The Difficulties Associated with Managing Staff in Another Country - Essay Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Course : xxxxxxxxxxx Title : The difficulties associated with managing staff in another country Tutor : xxxxxxxxxxx @2010 Table of Contents Table of Contents 2 The difficulties associated with managing staff in another country 3 Introduction 3 Advantages 4 Availability of a big talent pool 4 Fast turnover Low cost 5 Disadvantages 6 Managing change and diversity 8 Corporate social responsibility 9 Effective People Management 10 Managing decision making 11 Managing Human Resources 13 Recommendations 14 Conclusion 16 Bibliography 16 The difficulties associated with managing staff in another country Introduction Offshoring is a process used in outsourcing. It involves having the outsourced business activities carried out in another country. Most of these activities are outsourced in order to reduce labor expenses that are likely to be incurred in the course of the business transactions. India is known as a dominant player of outsourcing, mostly in software activities. The process of outsourcing can be greatly achieved in three main ways; for instance, the Indian government formulated a policy that all foreign business ventures must have Indian majority share capital. Fearing the administration turnover, which involved the Indian government turnover, many corporations that are based in United States pulled out from the Indian government due to the technically aspects. The second aspect was the global ubiquity of internet and immense telecommunication capacity. This further facilitated most business organizations to carry out major transaction anywhere, including china. Third, most business organization hired ISP (Internet service provider) which was largely responsible for ensuring that legacy program code is up-to-date. Most of these activities were carried out in India, where English was a common language that was spoken, where most of the population was highly skilled on matters involving software engineering, and of course where the labour cost produced by both skilled and non skilled employees was much lower compared to other developed countries (Berry 2005). Organizations that are interested in outsourcing are generally curious to explore more on the advantages and disadvantages of outsourcing as a result of offshoring. By obtaining insight truth of both good and bad aspects of outsourcing, an organisation would then be able to decide whether to outsource its activities in terms of production and services offered. An organisation would then be able to outweigh both the advantages and the disadvantages of outsourcing, thereby allowing it to make vital decision. Some organisation starts outsourcing process without necessarily understanding the advantages and disadvantages’. As a result most of them end winding up their business activities due to high competition from firms that have outsourced to those that did not outsource. The following are list of both advantages outweighs the disadvantages of outsourcing. Basically, the organisation under consideration is India. The reason being India was the first country to outsource its services. Advantages Availability of a big talent pool India being one of the first countries that benefited from off shoring activities was able to motivate both young and talented individuals. India has about 380 universities and 11,200 higher education centres’ which produces at least 2.1 million graduates annually. As a result of this, major businesses companies have provided customers sufficient options to choose from. The number of working individuals in India is projected to increase by 250 million by 2020 at a mean rate of 15 million per annum. This however resulted to high demand of labor by both US and Europe companies. Since India had the largest number of English speaking population, as a result is enhanced a good communication between and merchant when major business transactions are outsourced (Davies 2004). Fast turnover Low cost This is a vital advantage of Offshoring to Indians. Many business organisations have managed to save at least 30-40 % simply through the outsourcing process. This cost is either saved through labor, capital and labour management. General Electric (GE) is one of the Indian companies which have attained cost savings through off shoring. GE realised a total reduction of 25% on its labor cost. Different countries have different ways through which labor is provided. Some countries may offer both skilled and non skilled labor at a cheaper rate as compared o other countries. This will therefore force most of the organisation to outsource some of its activities in order to reduce on cost. Unnecessary cost in a firm mostly occurs where employees are not willing to work. Instead they busy themselves with something which something that is out of the organisation scope of work and responsibilities. Transcriptional processing reduced in India by 30 % over a period of years. India and United States has a 12 year time differences in terms of hours, thus providing the organisation with a 24 hours working economy. Most of the major processing functions are carried out in India; this is usually night time in most developed countries. As a result of the time differences, there was no or very little backlog in the front end. As a result of a 24 hours economy, India managed to double its profit. Subsequently this facilitated and led to a high growth in the country. In turn this has made most of the organisations in India to quickly develop over a shorter period of time. Disadvantages The disadvantages of offshoring enable most organisations if not all to think of consequences of outsourcing some of its production and services. However, there are so many