S was not able to deliver the contracted 10,400 security guards for the Olympics and this represented their failure as a private contractor. There is still however a possibility for discussions with the G4S on how police support can be secured and improved by outsourcing police support services to the private sector (BBC News, 2013). Most of the PCCs however have reconsidered the outsource plan and did not believe in the prospects of outsourcing for them. Nevertheless, outsourcing does present with major possibilities in relation to savings for the three PCCs in terms of their policing budget (BBC News, 2013). Based on the above article, the prospect of outsourcing in the UK is discussed, especially in the light of work backlog and funding deficits. The decision to outsource jobs and work often falls on the manager who is burdened with the establishment of efficient services while still maintaining the profitability of the company (McIvor, 2005). In the case of the UK, outsourcing would refer to the outsourcing of work to private companies. The need to outsource mostly comes from the shortage of personnel or the shortage of funds. In the above case, the work outsourced included joint IT and human resources (McIvor, 2005). The backlog for this work has been significant, but on closer inspection, these can be effectively relieved through outsourcing. This is the point of outsourcing – finding the least expensive way of efficiently managing myriad tasks which the current staff cannot accomplish (McIvor, 2005). In the end however, after much consideration, the outsourcing plan was abandoned by the three PCCs, this after they realized that the outsourcing plan may not be for them. Despite their refusal to proceed with the outsourcing plan, the potential benefits of outsourcing are still undeniable. Outsourcing has become one of the most financially-viable options for many businesses and corporations (Pyndt and Pedersen, 2006). In the UK, their public services are considered to be a major socio-economic and political force because it affects most citizens and it employs millions of these citizens while also raking in billions of pounds in profit. In recent years, the UK has been successful in outsourcing various public services, mostly from private corporations in the hope of efficiently managing waste disposal, children’s homes, adult social services, education, border control, and prisons (Williams, 2012). The outsourcing of public services has now gained momentum in the UK with more and more counties considering the outsourcing of the police and security services. Outsourcing is based on contractual arrangements between customers and supplier/s for the latter to deliver services or products which the former is already delivering internally (Fan, 2000). The basic difference between outsourcing and other agreements is that the customer contracts out a portion of the services or processes which is part of its operations (Fan, 2000). There are various reasons for companies choosing to outsource their activities which may include: reduction of costs, improvement of quality of products and of services, improvement of organizational goals and directions, improve flexibility, and to secure change in the organization (Fan, 2000). As was mentioned, outsourcing has grown to considerable proportions in the past decade, especially in terms of offshore outsourcing and private outsourcing. For instance, about 25% of most IT activities in the UK have been outsourced (Fan, 2000). In the US, the percentage for outsourcing is even bigger. At present, many more companies, especially western and industrialized economies are outsourcing some of their processes and services aboard or to private firms (Quinn and Himmer, 1994). It does not appear that this trend would likely dissipate in the years to come; instead, this trend would likely expand even further in the future. There are various theories explaining outsourcing. Transaction cost economies (TCE) is the most utilized theory for outsourcing (Perunovic and Pedersen, 2007). This theory provides the decision-making tools which allow corporations to decide on whether or not to outsource and to establish possible outsourcing arrangements (Perunovic and Pedersen, 2007). This theory provides an explanation for contractual issues and it has been used in order to further explain the wordings of contracts, including the preparation of related management activities. Another theory which helps explain outsourcing is the relational view. This theory indicates how corporations secure and ensure their competitiveness (McIvor, 2005). Its main goal – that of relational rents – has been used to indicate how organizations choose their possible outsourcing choices and relationships (Perunovic and Pedersen, 2005). The concept of core competencies is also another theory relating to outsourcing. In most theories seeking to explain outsourcing, the outlook has been directed towards assessing issues seen within the different stages of outsourcing. The issue arising from such approach is on the selection process based on various outcomes (Baden-Fuller, et.al., 2000). In general, it is possible to establish a favourable solution of this static issue. However, a more favourable approach may be taken if questions relating to the dynamics of outsourcing processes are considered (Baden-Fuller, et.al., 2000). Outsourcing therefore includes various processes and resources which work together in order to create improved outcomes for the organization. Although outsourcing provides significant benefits for organizations, there are also associated risks in its application (Barthelemy, 2003). In the risk analysis of outsourcing includes a point-in-time assessment which is usually implemented before suppliers are selected. It is also a useful tool in order to reassess supplier’s risk profile (O’Keefe and Vanlandingham, 2006). For outsourcing, the possible suppliers are evaluated within the risk analysis criteria, from where a risk ranking of the suppliers can be established (O’Keefe and Vanlandingham, 2006). The appropriate suppliers may be considered high risk, and under these conditions, the managers would be made aware that the suppliers would be high risk; this