Offshoring - Employee Performance Management and Strategic Planning Implementation - Case Study Example

Names : xxxxxxxxxxx Institution : xxxxxxxxxxx Course : xxxxxxxxxxx Title : Assignment2- case study report Tutor : xxxxxxxxxxx @ 2010 Assignment2- case study report Introduction Offshoring is a kind of outsourcing. Offshorring involves having organization’s functions performed in another country. The functions of a business are carried out in a foreign country through a foreign subsidiary. Often, work is usually offshore to decrease labor expenses. In some cases, offshoring may be done for strategic reasons; to enter in new markets, to get the professional skills which may be not available in the home country or even to rise above that prevent certain activities domestically. In some cases, offshoring which involves sending work in foreign countries with higher payments has been perceived to reduce the own country’s domestic employment as well as domestic investment. Numerous customer service jobs in addition to jobs within the information countries are regularly affected (Bruce & Shawn 2005). . Offshoring has its origin with competitive theory for nations like India. Offshoring has undergone transformation for a long time. As shifting of manufacturing procedure to countries that offer cheap labor during Industrial Revolution had take new connotation for today’s situation by starting off. In present globe IT has turned out to be the stamina of business organization thought out all the industry. During offshoring, organizations hands over some of its work to organizations in foreign countries, which gives it the responsibility of planning purpose of design, developing and implementing business organization process under some specific notifications regarding requirements and specifications from the offshoring organizations. It is beneficial to both the offshoring organization and the dealer, as it offers opportunity to the offshoring organization to reduce costs and augment quality in non core areas of organization and make use of the proficiency and competences for the maximizations (Stewart 2005). Internet is in a big way facilitating offshoring. With internet, it is easy to offshore services like web design, marketing as well as office administration. For instance, internet enables offshoring of white-collar employees overseas at a notably low cost than in Australia. It is possible to run an internet business at home while the workers are in different country. Offshoring may be viewed as cheap because of the cheaper wages but in some cases organizations are forced to pay Australians in order to correct mistakes that take place. Moreover, clients do not like dealing with overseas dealers. In the long run, the organization gains in cutting the wages and increasing their profits but eventually such organizations may lose their reputation. Offshoring which includes pursuing cheap labor in addition to cheap resources underlines centuries of economic history. Over the last decade, offshoring has been facilitated by globalization and hastened by advances in communication that enable organizations to reach people globally for training or employment. Offshoring has been on rise following labor shortages domestically (Parker 2005). Offshoring does not always replace existing jobs but instead creates new jobs elsewhere and also the jobs may be offshored but remain in-house or may be offshored to a third party provider. Studies have indicated that offshoring can reduce organization’s costs by 50% over a domestically housed operation. Offshoring enables an organization to acquire higher functions, locations that provide advanced labor skills elsewhere. Higher quality labor is not only being sought in education but also in businesses. The greater the labor pool, the larger the statistical possibility of locating adequate numbers of sufficient employees (Stewart 2005). The desire to take advantage of opportunities within the local market facilitates offshoring. History indicates that offshored manufacturing can be the starting point of international expansion for an organization when it recognizes the potential of a host market for its products. International products and services are regularly best adapted for the local market according to inshore view. An organization being locally present within a region might also place a company on the preferential side of powerful trading blocks or tariffs. Advantages The greatest advantage in offshoring is the cost advantage it generates which directly affects the organization’s bottom line. In tight financial circumstances, any savings within operation costs contributes a lot in developing the company and sustaining it as well. Organizations in recession state sustain themselves and develop by innovation. As a result, reduced operating costs mean that the company has more money to invest in innovation resulting to a stabilized domestic workforce (Kroll 2006). Within the service fields, the cost saving in offshoring enables an organization to develop new service lines, most of which had been postponed for want of investment. New services raise client satisfaction and turn out to be the new profit streams in addition to development pathways for organizations. Again, the geographic nature of offshoring comes with its own advantages. It assists an organization in expanding its reach and hence assisting the organization to grow. This development mitigates any negative effect that comes with offshoring. Offshoring also assists an organization to be nearer to its global clients, thus presenting suitable offering to its regional market and making sure there is faster problem resolution. Developers and support employees within the relevant global regions have better understanding of the client’s requirements as well as regional preferences and can therefore better implement the product or avail the service. Moreover, offshoring eliminates difficulties that come by due to time difference and this enables organizations to support remote clients too in a practical 24/7 operation. For the organizations with constrained resources, offshoring enables better utilization of capital investments through remote utilization within time zones. Finally, offshoring not only reduces the operation costs but also maintains staffing flexibility and enables a business to gain faster speed market to market (Kroll 2006). Disadvantages Through offshoring, an organization can lose the managerial control. This occurs since it is difficult to manage the offshored service provider in a foreign country when compared to the management of domestic employees in the organization. Still, when offshoring, the hidden costs involved with the process are normally ignored. The costs include the legal costs involved in implementing a contract between international companies as well as the time lost when coordinating the contracts. The hidden costs in offshoring are difficult to predict and estimate which leads to underestimation of the overall costs. As a result, the offshoring hidden costs may be higher than the labor costs and this ends up beating the whole logic of the process (Parker 2005). Another disadvantage