advantages that an organisation will have from outsourcing as compared to the disadvantages given on the same. Before an organisation thinks of outsourcing, it is important for it to put in mind both the customers and employees interest (Hunter 2006). By outsourcing major business processes, an organisation tends to ignore or lose managerial control. This occurs simply because it is very difficult to control the outsourcing service as compared to controlling an individual employee. Sometimes organizations skip the hidden cost which was used in outsourcing. These hidden costs are very hard and difficult to predict and identify, thus leading to underestimated value in the accounts prepared. This in turn limits most of the activities that are to be undertaken in the organisation. Due to underestimation, organisations are likely to incur a lot of unnecessary costs. Another disadvantage of outsourcing is that it threats the security and confidentiality of the organizations issues. If an organization outsources matters such as payroll it provides confidential information to other outsourcing organizations. Therefore an organization needs to be extra careful in choosing which business activities to outsource and which should not be out sourced. Where services are outsourced, an individual employee may then decide to leak out some of the important information to its country on how business is conducted in that particular country. The leaked information would then be used to make similar product thus subjecting it to unhealthy competition (Carmel 2005). Another disadvantage of outsourcing as a result of Offshoring is the inability for most of the business organization to adapt to changes in the business condition, sharing the cost on saving, lack of external and internal consumer and customer focus. Talents within a stated organization may be lost as a result of outsourcing thus affecting growth and development of the firm. Different or changes in the environment may at times call for more expenses. Employees working within the organisation may in turn be affected with the environmental changes, thus denying them the opportunity to offer the best services ever. Areas used in managing people needs to be considered, depending mostly on the nature, size and the volume of transaction carried out within the organization. Different organizations have different modes and means of outsourcing some of its activities. More so, the success of an Offshoring IT initiative is measured using operational metrics. These factors are referred to us as rational factors. Before outsourcing any activities carried out within the firm, an organization should be able to define and evaluate the merits and demerits of such activities. If the merit of offshoring outweighs the demerits, then an organization is said to be in a great position of outsourcing its activities. Managing change and diversity Major organization understands the benefits associated with introducing diverse workforce to the employees. However, most of them find it so difficult to attain its major objective. An organization that clearly understands the benefits of diversity is likely to attract more employees in the strategic field management. Diversity is mostly valued by organization if it has the ability to connect competitors within the market place. Effective managerial change is vital for a triumphant diversity programs. A human resource manager who supports the need for diversity must put in mind changes in certain areas (Burkholder 2006). The two vital areas in relation to Offshoring are workplace system and communication practices. Managers are also required to take in account personal changers that might contribute to the business success. An organization may achieve better results from outsourcing if it is able to business its opportunity which will promote diversity. Many employers implements business operations in order to achieve the benefits of outsourcing at the work place. This is achieved through training employees. An organization is similarly required to implement activities that ensure success through diversity programs of outsourcing. Mentoring program is one of the system approaches that could be adopted by the management. Firm should consider changes in communication before deciding whether to outsource its activities in an organization or not. This is because strategic communication affects recruitment and retention. Diversity of communication should act as a foundation of all search communication process as such advertising, media relations and the public. Both external and internal communication must be coordinated in order to achieve consistent report that promotes diversity theme. The consistency is required to help and facilitate Human Resource and marketing units to co-ordinated together in order to implement communication program. Corporate social responsibility It is ethical for organisation to send service positions to a very low cost state. This is usually conducted where CRS has an implication of jobs geographically. A country operating business must consider the global trend of outsourcing and the evaluation of its major consequence to the CRS. The company must also consider the specific effects of BT’s Offshoring decision; the evaluation must include major organisation based in United Kingdom and India. Seminar should be instilled in order to assist and provide strategic advice to firm’s interested in Offshoring and majorly corporate social responsibility. The Offshoring of IT has transformed India thus enabling it to become world’s largest Offshoring country (Kehal 2006). Effective People Management There has been an immense growth in Offshoring and off course the outsourcing services in India, South Africa, Philippines and Eastern Europe. Several organisation