would prompt the managers to secure a more rigid risk management process for further evaluation (O’Keefe and Vanlandingham, 2006). The appropriate supplier relations would also be evaluated within the supply risk/impact assessment phase. Risk management is a continuing process which includes three primary elements – the supplier/contract management, the service level agreement (SLA), and the billing accuracy (O’Keefe and Vanlandingham, 2006). Supplier and contract management would evaluate the statistics in terms of performance on the outsourcing relations. Such statistics would be evaluated to improve the relations between the outsourcer and the provider. The SLA then indicates the data to be kept and evaluates the variables for the parties. The SLA needs to be assessed every now and then, based on contract clauses (O’Keefe and Vanlandingham, 2006). Billing accuracy is continually assessed by the outsourcing party in order to secure contract compliance. These elements in outsourcing indicate the risks involved in the process. Nevertheless, these are risks which exist in most business enterprises (Patel, 2005). Moreover, these risks can also be managed with the recognition of elements involved in the process. The article discusses the outsourcing of human resources to private firms in the UK and how this possibility was soon discounted by the three PCCs due to issues relating to the contract. For purposes of discussion however, there are various reasons why HR is being outsourced to outside firms, especially in the UK. Mostly, the demands for increase in productivity and profitability has prompted organizations to assess their HR processes, thereby implying the need to move towards outsourcing services (Brown and Wilson, 2012). As evaluated by Greer, Youngblood, and Grady (1999), HR outsourcing considerations are mostly set as a response to significant demands for decreased costs in relation to HR services. With downsizing trends and more significant competition, HR function is being greatly pressured to manifest value, mostly in relation to efficiency as well as effectiveness (Roberts, 2001). In the case of the UK, the global economic downturn has created issues in financing and maintaining public and private enterprises and services, including peacekeeping. Outsourcing has been considered as a means by which the costs of these services can be reduced (Roberts, 2001). No specific details on financing or political have been indicated by the three PCCs in eventually discontinuing with their plans to outsource police services. Such decision however, does not diminish the value and favourable prospects which outsourcing can bring to these PCCs (Mirani, 2006). Although gaps in the delivery of services during the Olympics by private security firms had a significant influence on the decision of the PCCs, the possibility for future success for the outsourcing contract cannot be downplayed. Undeniably, for managers and organizations who seek to reduce the cost of services, outsourcing has a major potential in reducing such costs. Brewster (in Turnbull, 2002) discusses that the current trend in the global economy is a financially-motivated concept linking outsourcing with effective human resource management, mostly founded on the idea that there is a lot of money which can be saved from outsourcing (Pati and Desai, 2005). Moreover, outsourcing can be seen as a way of freeing professionals from their organization and making them available for consultative work; this is also a means for the organization to retain their workforce while giving employees an opportunity to improve their performance. This concept is very much associated with Ulrich (1998) and his discussion on the roles of HR, which apparently includes being a strategic partner, an administrative expert, an employee champion, and a change agent. Under these conditions, outsourcing can present significant benefits for organizations, as the goals of outsourcing mirror the goals of the organization itself. In other words, HR outsourcing can potentially become a business partner, and such value cannot be quantified easily (Whitten and Wakefield, 2006). Aside from carrying out some of the functions for the organization, outsourcing can also improve efficiency as well as avoid organization politics. In general therefore, the primary reasons for outsourcing HR are more or less consistent (Sisson and Storey, 2000). Reasons include specialist services, cost reduction, and specialists taking on strategic roles. In effect, outsourcing can be a strategic tool as well as a cost-cutting tool for organizations. In the end, for any manager, achieving such goals can translate to significant gains for the organization. Admittedly, outsourcing can present with various issues. As was mentioned previously, these issues can be managed with the application of strict and monitored practices within the organization as well as the private or foreign contractors. Outsourcing is difficult to reverse because once it is initiated, it becomes part of the organizational fabric (Plunkett, 2008). Any part of the fabric would be difficult to take out without causing the organization processes to unravel. It is important therefore for the organizations to weave a strong and effective outsourcing process into the organization, one which would not prove counterproductive for the organization. Conclusion The article discusses how three PCCs who were planning to outsource police services to private firms later changed their minds due to a variety of reasons. A focus on the wisdom of outsourcing has been highlighted in this article. Outsourcing has become a valuable organizational tool, especially in the current age of economic hardships and downsizing. Outsourcing provides a favourable option for most organizations in order to reduce the cost of their operations. Although it can also have its disadvantages, these are manageable disadvantages; and the benefits which can be gained would likely support favourable outcomes for the organization. References Baden-Fuller, C., Targett, D., and Hunt B., 2000. Outsourcing to outmanoeuvre: Outsourcing Redefines competitive strategy and structure. 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