is that offshoring can end being a thereat to both security and confidentiality of matters of an organization. For instance, if an organization decides to offshore a business procedure like payroll, confidential information like salary will be known by the offshoring company. Therefore, an organization should be very careful when choosing the business procedure to offshore. Offshoring can lead into the likely loss of flexibility in responding to changing business conditions, lack of both internal as well as customer focus and sharing cost savings (Daniel 2006). Moreover, offshoring may result into an organization losing internally generated talent and this can consequently hinder the development of an employee by denying him/her the experience he/she would have gained through handling the business matter and then passing it over to the other external party. Offshoring is not the best cure of financial matters within an organization. This is because even if offshoring has financial benefits for an organization, the advantages are usually far smaller than first anticipated because of the hidden costs. Still, there are non financial costs to an organization from offshoring which includes reduced public perception as well as decreased morale and motivation from the remaining staff which can affect the overall productivity in a business. Marketing Department budget would be negatively affected by extra costs to the organization for replacing workers who resign because they feel they were ignored, of placating potential clients who complained about getting junk mails that were not delivered by the parent company (Daniel 2006). Culture change and Stress Management In an organization, the employees can at times undergo through stressful experiences which could result from organization changing the culture or from increased work load. The employees can also get stressed at home and this might affect their productivity. In order to reduce the stress which might affect the overall organization’s productivity, the administration can consider motivating the workers. This can include wage’s increment or even the employees being warded for accomplishments they make in the organization. Still, in case an organization is considering making some changes, for instance offshoring, it is necessary to inform the employees and ensure that they understand why such changes are being made. Moreover, involving employees in such major changes makes them feel they are a part of the organization and hence they are likely to be less stressed when such change takes place. Optimizing the organizational environment can also improve productivity through improved employee motivation (Auyer 2007). Team Building The CEO should always ensure that there is team work among the employees. Efficient tem building within the employees is bound to have far reaching ramification within the organization. This means that the management should ensure there are better ways of solving problems among the organization’s employees as this will result into improved efficiency in general. As a result, increase efficiency will boost the employees’ morale and encourage team work and hence increasing the organization’s productivity which means increased revenue in the long run. Furthermore, it will also assist in reduce employee’s stress, turnover as well as the operating costs. After an effective team work is developed, it should be encouraged to become self perpetuating. All these developments within organization are also likely to bolster organization’s public image and therefore the organization will retain all its clients as well as attracting new customers including international customers (Auyer 2007). Employee Performance Management Each and every organization should make sure that performance management is carried out within an organization. Performance management consists of activities to ensure that the organization’s objectives are always being met in a successful and efficient way. For instance, the organization’s management can carry out performance of the entire organization, a department, processes to develop a product or service and even the employees. Once the management gets the results, these outcomes can be used to assist the organization in determining the way forward within the organization. Moreover, carrying out the performance management for the employees will assist the organization in determining the overall productivity of each and every employee and thus the appropriate actions can be implemented. For instance, performance management will assist in identifying the employees who are fully dedicated in their work as well as the employees who are not performing within the organization (Auyer 2007). Customer Service Effective customer service and customer relationship management, to organization’s internal and external customers, will eventually lead into the organization’s Human Resources department to be perceived as a strategic partner to both management and staff. If the organization offers effective customer service as well as effective customer service training among the employees, the organization’s clients are likely to remain loyal to the organization and hence they are likely to use the organization’s products and services more. The employees should be effectively trained on how to handle the clients professionally as this will better the relationship between the employees, organization and the customers. By offering the best service to the customers will retain them as well as attract more potential customers to the organization. This will in the end boost the organization’s revenues (Kung 2004). Strategic planning implementation Strategic planning implementation enables an organization to make any change within the organization. The organization’s management should start by devising the goals of the strategic process as well as implementation. For instance, one objective should be to ensure that the employees understand the organization’s missions as well as the objectives. The following are the keys to ensuring there is an effectual strategic planning implementation in an organization. Complete and active executive support, Effective communication, Employee involvement, Thorough organizational planning and competitive analysis, and Extensive perceived need for the strategic planning. There is always an advantage when the implementation of the strategic planning is within an organizational environment that is already employee-oriented and has employees with high level of trust. The advantage is that the organization already carries out its activities in a strategic manner and hence the process of Strategic planning implementation will not be difficult (Auyer 2007). An effective strategic planning implementation should have a great commitment from both the executives and the senior managers. Executives should leas, support, follow up and live the outcomes of the strategic planning implementation procedure. Organization’s managers and leaders can carry out the following to produce an efficient strategic planning implementation procedure. A clear vision for the strategic planning implementation procedure should be established. The