have managed to provide information to the customer explaining the benefits involved in the outsourcing processes. Outsourcing has a potential efficient of enabling customers to carry out certain activities such as financial saving, improved customers satisfaction and business efficiency among others. The information provided can be used by the by the client management in trying to curb challenges facing the human resource and the countries manager. It also provides information on how to handle capital during Offshoring process. The process should begin from initiation and transition to management and expansion. Benefits of an effective people management include; this program should be able to provide both the management and the customers with knowledge on how to make vital decisions when establishing Offshoring operation .it also facilities a greater understanding of the possible challenges and their solution thereon. It creates awareness of cultural influence when handling Offshoring operation. Culture of an organisation are usually formulated or put in place by the human resource manager together with its employees. Managing decision making An emergency circumstance on offshore installation has a devastating consequence as evidenced in the piper Alpha disaster of 1988. The offshore located at the North Sea can be positioned in more than 100 miles. Therefore, it is imperative that the personnel manager should have the ability to facilitate and deal with emergency issues independently. Offshore installation manager is accountable for handling matters which are said to be risky in nature, has unclear goals, constant changing of situation from time to time and ambiguous information that is likely not to be unclear. To facilitate a good operating standard, OIM (Offshore installation management) has to be immediately introduced by the operating firms. These certainly will provide rules and regulations that could be used when there is an occurrence of certain emergencies in a given organisation. There is a possibility of creating SOPs for each and every projected risk that might occur in the course a normal business operation (Derose 1999). Constant development of procedures installed to handle events that requires emergency may not only prevent the need for OIM decision making process but also, it will affect the procedure used in curbing major emergencies problem. Over reliance on SOPs has created great dangers since some organisations if not all may fail to understand the rules stipulated and thus most of them may decide to follow it blindly. It is therefore very important for the organisation to identify how SOPs are being used and what affects their use. A research of 10 experienced OIMs was carried out to establish rules used in one platform. It came out that most offshore installation managers have a high repertoire strategy that could be used to deal with emergency services. The installation knowledge on emergency issues is established on a regular basis. This is to mean that decisions made by most organisation managers are based on true and fairness but not blind decisions making process. A comparison is however made on decisions made by the offshore installation manager and off course other emergency commander Managing strategy and structure: Planning FDI and political financial system, helps most organisations as well as the customers l to understand how outsourcing influence worldwide spirited strategies’ adopted by MNCs. FDI help to merge MNCs firms activities in a vertical structure. Offshore serves as a basis of providing a low chain cost that tends to guarantee most regions with development strategies .Through transferring of major business activities from the foreign countries to a local country via the technologic advance, several improvements has been achieved by most organisations. Examples of this include .the US importation of either intermediate services or production from Brazil, India and china. These three countries are widely known for technological advances made over a number of years as well as providing a competitive human capital (Shorrock 2009). Furthermore, their legal infrastructure, this includes, transport and communication, water and other infrastructural development used in conducting business activities. Most surveyors say that, both imports and export services carried out in the United States of America took place in the year 1987-2003. The method used was based on the analysis of the information on transaction of purchases and sales. This was eventually used to offer services contained at the BOP (balance of payments). Also the current sector of services provides that most outsourcing services should be made available for both customers and federal government. There is an increase development in export and imports services largely in line of professional services. The imports of services increased by 14% in 2003while that of 2002 increased by 11%. However, the outsourcing services occurred mostly in India and china. Outsourcing services is very essential in the development of a countries growth and development in US and the rest of the countries were well. The access of market decisions is a better strategy that can be used by major organisation while making organisations decision, Relating to both finance and managerial control. Managing Human Resources Major human resource outsourcing is usually done locally, any infringements done was to be reported within a period of three year. Any infringement of the terms and conditions of the act meant that both the manager and the person responsible shall be liable. Liable to the extent of which the act shall clearly stipulates. Organisations should be able to change its activities and employees within the organisation in order to be able