Outsourcing in the Workplace - Research Paper Example

Outsourcing in the Workplace Introduction According to the article of Jim Lowery namely “Outsourcing: The Good, the Bad and the Ugly”, an explanation has been provided regarding the determination of good as well as bad side of outsourcing. According to Jim Lowery, “The degree of success of the outsourcing will be measured by many people inside and outside the organization, and that success will be measured with many tools. It seems, however, that one consistent theme that goes along with success is the communication of the change plan, design and implementation, and the continual review after the change to see whether the job is being completed better or just differently” (International Public Management Association for Human Resources, 201, pp.1-32). In this present era of globalization, outsourcing has gained much attention from many business organizations. Currently, it can be viewed that in order to expand the range of business activities and also to focus more upon the core competencies, business organizations often outsource their various tasks such as product designing, assembling, research and development, marketing, distribution, customers relations department and after sales service among others. There are different kinds of outsourcing techniques that are readily practiced as well as implemented in the global business environment. The commonly used outsourcing streams principally include IT, legal, content, recruitment, manufacturing, logistics, web design and customer support. Workplace outsourcing can be employed in every kind of business. For example, relating to an Information Technology (IT) based company workplace outsourcing is mainly utilized for balancing demands of their end users ensuring greater mobility. It can be stated that an effectual workplace outsourcing technology decreases workplace complexity by delivering effective end-to-end management of their distributed computing environments. Other than providing stable work environments, workplace outsourcing enhances user productivity with quicker software rollout to a significant extent. Apart from the aforesaid advantages, outsourcing in the workplace can also be viewed to generate significant disadvantages affecting the overall business operations quite considerably (Kathawala, Zhang, & Shao, 2005). It is quite controversial to describe the nature of outsourcing concerning its benefits as well as disadvantages from an organizational standpoint as well as its workplace. With this concern, this particular paper provides a greater explanation determining whether outsourcing in the workplace is regarded as a good or a bad phenomenon along with substantiating its effectiveness in this present era of globalization. Explanation of Outsourcing as Good There are a number of advantages that can be gained from conducting outsourcing in the workplace. Outsourcing in the workplace can be treated as a cost saving strategy. Cost saving or cutting cost is not a sole reason for a firm to outsource, but outsourcing can often be treated as a vital factor in building effective communication in the workplace to a certain degree. Through outsourcing firms often succeed in reducing stress for their core employees. For example, a company operating in the United States can outsource its marketing division to an outsourcing firm in an offshore locale with the intention of availing of lower labour wage rate as compared to the domestic market of the US. Through outsourcing a company may increase its profitability by a certain degree. Moreover, it also might create a greater value especially for the customers along with the shareholders of a company. After outsourcing a task, a company becomes free to focus upon evaluating its important strategic competencies. Along with that a company can also focus on improving various significant aspects that include customer satisfaction, time-to-market, responsiveness and quality among others. Outsourcing improves the service quality which is offered by the firms to the customers. In addition, outsourcing is generally conducted to introduce new systems as well as technologies for the purpose of developing new distribution channels and also aiding the managers to concentrate upon performing higher value strategic activities (Vintar & Stanimirovic, 2011). There are certain significant aspects through which it can be understood that outsourcing is a good activity. These aspects have been elaborated hereunder. Gain outside Expertise Improvement in the core and non-core competency products or services can be performed with the involvement of outsourcing as it brings new ideas for development. Increase in Profits Due To the Currency Exchange Firms benefit from the contracts especially when they are outsourced in terms of gaining substantial profits due to current exchange. Improved Operations If a particular firm suffers from inadequate input of labour and raw materials, then through outsourcing, this particular critical problem can be solved. Gain outside Technologies In this context, it can be affirmed that firms can get the state-of-the-art innovative technology with the help of outsourcing. Procurement of latest technologies involves high capital expenditure. In this regard, the cost can be controlled or lessened through outsourcing to a certain degree (Vintar & Stanimirovic, 2011). On the basis of the above discussion, it can be affirmed that the aspect of outsourcing is becoming a growing trend for the companies to outsource fundamental projects in an effective manner. This shows the popularity of outsourcing process. Outsourcing enables the firms to attain variety of qualified and outside resources resulting in increased