Outsourcing Assignment Example | Topics and Well Written Essays - 2000 words

Outsourcing - Assignment Example Outsourcing has revolutionized processes in the workplace, provided tools and valuable data and information, and has done many things of great importance to businesses and organisations. Literature Review This essay will focus on human resource outsourcing (HRO) which is becoming a trend particularly in the public sector. Human resource outsourcing affects performance of the staff. Human resource functions that are handled by an outsourcer provider are functions that some employees are used to performing. Businesses find outsourcing as an easy way to produce their products at low cost. Functions that can be outsourced include human resources, financial transaction processing (for accounts payable), procurement, distribution and logistics, and clinical data management. One of the drawbacks for outsourcing is that it can reduce product quality. This usually happens if a company outsources without careful study and planning. It can also reduce innovation. Firms must select areas in whic h they can concentrate their resources. Reduced innovation means lost creativity. Firms that outsource core competencies do not see the importance of focusing on employees’ capability and knowledge considering that there is a relation between contented employees and contented customers. Satisfied employees not just turn their attention on their organisation out of gratitude but provide good and faithful service to customers as payback to their organisation. (Cooke et al., 2005) Organisations should not rush into outsourcing. The firm must first analyse the business situation and conduct feasibility analysis, define the parameters of the contract, and build a strong relationship with the outsourcing company. There are several steps to be undertaken before deciding to make outsourcing a part of the company’s functions. It is like initiating an intensive project management. There are four screens to follow in conducting the feasibility: core competency screen, cost of con trol screen, goals screen, and scope screen. The feasibility study should clearly define the core competency screen, i.e. what are core competencies and what are critical in the organisation? Core activities refer to what a firm can do best and are crucial to the firm’s advantage while noncore activities refer to those which have lower impact on the firm. A detailed analysis of the requirements has to be done. When the costs exceed the benefits, outsourcing should not push through. Planning can proceed if the screens are beneficial to the organization. In the evaluation, the executive team should be identified. The team will include those who will handle the analysis, the leader and the decision-maker. The outsourcing team should be composed of technical and managerial people, and representatives from user areas whose services will be directly affected by the outsourcing. The people who will be responsible for oversight and management of the outsourcing arrangement and vendor (supplier) relations must be properly identified and involved in drafting the contract. Technical and management issues must be properly stipulated in the contract. (Cooke et al., 2005) The supplier and buyer should have close coordination and communication, and a team must monitor the progress of the relationship. The monitoring team will conclude if the provisions of the contract are being followed. This has to be evaluated time and again to see if the