Outsourcing entails engaging external entities such as other businesses to provide services relating to in-house tasks. Presently, only very few businesses are capable of all their business needs by themselves (Greaver, 1999). That means that many businesses view and employ outsourcing as a practical solution, which allows them to zero in on their principal business activities. One of the principal difficulties typifying the IO Corporation’s outsourcing decision is staff resistance. Regarding the decision, the corporation’s employees are apprehensive that outsourcing will occasion the loss of specific jobs at the corporation (De, 1997). This paper explores the varied factors that typify outsourcing decisions along with the attendant sense of control concerns. The paper demonstrates and rationalizes the prioritization of the efforts aimed at quelling the resistance. Besides, the paper offers varied reasons why staff members’ jobs ought to be safeguarded as businesses outsource specific tasks.
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Factors Informing Outsourcing Decisions
There are various factors that inform outsourcing decisions, including the outsourcing decision by IO Corporation. First, outsourcing decisions are largely functions of cost-benefit appraisals. In coming up with the decisions, businesses weigh the relevant expected marginal against the relevant expected marginal costs (Langfield-Smith, Smith & Stringer, 2000). Notably, outsourcing is primarily aimed at reducing the marginal costs. The costs include contractor selection costs, transition expenditures, and legal costs (Greaver, 1999). Before coming up with outsourcing decisions, ideally, businesses execute comprehensive cost-benefit appraisals to confirm that the decisions present them with good prospects for significant ROI (Return on Investment). The appraisals may require reassessments of the businesses’ commercial goals and strategies together with visions. As well, the appraisals may require reassessments of the expected lasting consequences of the decisions, especially regarding cost reduction.
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Second, outsourcing decisions are largely informed by consideration of the staff skills that businesses cannot get in-house (Greaver, 1999). For instance, regarding the IO Corporation case, the outsourcing decision may be motivated by the consideration of the corporation is devoid of customer service specialists within its ranks. The absence of the specialists persuades the corporation to engage in outsourcing to reduce the time along with costs that would otherwise have been committed to the hiring, as well as training, of the specialists. Businesses consider outsourcing the functions that cannot be handled well by their in-house staff (De, 1997).
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Third, when considering whether or not to outsource particular functions, businesses examine the probable risks. Some businesses outsource their high-risk business functions as it allows them to transfer possible risks with other parties or share the risks with them. Fourth, businesses which are considering whether or not to outsource specific functions examine the capacity, as well as expertise, of the targeted external service providers (Wiegmann, Sundararajan & Tao, 2011). Ideally, the providers should ensure that that the businesses benefit from flawless processes. In the case of IO Corporation, the principal strength of the providers will be their ability to standardize or even out with the corporation’s internal business tasks and processes.
Sense of Control-Related Issues
There are various concerns relating to business control that color outsourcing. The concerns essentially stem from the actuality that outsourcing integrates varied organizational structures (Langfield-Smith, Smith & Stringer, 2000). Besides, the fears that businesses have regarding loss of control over their processes and tasks are compounded by the reality that the engaged service providers access their resources. For instance, the external service providers engaged by IO Corporation will ultimately access its resources, which may pose significant threats to the confidentiality, as well as privacy, of the resources, including privileged corporate information.
Notably, customer service functions are rather sensitive, which means that the corporation ought to develop information privacy, as well as security, policies to safeguard its clients’ information (McIvor, 2009). It is critical to make certain that the clients’ information is not used illegally and that sensitive data is not lost (Wiegmann, Sundararajan & Tao, 2011). The loss of such data would have adverse business implications (Langfield-Smith, Smith & Stringer, 2000).
Organizational structure variations bring about considerable difficulties when outsourcing processes are underway as outsourcing causes management control loss with respect to the outsourced tasks or functions. The IO Corporation’s management will experience a significant reduction in the control that it has over the customer service function and the related operations and deliverables presently. There is a need to establish guidelines spelling out the corporation’s role with respect to the business functions that it will outsource. Notably, the staff members of the contracted service provider will be responsible to the provider as opposed to the corporation. The corporation will have no control over the staff members (De, 1997). That means that the corporation will have challenges monitoring the staff members’ progress as they offer customer services.
Plan for Quelling Staff Resistance and Its Rationale
Employees are likely to resist outsourcing owing to the associated organizational structure changes. As well, most employees view outsourcing as jeopardizing their jobs. That means that businesses that are planning to outsource some functions should plan and implement their outsourcing decisions carefully to overcome staff resistance (De, 1997). There are various steps that can be adopted to overcome the resistance speedily and cost-effective.
First, the businesses should educate their employees about the benefits expected from outsourcing particular functions. The promise of the benefits is likely to incentivize the employees to support the outsourcing (Wiegmann, Sundararajan & Tao, 2011).Second, the businesses should demonstrate the necessity of the outsourcing. That demonstrates to the employees that the outsourcing is inevitable in ensuring that they keep their jobs (Greaver, 1999). Lastly, the businesses should make the employees aware of other outsourcing success stories, especially the ones showing how employees benefit from the outsourcing of particular functions by their employers. That makes the employees view outsourcing positively and support it consequently.
Reasons for Safeguarding Employees’ Jobs
Employees make lasting contributions to the businesses employing them, thus the businesses should protect the employees’ interest to keep their jobs even as they outsource specific functions. There are various reasons why businesses ought to protect the jobs. First, businesses are obligated by law to protect the jobs to steer clear of the labor lawsuits that employees may lodge against them (Langfield-Smith, Smith & Stringer, 2000). The lawsuits have cost and reputation implications on businesses.
Second, the protection of the jobs helps the businesses balance between their needs and those of the employees. That means that the protections offered to the jobs by the businesses are effective tools in integrating the businesses’ interests and the employees’ concerns. The integration helps enhance staff morale and productivity (De, 1997). Third, the protection of the jobs assists in eliminating the fears that employees may have regarding outsourcing. It assures the employees that the opportunities available to them in the businesses are assured.
Conclusion
Many businesses view and employ outsourcing as a practical solution, which allows them to zero in on their principal business activities. They base their outsourcing decisions on cost-benefit appraisals. The decisions are also largely informed by consideration of the staff skills that businesses cannot get in-house. Employees are likely to resist outsourcing owing to the associated organizational structure changes. Businesses are obligated by law to protect the employees’ jobs to steer clear of the labor lawsuits that they may lodge against them, address their fears, and enhance their productivity.
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