profitability. It is worth mentioning that outsourcing works as a mediator for the firms supporting them to establish effective communication as well as coordination amid the employees in the workplace by a significant level. In this regard, firms benefit in terms of dealing with numerous complexities relating to currency, language and universal accounting issues among others. Apart from the above mentioned good practices of outsourcing effects, there are certain positive effects that can be divided into five broad categories elaborated on hereunder. Improved operational effectiveness resulting in better quality, shorter investment cycle, increased returns as well as greater productivity Greater access to knowledge, modern technology and experience resulting in raising the productivity of the firm Improved control processes and governance Reduced risks when performing in-house operational functions Better access to provide innovative solutions and ideas raising the efficiency of the firms (Vintar & Stanimirovic, 2011). Explanation of Outsourcing as Bad Apart from considering outsourcing to be a good practice, there also pertain certain critical aspects determining the aspect of outsourcing to be a bad practice as well. These aspects have been portrayed in the following discussion. Loss of Control Managers of a company often feel much worried concerning the loss of control over performing their own work and determining the process of technologies, whenever their services are outsourced to other regions. This may be owing to the reason of tracking down the activities that are conducted by the managers or any other official while outsourcing in any other region. Loss of Innovation It can be stated that innovative companies need to focus upon developing their respective human resources by a greater level. Companies looking for innovation strategies need to recruit highly qualified individuals and train them and appraise for their outstanding performances. This process eventually enhances the growth of the employees by a certain degree. It can be observed that improvement in the efficiency of the workers motivates them to bring new strategies in the businesses. But when a company outsource its certain services such as software development, IT and material management among others, then growth in the employees is hindered by a certain degree. Therefore, it can be affirmed that outsourcing reduces the chance of innovation and without attaining innovative process no company can survive in the global competition. Risk of Exposing Confidential Data Each and every company possesses certain confidential departments that embrace payroll, HR and recruitment services among others. In this regard, when a company gets involved in outsourcing task, then greater risks emerge concerning the exposure of various confidential data relating to the company. Lack of Customer Focus At certain times, it can be viewed that an outsourcing firm generally works for multiple firms at a single time. In such a situation, it becomes quite impossible for a firm to concentrate upon complying with the requirements of the customers. This tends to affect customer satisfaction by a great degree. Synchronising the Deliverables Selection of an appropriate outsourcing firm is an important task. If a company selects inappropriate outsourcing firms not in accordance with its needs and requirements, then various problems may arise such as inappropriate type of responsibilities, non-standard quality output and failures in delivery time among others. Unpleasant Effect on Domestic Job Market It can be affirmed that companies always seek to perform cost-effective operations with the intention of accomplishing their predetermined business targets. Developing countries can be viewed to have the presence of low cost labour force which is best for outsourcing industry. In this regard, it is to be stated that if a company situated in the US and outsourcing its various operations to companies situated in a developing country, then job market of the US may get hampered generating disturbance in the workplace by a certain degree (Raiborna, Butler, & Massoudb, 2009). Difficulties in Managing Relationship Outsourcing often eliminates the direct communication which occurs between a firm and its clients. This actually prevents a firm from building a strong affiliation with its customers. Apart from the aforesaid bad practices of outsourcing, certain risks can also be viewed to be associated with it. These risks have been summarised below. Sharing knowledge with an outsourcing firm may lead to disclosure of its knowledge in front of the competitors Outsourcing may lead to losing the skills of the firms that might be required to run future course of action Companies always need to structure its business operations on a long-term basis. From this standpoint, it can be affirmed that over-reliance upon the facet of outsourcing might lead to losing the capability as well as the competence of the firms by a certain degree Failure to meet the organisational objectives within the context of outsourcing may lead to the failure in developing the performance of the firms (Schniederjans & Schniederjans, 2005). Comparison between Good and Bad Practices or Activities of Outsourcing Outsourcing has different impacts on diverse countries. It is the developed countries that are affected by the process of outsourcing, whereas the developing countries enjoy the benefits of outsourcing in the workplace to a certain degree. For instance, in the US, outsourcing can be viewed as a process bearing a handful of negative features. It has been viewed that outsourcing has impacted the US job market in a devastating manner owing to the reason of prevailing the differences