Today one of the new trends that organizations are turning to is Outsourcing, which refers to the outsourcing of activities that were specific to the company but that, to save costs, make them external by paying a lower price.
For organizations this is a help because, as already mentioned, they can reduce costs in an impressive way by paying relatively low costs for the provision of services, but also keep in mind that it is not always beneficial for them since you have to know How to use these types of trends, if they are not used correctly, the organization can get into a big problem by leaving departments or crucial decisions in the hands of an external company that, although it is hired to work, does not have the same confidentiality.
DEFINITION OF OUTSOURCING
In the book "Direction and management of information systems in the company, an integrating vision" the authors say that the term Outsourcing comes from English, and literally means "take the source out." This is an approximate translation into Spanish, and it refers to what could be the outsourcing of activities that defines a phenomenon probably more complex than Outsourcing itself (Herderos, et al., 2004).
Lacity and Hirscheim in 1993 defined Outsourcing as the purchase of a good or service that was previously provided internally. The definition refers to the outsourcing not only of an activity, but also of the responsibility for carrying out said activity.
On the other hand, in 1995 Quinn and Hilmer proposed a classification of the conceptual possibilities of outsourcing business activities, ranging from the establishment of short-term contracts to the total ownership of the activities by the Outsourcing services client, in which the supplier is limited to developing works where the client is.
Based on these concepts we can define Outsourcing as the action of hiring a third party to carry out an operation in the company a in order to increase the effectiveness of the organization. This activity has been mostly used in business today.
OUTSOURCING IN COMPANIES
Outsourcing or also called Outsourcing has become a fairly common practice in human resource management. Outsourcing has infiltrated the world of human resource management in a major way and is a growing trend today (Choudrie, Gray, & Selamat, 2009).
The current trend, according to Cooke, Shen, and McBride, is that companies outsource a single part of their human resources function rather than the entire department. The Human Resources functions that are most likely to be fully outsourced are the Employee Assistance and Counseling, Flexible Management, Expense Account, and Fund programs (Cooke, Shen, & McBride, 2005).
The objective of most organizations is to reduce costs and this is done by looking towards the outsourcing of their human resources, that is, they want to use the functions of resource management as a way of reducing costs through Outsourcing. The starting point in outsourcing human resources so that it works well in the organization and activities are carried out effectively, is to understand what can and cannot be outsourced (Handley & Benton, 2009).
There are certain human resources activities that generally cannot be outsourced by Outsourcing. As they are essential activities and that are directly related to strategic decision making and that require specific management knowledge and activities that require confidentiality, they should rarely be subcontracted. Serious problems can occur if the determination between what should and should not be subcontracted is not made (Davidson, 2005).
Examples of such serious problems are the bad decisions that can be made as well as the confidentiality that has come to be violated, the work cannot possibly get done correctly or not get completed in a timely manner, the money is spent unnecessarily as well like a host of other problems.
Another requirement for successful outsourcing is understanding the advantages and disadvantages of outsourcing (Caruth & Caruth, 2010). But on top of that an outsourcing prerequisite for it to be successful and prosperous is to create an effective relationship between the outsourcing provider and the subcontractor doing the work (Handley & Benton, 2009)
ACTIVITIES THAT MUST AND MUST NOT BE SUB-CONTRACTED
What seems to be missing from everything that has been written about outsourcing is a general outline or framework of all activities, differentiating those activities that have the greatest potential for outsourcing from those that do not and providing a justification for the difference. of outsourcing potential. Starting by identifying seven levels of human resource activities and then organizing them into a hierarchy ranging from activities with the highest potential for Outsourcing to activities with the lowest potential for Outsourcing (Ketter, 2007).
In order to provide good guidance to organizations considering outsourcing of human resources activities, All activities are divided into seven hierarchical categories, arranged in ascending order of importance of strategy activities, competitiveness and success of The organization, ranging from the most viable to carry out with Outsourcing or outsource to the least recommended to outsource are classified as follows:
- Auxiliary activities Routine activities, Activities that contain the potential to achieve economies of scale, Activities that require specialized knowledge, Activities that require extensive organizational knowledge, Activities that require high confidentiality, Activities that require specific management decisions.
Each of these activities is described below.
1.- Auxiliary activities
Auxiliary activities are those tasks assigned to the human resources department that are not necessarily human resources tasks. These are activities that must be carried out by the organization, but not necessarily by the HR department.