to effectively outsource. HR outsourcing providers have a duty and responsibilities of ensuring that the contract established are met by the organisations needs at the end of the year or day. This needs includes, profit and customers satisfaction. Due to technological advances, most of the outsourcing organisations had the ability to offer induction courses, employee’s survey and also offered training services in the organisation (Shorrock 2009). Recommendations In the process of offshoring and trying to put aside some money to be used in the near future an organisation should not overdo it. Overdoing in the sense that, profit that the organisation generates from the business should not only be saved, instead the money should be used for growth and development of the organisation and the customers as well. This can be done where the human resource manager verifies some of the activities that he /she can undertake instead of outsourcing. It is therefore important to consider some of the services that an organisation wishes to outsource. Confidential information that is outsourced may fall into the hands of a wrong individual employee, thus becoming very difficult to carry out certain activities. The human resource manager should always provide security for important information in the organisation. There is a possibility that offshore service provider may become bankrupt automatically thus leading to extra spending ,time wastage and it may at time lead to more troubles that an organization may not be able to handle. Managing the services provided through offshoring is usually very difficult and complex than managing business in one’s own country. It is therefore very important for one particular organization to have more than one human resource manager. Even if it means that the human resource manager should be from the country where the services and production was outsourced from. Through this organizations would be much able to understand its workers. It is always very essential for a human resource manager to put into consideration the hidden cost before eventually venturing into the business. Once a contract is signed between the two parties, (organization and the employees at large) it is important to read clearly the terms and conditions of a given contract. Once a contract is signed and accepted it cannot be however violated. Violations of a contract results to a breach that is punishable by the state. It is important to reconsider the employees in an organization; this includes their views and problems which they may go through in the course of the employment contract. An organization may experience lack of customers focus. For example, where an organization decided majorly to outsource its services that as initially carried out in the organization, some of the customers feel uncomfortable and as a result reject the commodity/provided in the market. Therefore, a human resource manager should always consider the customers interests. It is also very important to have personal information of an organization in house employee. Some of the employees may be unhappy and uncomfortable when some of their services are outsource. I bet no one likes when he /she are rest assured that their services could be replaced by other individuals so fast. As a result, most employees may be demoralized thus limiting their activity which they are required to perform. Outsourcing has a tendency of killing employees’ morale. When a human resource manager decides to outsource, it is important for him /her to cater for the needs of its valuable employees. Conclusion Outsourcing is very important if it has the ability to enable the organisation to earn profit. It is very important for the human resource manager to establish the merits and demerits of outsourcing. Where the demerits outweigh the merits, the human resource is required not to outsource its services. However it is on a rare occasion through which the demerits of outsourcing will outweigh the merits, it is usually the opposite. However it is irrelevant and absurd when a small organisation decided to outsource some of its services and production activities. Since the organisation is likely to experience several challenges, thus collapsing. Outsourcing may be beneficial and at the same time it may be expensive. The cost incurred by some organisation while still in the process of outsourcing may frustrate both the human resource manager and the employees at large. Understanding the client’s customer interest will give the human resource an overview of their taste and preference. This taste may include both the likes and the dislikes. Bibliography Amiti, M. & Jin Wei, S., 2004, Fear of service outsourcing: is it justified, International Monetary Fund. New Jersey. Berry, J., 2005, Offshoring opportunities: strategies and tactics for global competitiveness, John Wiley and Sons, London. Burkholder, N., 2006, Outsourcing: the definitive view, applications and implications, Wiley and Sons, A.H. Advani University of Virginia, New York. Carmel, E. & Tjia, p., 2005, Information technology: sourcing and outsourcing to a global workforce, Cambridge University Press, Cambridge. Davies, P, 2004, what’s this India business? Offshoring, outsourcing, and the global services revolution, Nicholas Brealey Publishing, Washington D C. Derose, G., 1999, Outsourcing: training & education, American Society for Training and Development, New York. Hunter, I., 2006, Indian offshore advantage: how offshoring is changing the face of HR, Gower Publishing Ltd. Kehal, H. & Singh, V., 2006, Outsourcing and offshoring in the 21st century: a socio-economic perspective, Idea Group Inc (IGI), San Francisco. Shorrock, T, 2009, Spies for hire: the secret world of intelligence outsourcing, Simon & Schuster, Harvard. Read More