In today’s world the chance for surviving get those companies that can minimize their costs at the same time providing high quality service and goods. One of the modern ways to strengthen the competitive possibilities of the enterprise and its advantages on the market is outsourcing. In contrast to support services that have strictly defined beginning and the end, outsourcing is a much longer process that provides support for different departments and infrastructures according to a long-term contract.
Outsourcing, Its Advantages and Disadvantages
Outsourcing is a strategic process of managing when enterprises entrust a part of business to such a specialist as an external service provider. It often happens that a company cannot handle all the processes internally. In addition to this, sometimes, there are temporary services, and enterprises do not need to hire and train specialists for a short period of time. In these cases companies outsource the task to the service provider. The most commonly used outsourced services include IT, recruitment, web design and maintenance, logistics, content development, manufacturing, technical and customer support.
There are benefits and potential challenges of outsourcing. Among its advantages is the ability to concentrate on the core business processes without wasting time on additional functions. Therefore, those people who were involved in additional projects can join the main team and work for the welfare of the enterprise. However, there is also another way to save money by making unnecessary positions redundant. Sometimes, services of the outsourcer can be cheaper than expenses on your own staff. Thus, using the benefit of outsourcing a company can cut in operation costs and have cheaper labor. Moreover, the expenses on training can be reduced. Therefore, a company has access to the better technology and qualified service and saves money at the same time (Reyna 2007). Outsourcing is the great opportunity for the companies that do not have qualified specialists in some spheres. They can count on experts and reduce the risk of failure by trusting some services to a specialized company. On the other hand, there is always a risk of losing control of the company or receiving service of a low quality. Moreover, while outsourcing, many functions a company can face unexpected expenses. A great role plays psychological factor, sometimes employees may feel threatened thinking that their job will be in jeopardy or company’s knowledge and defense may appear unprotected. The risk of revealing confidential information is the most dangerous because in this case the company can lose competitiveness.
Organization changes are departures from status quo or from smooth trends. Mostly they are products of an energizing force. Huber and Glick (2005) distinguish such forces for change as the organization’s top managers and the organization’s environment. According to the business dictionary, organization change is a period when company or organization is going through a transformation. Organization change occurs when business strategies or major sections of an organization are altered. It is also known as reorganization, restructuring and turnaround. It is a strategic process when all changes are gradually and successfully implemented. However, in modern world globalization made changes so rapidly like never before. Development can be evolutional or revolutionary. Evolutional development means a gradual change in quantity and quality. Contrary to evolutional, revolutionary development is a rapid change from one condition to another or dramatic change of concepts without proper change of basic knowledge. There are several factors that lead to organization change. First of all, these are changes in the environment and internal changes (for example equipment, technology, etc.). Second, people’s needs and interests of the society are taken to the consideration. The last factor is technical progress and globalization. The main problem of organization change is to convince people that this change will work for their welfare too. The overwhelming majority thinks that changes can ruin their usual comfortable way of life. They perceive success as stability and safety. In reality, the feeling of discomfort is a proof of development and moving forward. The key factor of organization change is to give people full understanding of the final goal and its result. That is why managers should understand basic systems and structures in organization, perform their role and be acknowledged with the leadership policy in the company (Carter 2003). HRM should keep in mind the main factors that people should experience during the change. One is dissatisfaction with the present state. If people are satisfied with what they have there is no need in changes. It may include unrealized dreams or awareness of missed opportunities. Another is conception of the future. If people are not inspired by the image of future progress they will not risk their stability for the doubtful result. That is why people should have broad prospective, particular goals and inspiring motivation about future of the company, its concepts and achievements. The last is creating the plan of reorganization, implementing changes and monitoring the process. It is important to critically evaluate changes and not just think about future result. That is why the role of the HRM is very important during the changes in the company. These changes should inspire and motivate people and, at the same time, convince them in the successful aftermath of organization change. Therefore, well- prepared HRM is a key to a successful organization change.
