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IMPACT OF AN EFFECTIVE HR SOURCING STRATEGY ON ORGANIZATIONAL PERFORMANCE

 
 
 

Opportunity for out sourcing and the new array of new options for getting work done comes with its own risk. Those risk are essential to analyzed and typically managed. Understanding how they should be assessed, compared, and then mitigated requires a different set of competencies than one typically sees in human resources. Two main issues in deciding sourcing choices are reliability and responsiveness in providers. Lack of reliability and responsiveness with HR sourcing can potentially cripple the HR function (Cappelli, 2011). When outsourcing is considered as one of the methods that organizations utilize for strengthening their core competencies to allocate their resources efficiently need to take in to account the effect of organizational culture to the outsourcing and impact on organizational performance. in order to gain competitive advantage, they must select areas in which they will concentrate their resources (Hamel and Prahalad, 1994). By outsourcing to specialist organizations services not generated by core competences, companies can see an improvement in their organizational performance (Kotabe et al, 2008).  There are three reasons for this. Firstly, the acquisition of non-strategic services allows the organization to center on what it really can do well, that is, on the services whose resources have a high strategic value (Gilley, et. al. 2004 cited in Cicek, 2011, p.133). Such a focusing on services not included in the core competences can increase performance and allow the company to be more flexible. Secondly, increasing the outsourcing of non-strategic services can improve both the quality and the service. Lastly, the outsourcing of services of low strategic value enables the company to reduce costs and improve its competitive position (Dess et al., 1995 cited in Cicek, 2011, p.133).

Nazeri (2012) have presented an empirical study to measure the impact of different items on increasing efficiency of a supply chain through outsourcing activities and it indicated that outsourcing could lead to reduce cost, improve quality, increase flexibility, better financial and non-financial performance and services. Further he recommends the following to improve the outsourcing as follows,

•           Participation of the suppliers in designing and developing products,

•           Making a friendly atmosphere with suppliers,

•               Long-term relations with suppliers instead of multiple ones,

•           Prioritizing activities in respect to the costs and entrusting according to hierarchy,

•           Participating in the source-finding decisions with suppliers,

•           Creating management teams of supplying network in order to embrace different companies,

•           Qualitative evaluation of suppliers periodically

•           Entrusting activities which by entrusting them the company gains more flexibility,

•           Entrusting important activities and processes concerning customers' opinions about suppliers,

•           Enhancement of the company's power penetration in supplying network through placing trust among the members of the supplying network,

•           Optimizing the geographical distance between customers and suppliers in the supplying network

Every company has scarce resources and all managers have limited time and attention. Outsourcing implies that the HRs of the organization shift their focus from the periphery to the core business operations of the organization and it enable to reduces operational costs as well as the cost of capital, further outsourcing reduces the need for significant investments in non-core functions. A reduction in the operating costs of the business gives a strong competitive advantage. It is obvious that compliance related to tax, retrials, labour laws etc. are complex, and when outsourcing to a specialized Service Provider, it will ensure compliance and therefore deny organization exposure to legal risks which can lead to financial and reputational issues. The repercussions of outsourcing strategies on work quality, attitudes and performance of employees were investigated by Elmuti, Grunewald, and Abebe (2010), the attitude findings show that outsourcing strategies have a negative impact on the perceived quality of the dimensions of work and life (Alzhrani, 2020).

Reference;

Alzhrani, A.M.(2020) Outsourcing Human Resource Functions and their Impact on Organizational Performance. Global Journal of Management and Business Research: A  Administration and Management,Volume 20 (Issue 4). Available from https://www.academia.edu/65154409/Outsourcing_Human_Resource_Functions_and_their_Impact_on_Organizational_Performance [Access on 26th April 2022].

Cappelli, P. (2011) HR Sourcing Decision and Risk Management, [online] Organizational Dynamics   Available fro https://www.researchgate.net/publication/251503927_HR_Sourcing_Decisions_and_Risk_Management?enrichld=rgreq-d34ef7320dfcbaf9257e0d20499d7b81-XXX&enrichsource=Y292ZXJQYWdlOzl1MTUwMzkyNztBUzo3NzQwMjMxMzQ4Njc0NTdAMTU2MTU1Mj

Cicek, I. (2011) The effect of outsourcing human resource on Organizational performance: The role of organizational culture. International Journal of Business and Management Studies, Vol 3 (No 2) 1309-8047.Available from https://www.researchgate.net/publication/330521241_THE_EFFECT_OF_OUTSOURCING_HUMAN_RESOURCE_ON_ORGANIZATIONAL_PERFORMANCE_THE_ROLE_OF_ORGANIZATIONAL_CULTURE,  [Access on 26th April 2022].

Hamel, G. and Prahalad, C.K (1994) Competing for the Future Boston. Harvard Business school Press , Available from  https://hbr.org/1994/07/competing-for-the-future [Access on 26th April 2022].

Kotabe, Masaaki, Michael, J.M. and Murray, J.Y. (2008) “Outsourcing, performance, and the role of e-commerce: A dynamic perspective”. Industrial Marketing Management, Vol. 37, pp.37−45. Available from https://tarjomefa.com/wp-content/uploads/2017/02/6151-English-TarjomeFa.pdf [Access on 26th April 2022]. 

Nazeri, A. (2012) Outsourcing and Its Impact on Operational Performance.[online] Istanbu:Concept paper for the Third International Conference on Industrial Engineering and Operations Management (IEOM). Available from https://www.researchgate.net/publication/275465073_Outsourcing_and_its_impact_on_operational_performance [Access on 26th April 2022].

 

Comments

  1. Anne PereraMay 7, 2022 at 3:49 AM

    Hi,

    With the increase use of technology organizations have gain the capability to try and work innovatively. outsourcing will help the organizations to manage organizational processes effectively. yes this is challenging because the organization will loose the control of some of the processes, but if the organizations can choose the correct suppliers as you have mentioned in your article, it will help the organizations to grow fast with many benefits like cost saving, having quality services from the best talents, effective use of new technology, trying out new methods used globally to become successful and many more(Becker and Gerhart, 1996).

    ReplyDelete
  2. Chathura PereraMay 7, 2022 at 3:49 AM

    According to Jirawuttinunt (2015), there is a positive impact of HR outsourcing on organizational performance. One of the main reasons why companies use strategic outsourcing is the desire to cut costs. Automation and optimization commonly go along with outsourcing, thus allowing businesses to save on operational costs.

    ReplyDelete

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