Human Resource Outsourcing - Research Paper Example

Human Resource Outsourcing Outsourcing refers to the process by which a company assigns its internal non - core operations to an external firm that has relevant knowledge and skills concerning the said operation. Outsourcing started in the 1980's and has been in use in many companies producing positive results to the management. Historically outsourcing has been used in reference to labour organization within diversified societies. The main reasons for outsourcing include: - The efficient use of the workforce, resources capital and technology. Reducing the companies costs Energy conservation aimed at particular business competencies. 1 Outsourcing is entirely based on trust between the client and the outsourcer since it involves business function decision making management control sharing and transfer of operations to outside management. Though outsourcing has continued to receive mixed criticism from both the consumers and the management, it is widely used in the current dynamic global market by most companies at the local, regional and international scope. However, outsourcing itself has got associated advantages and disadvantages in many of these firms. This paper will look at the human resource outsourcing in the UK's largest and most successful airline, the British Airways. The airline started in 1919 with Houston's airport as its home. On 25th August 1919 the first flight from Le Bourget to Houslow was launched. Afterwards these were the establishment of the Handley page and unstone airlines with older modified bomber applied in them. To counter stiff competition from the French airlines who offered low fares the airlines merged and created an airline that could fly distant place for example Egypt and India, the airline was called Imperial Airways.2 It was after a committee chaired by President Ronald Edwards in 1967 British airways was born in 1976 British European Airways (BEA) and British Overseas Airways Corporation (BOAC) merged, a thing that left British Airways with big fleets for instance Lockheed Tristar, Boeing 747 among others. These developments saw the British Airways, becoming one of the leading world's cargo airlines. After the September 11th 2001 bomb attack there was an airline crisis and British airways was not an exceptional since it faced severe economic problems which it took some time for it to recover. However, it has now recuperated with increased returns a characteristic of future economic boom. In 24th October 2003 what was the then trademark of the company for the twenty five years, the Concorde made its last flight. To strengthen its global market position the airline is forging alliances with the world's major airlines and has been outsourcing its human resource functions.3 The company's main objectives include; the achievement of greater management effectiveness, application of business - oriented organizational approaches, meeting the organizational goals applications of the critical success factors (CSFs) approach in the management system and overcoming the technological barriers in the company. The company's challenges ahs been its failure to accurately focus on the organizational goals with a feeling that the critical success factors approach might not be appropriate for managers investigations at all levels within the company. Lower level manages has been experiencing problems in the application of the CSF concept.4 British airways human resource outsourced functions include the risk management, temporary staffing, recruitments, employee benefits administrations, pension administration, retirement planning assistance, development programs relating to training and management executive staffing, counselling of the staff members, administration of wage and salary, background checks, incentive plans payroll and training implementation. The main reasons as to why British airways opt to outsource its non -core business operations are as follows: To improve its accuracy. So as it can put more focus on its core business operations. So that it can take and gain full advantage in the technological advancement. To save on finances and cut its management costs. So as to take full attention on its business plans. To progress in business compliance. To offer those services that can be offered only through outsourcing. The company lacks some of these experiences with the only option being outsourcing. Through the outsourcing British airways will ultimately acquire some benefits. Some of these benefits include: - British Airways professionals will be a little bit free a thing that will make them devote most of their time towards strategic roles that will be of much importance to the company. The company will considerably reduce its operational costs mostly in areas relating to the human resource practice. It is obvious that the external outsourced providers have diverse knowledge and experience in Human Resource. Their services will therefore increase the Human resource delivery effectiveness. For instance, the workers recruitment exercise will be accelerated, this will see increased growth and development in the human resource department and a general reduction on the turnover costs associated with the workers.5 The outsourcing exercise will assist British Airways in shifting its focus towards decision and policy making. They will be of importance to the human resource function in ascending the Hierarchy of value chain. British Airways will harness greater experience from the external outsourcing providers who have diverse experience and knowledge in certain specified areas than the internal workers. The external experience will therefore be a major boost to the company's economic performance. Outsourcing will help British Airways in its overall growth. The company is realizing exemplary economic performance witnessed by its huge profit for the year ended 31st March 2006 which amounted to four hundred and sixty seven pounds. Incorporating outsourcing will even boost is financial performance at a higher level hence achieved company's growth. The outsourcing providers are risk managers. They will manage risks in British Airways related to either competition from other firms, technological and financial risks. Through risk managing the companies risk levels will be reduced. Outsourcing will help British Airways in starting new projects at a faster rate. It might be tedious and time consuming for the company to complete similar projects internally since it will involve training new people an exercise that may turn out to be expensive. Through outsourcing British Airways will be able to concentrate on its main business activities. This will be possible since it will delegate the non - core activities to the outsourcing provider. The major factor for the British Airways outsourcing is cutting on its capital costs. This is made possible since outsourcing will convert the company's fixed costs into variable costs thus allowing the company to avoid unnecessary expenditure. This will attract investors for the firm a thing that will lead to the company's expansion. Lastly, the company will derive benefits relating to reduced labour costs. However, when resourcing its human resource non - core activities, British Airways should assess the professional competency of the provider to avoid instances where the company might receive substandard services. On the other hand outsourcing will bring some disadvantages to the company. These disadvantages include: - 6 Through outsourcing the company will lose much of its employee's skills and knowledge. The internal knowledge processed by its workers won't be fully utilized resulting to underemployment. Through outsourcing brings advantages relating to its financial management, it is clear that the outsourcing providers make use of complicated software in order to avail the service. Since British Airways has an effective information technology systems external outsourcing will not cut its cost but may even increase them further. Outsourcing the employee management practices may be detrimental to the company. This is because better relationship between the departmental managers and their staff the management practice ought to be practiced internally. Outsourcing will bring some pitfall since it will learn more tasks regarding the relationship between the company's members of staff and their mangers. Outsourcing will therefore create more tasks concerning management practice instead of reducing them. Outsourcing the human resource function might result in the relaxation on the British Airways management team. This might lead to the companies classifying the core practices as non- core practices so as to outsource. The outcomes might be very negative companies' performance. 7 Conclusion Decision relating to outsourcing are hard for companies such s British Airways to make while outsourcing the human resource function the company's top level management team (who are the main decision makers) should do an evaluation as the to whether it will be beneficial to outsource human resource. This must include reviewing the existing human resource practices and trying to predict the outcomes of a change in the human resource departments operations. The evaluation should concentrate on the company's human resource policies, its efficiency level (administration) costs incurred by the company in its many operations and the level of manpower expertise it enjoys. After careful assessment and consideration the company will identify the areas on which to outsource thus seeking an outsourcing provider for the same. By moving from internal human resource service provision to outsourcing human resource providers, British Airways will experience a significant change. Such decisions should therefore be made by the right minded people and consultations done regarding the same. The management team in British Airways should weigh the benefits denied from outsourcing, if more than the disadvantages then it can go on in outsourcing and vice versa. References Christopher, M. (2001), Outsourcing the American Dream, London, Writer's Club Press George, E, and Aida Sayed-Ahmed, Offshore Outsourcing - A Global Shift in the Present IT Industry, in: Intereconomics, Volume 40, Number 2, March 2005, S. 100 - 112, [6] Lou, D. (2004): Exporting America Why Corporate Greed is Shipping American Jobs Overseas, ISBN 0-446-57744-8 Martyn, G. (2000). Dirty Tricks: British Airways' Secret War against Virgin Atlantic. London: Virgin. Peter, B. (2005): Technology and Offshore Outsourcing Strategies, ISBN 1-4039-4619-1 Read More