Most of the current research on change is based on the classic change theories developed by Kurt Lewin in the mid-20th century (Marquis & Huston 2009). The three stages of Lewin’s model are unfreezing, movement and refreezing. The first stage states that the task of a manager is to encourage people to realize the importance of changes. Unfreezing can be individual or implemented within a group. It can be a result of personal conversations or communication with colleagues from the other companies; it is also conflict of interests between different professions. However manager should not wait for “unfreezing”, he or she should search for opportunities to interfere and change the situation. In such a way, there is a chance to prevent resistance between workers. The company that currently is in homeostasis and works according to the old stable rules can be unwilling to use new implementations. There are several reasons why people do not want changes. Among the main reasons are misunderstandings and lack of trust, incorrect perception of situation, low level of readiness for changes and personal reasons. There are also additional factors such as influence of colleagues and previous unsuccessful experience of changes. In this case, Lewin suggested finding the suitable moment for changes by increasing driving forces for change and decreasing resisting forces (Lunenburg 2010). In this case HRM can use such methods as communication and explanation, encouragement for participation, help and support, negotiations and agreement, manipulation and cooperation. Edgar Shein developed this idea and underlined that motivation can become a crucial factor for changes (Schein 2009). For example, he distinguished motivation through survival and learning anxiety that can be represented by fear of punishment, incompetence, loss of group membership and identity. Unfreezing is the period when it is a high time to let people be proud of what they have done in the usual manner and demonstrate the recognition of the past achievements. To make people make up their mind and to take part in the venturesome innovations within the enterprise, the company should provide all the necessary support and personal security. The second stage of the movement is a period of taking actions. It is time of careful planning and moving from the old rules to the new ones. During this stage some unexpected resistance may happen. People can easily come back to the old policy, because they used to it and experience can win over the desire for changes. During the stage of moving, people should learn new concepts and reinterpret the old ones. That is why company should supervise the process of introducing new changes and do everything possible to move forward but not backward to the old life. While implementing changes, it is important for the leaders to model the desired behavior of the employees. The third stage of refreezing is a period of establishing the new way of work and consolidating all the changes. People should be confident in the effectiveness of innovations, accept new concepts and support their usage.
Changing role of HRM
Recently outsourcing started influencing the sphere of HRM. On the one hand, it can be seen as an attractive way of off-loading the more traditional elements of the job, thus freeing up the HR managers to take a more strategic role (HR5005 - Case Study). Today more and more companies use this method in order to achieve its business goals. For example, BT Senior HR executives have been freed to concentrate on inspiring, motivating and developing employees, as well as developing HR strategies to help BT gain its business objectives (HR5005 - Case Study). As the result they cut costs and got a positive feedback from the customers. However, during the next attempts of outsourcing they faced some challenges like unexpected expenses, strengthening of governance and control, extension of the contract and difficulty to hold a position as an organization with leading-edge HR practices. Therefore, it was needed to ensure the high performance of the employees by providing effective HR support and retaining the best staff.
Outsourcing may change the nature of HR profession. To a certain extent, the position of HRM has become bifurcated. The external knowledge increased, but the main role remained integral. In the future it would be desirable to have marketing skills in order to become an HRM and conduct negotiations. Developing of marketing skills can become a powerful tool for gaining experience and creating competitive environment.
Many companies throughout the world outsource their services. It is a great chance to facilitate the process of leading business and cut costs. However outsourcing has a lot of disadvantages, as well as advantages. For example, if you trust confidential information to an unknown company it may turn out to be a big problem. In order to reach success it is needed to reorganize the working process. Usually people are unwilling to changes unless they are enough motivated and persuaded in the profitable outcome of reorganization. Kurt Lewin developed the model of changing which consists of three stages: unfreezing, moving and refreezing. Each stage is implemented to change the situation in the company and lead people to gradual process of substitution of the old concepts by the new ones. In the recent time HRM got more strategic role. They are concentrated on inspiring and motivating of people. It influences greatly the development of the whole company. However, outsourced HRM can either support or undermine the work of employees. It depends on the quality and effectiveness of the outsource company. Outsourced HRM should take into consideration personal qualities of the staff, internal and external factors. It would ensure commitment and engagement of the employees. Therefore, HRM became “strategic business partners” that take part in the growth of the company and provide service of personnel support and individual consultation.