in hourly labour cost in comparison with other nations. In order to compare good and bad practices or activities of outsourcing, it can be apparently observed that workplace outsourcing can be of different types such as onshore outsourcing and offshore outsourcing. The US nationals are less accepting of offshore outsourcing as it tends to transfer jobs to the foreign countries, whereas onshore outsourcing does not affect the US nationals as much because of a lesser jobs drain from their country. It can be viewed that every outsourcing firm is operating in various sorts of businesses such as Business Process Outsourcing, Legal Process Outsourcing and Knowledge Process Outsourcing. Each of these outsourcing units has various subparts such as BPO deals with customer service, marketing and IT. Though every outsourcing firm deals with specialisation businesses, problems concerning the control of the activities typically emerge. Specially mentioning, outsourcing often creates unemployment in a developed nation as well as creates greater employment opportunities in a country where labour rates are relatively low (Rockford Consulting Group, Ltd., 2007). In relation to determining the impact of outsourcing in the workplace, it reduces workload on the existing employees and forms effective coordination amid them to a certain degree. Therefore, employees can concentrate more upon performing their core activities in an effective manner. In the age of globalization, rivalry among competitors has become a common phenomenon and to survive in this competitive landscape, global firms need to focus upon performing their core activities in an effectual manner. For example, a manufacturing firm should always remain very focused upon developing its core activities such as manufacturing rather than concentrating upon other sections like customer service and logistics among others. This could have a substantial impact in the workplace. From the above analysis, it can be affirmed that though outsourcing can be both a good as well as bad practice, it is developing in a rapid manner in this era of globalisation gaining momentum and an increased level of internationalisation. This can be justified with reference to the fact that most of the business organisations in the context of this modern day consider the aspect of outsourcing to be a good practice as it helps them to accomplish their expected business targets considerably. In this regard, the expected targets of the modern organisations might encompass gaining substantial market share, enhancing profitability along with overall productivity, attaining significant competitive position and most vitally developing the workplace atmosphere among others. In this competitive landscape, the modern organisations view the facet of outsourcing to be one of the effective methods of developing their respective business operations and compete with their major competitors at large. The organisations strongly believe that though there exist certain bad practices of outsourcing, still the predetermined business targets can be attained through effectively adopting as well as employing the good practices of outsourcing (Rockford Consulting Group, Ltd., 2007). Conclusion From the overall analysis, it can be stated that outsourcing has a significant impact especially upon the workplace of different organizations and also on economy. It is worth mentioning that outsourcing can be a useful tool for increasing the market share as well as the profitability of a particular company. At the time of global financial downturn, it is quite obvious that every organization endeavors to cut its operational expenditure. As developed countries boast high labor wages, they can transfer particular tasks to a third party called outsourcing firms. It can be affirmed that outsourcing has both negative as well as positive influences upon a particular company. On a positive note, it helps firms to reduce their cost of operations and on the other hand, on a negative note, it hampers organizational performances by reducing quality and service accountability by a certain degree. Outsourcing firms also get affected by the hidden and unexpected costs that cannot be controlled by the firms. Therefore, on the basis of the above discussion, it can be affirmed that outsourcing can be both a good as well as bad practice making a firm think as well as realize much upon developing its existing business activities in order to form and maintain a better workplace to work in. The aspect of outsourcing might prove to be quite beneficial for the organizations belonging to this present day context supporting them to accomplish their predetermined business targets by a significant level. References International Public Management Association for Human Resources. (2011). HR news. The Magazine of the International Public Management Association for Human Resources 76 (12), pp.1-32. Kathawala, Y., Zhang, R., & Shao, J. (2005). Global outsourcing and its impacts on organizations: problems and issues. Int. J. Services Management 1(2), pp.185-202. Raiborna, C. A., Butler, J. B., & Massoudb, M. F. (2009). Outsourcing support functions: Identifying and managing the good, the bad, and the ugly. Business Horizons 52, pp.347-356. Rockford Consulting Group, Ltd. (2007). Strategic outsourcing: the good, the bad, and the ugly. Retrieved from http://rockfordconsulting.com/goodbadugly.htm Schniederjans, M. J., & Schniederjans, D. G. (2005). Outsourcing and insourcing in an international context. New York: M.E. Sharpe. Vintar, M., & Stanimirovic, D. (2011). Evaluation of impact of outsourcing on efficiency of public sector organizations. International Journal of Business and Management Studies 3(2), pp.211-225. Read More