management should ensure that a clear picture of the organization’s goals and the expected results are well understood. The management should pain a picture of reality and not what people would wish to take place. Moreover, it will be appropriate to ensure that the organization’s employees are aware of why the organization is changing. A leader who “owns” the strategic planning implementation procedure should be appointed and senior managers in addition to other suitable people within the organization should be involved in the whole process (Kung 2004). Solutions to the challenges The CEO should make use of expert advisers before implementing the offshoring process as this will reduce the difficulties, manage risks, rationalize expectations and also assist the company in attaining its objectives. Organizations require the advisers before implementing the offshoring process and also after to make sure the offshoring is successful because of factors like: competition keeps on rising, international markets can be dynamic and also unstable and also the available stock, conforming real estate gets depleted. If the offshoring process is implemented without the seasoned advisers the result can be less than optimal outcomes (Bruce & Shawn 2005). . The company’s CEO can also consider making use of best practices involved with offshoring. Research has shown that organizations that advocate and make use of the best practices engender higher credibility, authority and effectiveness as well. The organization can utilize a formalized, multidisciplinary approach for offshoring to get the most seamless execution and performance. It is important for the CEO with her core competency in project management to raise awareness and promote discussion of wide range of matters and tactics that that are significant to overall success of offshoring process. The organization CEO should make sure that the following processes are followed during offshoring. A cohesive decision making unit should be assembled and should have representatives from human resources, technology, finance, CRE, risk management, legal and the involved business unit. All representatives should be properly charged with the planned mission. Each should be respected and afforded suitable control and ownership in the entire offshoring process. A formal protocol should be used to make sure the appropriate functions are offshored to the correct location. This entails investigating the skill requirements of the task and analyzing the receptivity of the target user. This will ensure that the parameters are met through a matching labor pool (Bruce & Shawn 2005). . Pipeline management of actively available labor and real alternatives that fulfils the business needs should be engaged. This pipeline is supposed to include several cities, identified and approved as well as various buildings at multiple levels of due diligence and negotiation. This approach will both manage the risks that are involved in the changing business environment as well as the difficulty involved in international real procurement. Local markets experts and country managers should be enlisted at an early review stage. This will facilitate nuanced view of labor and location variables. “Lease versus own” subject should be wisely examined. For instance, owning properties in India or china would not be suitable for the company since there are illiquid property markets, taxes, legal limitations and capital requirements. This would enable the company to identify the best location for its business where the business will operate with minimal difficulties. The company should also consider employing “subject matter experts” to carry out due diligence before moving downstream in the offshoring process. This is essential since the company will implement the process adhering to the best professional specifications and hence doing away with numerous risks associated with offshoring. Advantages provided by the “build-to-suit” strategy with a quality developer should be considered. For example, “built-to-suit” lease terms as short as three years are typical in India. On the contrary, in USA, there is provision of a minimum of ten years. This will allow the CEO and the entire organization to offshore its business in a country that favors it most. The company should allow about six to twelve months for basic building construction from where it will carry out its operations in the chosen international location. The CEO should make sure that the organization partners solely with the ‘A Team’ within local developer who fulfill the required multinational standards. This will ensure that the company will not invest in a location that does not meet the required standards. Investing in a location that does not fulfill the required multinational standards will not only lead the company into incurring huge losses but can also lead the company into legal problems as well as the company’s losing its reputation from its clients (Bruce & Shawn 2005). . To reduce upfront capital investment as well as speeding the market of its products and services, the CEO should consider the “build-Own-Transfer” model. The model jump-starts an operation through short-term contract with the local partners who set up and operate an independent facility whereas the parent organization maintains an alternative to purchase the building and retain the people and the processes as well at the end of the term. This will help the company is assessing if the selected location for its offshoring process is the best and if successful it presents the company with an opportunity of continuing with the business. In such a case, if the business turns out to be unsuccessful, the company can withdraw from the locality and the business within a short period without any difficulties and hence saving the company from further losses. Finally, the CEO should make sure that the plan is well understood for sufficient training for language and technical skills that may be required (Bruce & Shawn 2005). Conclusion The key to succeeding in offshoring is in utilizing the advantages that come with it using a well-planned and articulated scheme that views the business from various dimensions and not a simple cost decrease exercise. Before the CEO embarks on the offshoring process, she should ensure that an appropriate strategic management planning process is carried out regarding the process. The management should make use of professional advisers in offshoring to ensure that the whole process is a success and will benefit the organization in the end. Bibliography Auyer, J., 2007, The 1998-2010 Employment Projections, Occupational Outlook, Sydney. Bruce, R & Shawn, M., 2005, The next wave: Refining the future of Offshoring, Journal of Corporate Real Estate, Vol.1/1. Daniel, H., 2006, Offshoring Service Jobs, Allen & Unwin, New York. Kroll, C., 2006, The new wave of Outsourcing, University of California, Berkeley. Kung, M., 2004, Occupational Employment Projections to 2012, Paw Prints, London. Parker, G., 2005, Low-Cost Global Delivery Model Showdown, Spring, London. Stewart, R., 2005, Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth, Sage, London. Read More