Week 1 Discussion

Outsourcing and Strategic Planning

Outsourcing is the strategy used when organizations contract other organizations to provide a service. So, yes, outsourcing can result in people losing their jobs. However, the reasons for outsourcing varies, including lowering costs, improving quality, gaining access to advanced technology or gaining access to specialized expertise. And, outsourcing HR activities and functions can be a part of an outsourcing strategy.

For an international organization, it may make perfect sense to outsource HR activities. This allows an organization to rely on specific expertise in locations where it conducts business. Think about the variety of legal, regulatory, and compliance environments that a global organization must abide by. It makes sense to rely on local experts rather than manage these disparate environments in-house.

One of the HR functions that might be outsourced includes the financial, which would involves benefits, payroll, retirement and pensions, etc. Additional functions include training, and recruitment, onboarding, health and wellness programs, and safety management and training. The myriad of activities and know-how for managing these functions are reasons why outsourcing HR is an attractive strategy—not just for an international organization, but a domestic organization can also benefit from an outsourcing strategy.

In spite of the sought-after benefits from outsourcing, the strategy is not without its risks and limitations. Putting your hands in another organization can be risky. What if they go under? There is a risk that the expected gains in service may result in poor service and customer complaints. Then, there are security risks in outsourcing. These are just a few of the risks inherent with the outsourcing strategy. Proper planning and execution in the deployment of outsourcing can help avoid the associated risks as an organization moves forward to the next level of excellence.

Additional Materials

From your course textbook, Managing Employee Performance and Reward (2nd ed.), read the following chapters:

• Performance and reward basics
• Managing for engagement
• Strategic alignment

• Managing for results

From the South University Online Library, read the following articles:

• Are You Ready to Outsource HR?
• Are You Ready to Outsource Staffing?
• The Fine Art of Outsourcing