Auxiliary activities such as food service, maintenance and cleaning services. Although the performance of these activities is important to the organization, the activities are not specifically related to human resource management.
2.- Routine activities
Routine activities are often important, but their nature is such that they can be managed through standardized procedures because there is little or no variation from transaction to transaction or case to case.
Once procedures are established, processing changes occur infrequently (Caruth & Caruth, 2010).
3.- Economies of scale
Economies of scale are operations in which an organization's economy can be improved by processing larger amounts. Processing health care claims, conducting job interviews, and administering personnel tests are examples of activities that have the potential to achieve a certain degree of the economy scale (Caruth and Caruth, 2010)
4.-Specialized Knowledge
Some functions within departments require specialized knowledge to perform them. This knowledge can be acquired either through specific educational requirements, experience, or a combination of the two.
These types of activities may only be required as needs arise. For example, keeping that knowledge on the payroll for occasional use only can often be an unnecessary expense. Preparation of personnel policy manuals, conducting human resource management research, and presenting training and development programs are examples of activities that require specialized knowledge (Caruth and Caruth, 2010).
5.- Organizational Specific
Lack of knowledge of the organization's staff, operational peculiarities, customs, traditions, and culture may be a factor limiting the potential outsourcing of certain types of activities. Specific organizational knowledge is necessary to make effective decisions.
The planning of productive resources, for example, are areas where organizational knowledge is required, and therefore are less conducive to Outsourcing success.
6.- Highly Confidential Activities
In this case for example that high levels of confidentiality are required such as layoffs, plant closings, and restructuring are examples of activities that should be kept confidential. These types of activities obviously have much less potential to be outsourced.
7.- Activity Management Decision
Some of the human resource management activities require Research as well as direct and specific participation from the top.
The organizational structure and decisions either by department or by management are examples of activities that require senior management. They must be made by the executive level of management in an organization and not by the externalization of these decisions (Caruth and Caruth, 2010).
THE ADVANTAGES AND DISADVANTAGES OF OUTSOURCING
For the Outsourcing application to be carried out successfully, you must have an understanding of the advantages and disadvantages of outsourcing
While the potential value of outsourcing could tempt any leader in the organization to use the strategy, outsourcing inevitably poses some side effects that may harm the organization, for this we present some of the advantages and disadvantages of Outsourcing (Fisher, et al., 2008).
Among the main advantages we can find the reduction of expenses, Canned time and effort management, Increased Organizational Competencies, Excellent Quality of Service
Among the disadvantages we can mention: Increased direct costs, Decreased employee morale, Loss of Control, Confusion of Responsibilities.
CONCLUSION
In conclusion, we can say that Outsourcing, despite being one of the most well-known and currently used tools by organizations around the world, can bring with it very favorable advantages, among them the most important and that it positively beats the organization which are the costs, this is why we see the leaders of the organizations so tempted to apply this tool as soon as the opportunity arises, but the disadvantages that the application or misapplication of This tool, since it could decrease the morale of the plant employees or could lose control of the activities carried out, may also lead to the confusion of the responsibilities of the workers.
Organizational leaders should always take into account how and when Outsourcing can be applied since not all positions are candidates, since they involve important decision-making and many other factors.
BIBLIOGRAPHY
- Caruth, D., & Caruth, G. (2010). Outsourcing Human Resource Activities: A Proposed Model, Supervision. Choudrie, J., Gray, S., & Selamat, M. (2009). Meta-abilities and Outsourcing: An Individual Based Conceptual Framework, Knowledge and Process Management. Cooper, F., Shen, J., & McBride, A. (2005). Outsourcing HR as a Competitive Strategy? A Literature Review and an Assessment of Implications, Human Resource Management. Davidson, G. (2005). Why HR Outsourcing Continues to Expand, Human Resource Management International. Fisher, SL, Wasserman, ME, Wolf, PP, & Wears, KH (2008). Human Resource Issues in Outsourcing: Integrating Research and Practice, Human Resource Management.. Handley, SM, & Benton, WC (2009). Unlocking the Business Outsourcing Process Model, Journal of Operations Management.Herderos, C.,Agius, JJ, Romero, S., Salgado, S., Navarro, A., & Nájera, J. j. (2004). Direction and management of information systems in companies, an integrating vision. Ketter, P. (2007). HR Outsourcing Accelerates.
