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Outsourcing Human Resource Activities


Although outsourcing is associated with many advantages that could promote business growth and development, human resource development has not maintained pace for the demand of competent professional that BPO requires (Al-Jaghoub, 2004). Business outsourcing has faced emerging challenges characterized by decreased skill requirements, which have exposed firms into market exit or slow growth (Campbell, 1990). Software outsourcing especially is a critically resource intensive industry, and professional skills are paramount towards the industry’s capability to demonstrate achievement of outsourcing goals that can sustain operational, strategic and tactical processes that promote the business industry, financial, and revenue sustainability. Human resources development forms foundation, for example, in an IT-enabled outsourcing.         

Outsourcing faces challenges characterized by the inability to deliver customer value, retain employee that are competent in the tasks and inability of the sector to achieve efficient human resource that could deliver quality outsourcing process. Capability model for services has been identified as a solution to the BPO problem of human resource development. Today, the adverse effects of economic downturns have made organizations prefer the outsourcing of services to cut on recurrent costs, such as salaries. In spite of the economic advantages of outsourcing, there are some essential services, such as IT, which can be more effective when they are done in-house, as opposed to outsourcing. This essay will provide compelling reasons why some departments like the IT department should be retained and not outsourced.

The costs of outsourcing in a department like IT outweigh the benefits. When outsourcing IT services, scheduling appointments with an outsourcing company can be extremely costly for the organization. Mclvor (2010) contends that the organization will have to pay for outsourcing IT engineers in terms of transport costs. Besides, since an outsourced person does not understand the logistics of the organization, the firm will have to pay extra costs for training an outsourced person, so they can fix a problem. Therefore, the IT department should not be outsourced to save on unforeseen costs.

Therefore, internal IT engineers are more familiar with the system and networks better than any outsourced persons. This is because in-house IT engineers are the ones who most probably built the IT systems, hence are more likely to understand the problems and fix it in the most intelligent way (Ramanathan, 2009). Although, an outsourced person may solve the problems, it may take a lot of time before he masters and understands the real issues. Therefore, some departments like the IT department should be retained, because it will be easy to keep the systems running smoothly, and solve emergencies much faster.

Another significant reason for retaining the IT department is the creation and development of positive employee relationships. This is a fundamental aspect, because when employees are in-house, they understand each other and interact extremely well with others. Mclvor (2010) conceptualizes that the down side of outsourcing IT services, for example, is that the contracts will not be the same; hence the organization has to get used to different contactors showing up at the company each time. This could be disastrous for the company, because using different contractors may cause fluctuation or a total breakdown of the IT system and networks.

Quite often, when an organization decides to outsource services, it has to be forced to employ extra measures to safeguard company data. Since third parties are not supposed to access company information, the organization will always be on the look out to protect data, and ensure there is no spillage (Ramanathan, 2009). Therefore, to ensure that the company is protected against external threats, some departments like the IT department should not be outsourced. Besides, using an in-house IT engineer will ensure that employee and company information is protected.

The Chinese business outsourcing context

Although the outsourcing industry in China has grown and became one of the market leaders in the provision of outsourced services, the success is becoming increasingly threatened by inadequate human resource, especially low numbers of high quality professionals in the software industry. The problem has become a bottleneck to the success of China’s software outsourcing industry.

Software professionals, currently existing in the country, are either lower quality and not thoroughly seasoned in skill and knowledge or are not willing to stay in a firm long enough, citing monetary and non-monetary compensations (Kambhampati, 2002). The software industry is negatively affected by high job turnover rates. A secondary problem of human resource inadequacy is based on quality of education currently provided in China’s colleges and universities that are not sufficient to meet the needs of what outsourcing industry requires. The language requirements are below standards. Company mitigation strategies in the provision of internal training are not sufficient. This has negatively affected the performance efficiency and productivity in the industry (Kambhampati, 2002). There is, therefore, a gap in academic and technical training for the software outsourcing industry. Sometimes, software used in the source countries is not compatible with those used by the customer country, which brings in the problem of interoperability between computing devices. This creates a situation in which outsourced personnel are not able to engage with it and consequently lowers productivity.

Importance of software outsourcing

Competitiveness of human resource plays a significant role in modelling industrial structure of the software outsourcing industry. According to Ramanathan (2009), drivers of the software industry, quality of service output and quality of human resource in the service employment are the salient quantifiable indicators for business process outsourcing. Quality of human resource has been identified as the determinant of the growth of the software industry. However, political factors influence the scope of development of the software industry and modelling of the education system towards meeting market demand for the business process outsourcing. Political policy on outsourcing further has been identified to impact software export industry and development of the framework for intellectual property management and corresponding ownership of the intellectual property assets (Ramanathan, 2009).

Quality of software personnel in software outsourcing industry

The sustainability of the software outsourcing industry, for example, depends on the quality of software personnel (Ramanathan, 2009). The software outsourcing industry is knowledge intensive towards meeting emerging demands for technology push innovations or market pull or demand pull innovations. As a result, quality of the software personnel is crucial in modelling software outsourcing industry (Ramanathan, 2009). However, it has been documented that the capability to export software personnel or outsource quality software personnel depends on the quality of the education system in meeting demands for the software outsourcing industry.

Outsourcing and human resource development

The success of the outsourcing industry is dependent on the quality of human resource development, however, low quality of human resource development, high job turnover rates for competent professionals and education system that does not adequately support business process outsourcing. Challenges brought about by human resource development have been characterized by lack of university-industry collaboration. This could facilitate the identification of rationale universities, could restructure syllabus towards satisfying outsourcing industry human resource requirements. Also, human resource as enabler of BPO plays an important role in shaping the outsourcing industry. In general, quality of human resource in BPO is crucial in defining quality of services that are offered, quantity of service output, efficiency and sustainability of trade in outsourced services, sustainability of business operations in the long term and quality of service output that can support future customer repeat business.

Challenges brought about by low quality of human resource development

Low quality of human resource development contributes to failure of the outsourcing industry to establish sustainable relationships with clients that are built on trust. In addition, BPO is characterized by failures in industry management of client expectations or inability of the industry to provide positive client experience in face-to-face interactions or remote interactions over the internet.

Quality of interactions influenced capacity of industry to meet or exceed client requirements in terms of ease of use, functionality and operational efficiency. Management of client interactions have been fuelled by low quality of management of multi-cultural, variations in organizational cultural differences that decrease quality of interactions and general quality of service output that BPO industries invest in. The quality of human resource development in the BPO market contributed to lack of confidentiality of client intellectual property through organization sales, which result into industry conflicts. Further low human resource development has contributed into inability of personnel to develop policies on proper outsourcing that could support subcontractor relationship and management. In addition, inadequate subcontractor relationship has contributed into inability of contractors to adhere to service quality levels. It is pertinent for organizations to have the capacity to identify contextual knowledge that could support consistent and continuity improvement of the BPO.         

In spite of the tough financial times, the finance and IT departments should be retained to ensure there is continuity and avoid loss of work financial records. When a company decides to outsource services, there is a risk of changing contractors, retraining people and installing extra measures to protect company data, since the company faces the risk of having their financial information leaked out. Besides, outsourcing could lead to loss of work and productivity, since it takes a lot of time before the outsourced professionals fix the problem. However, the use of in-house manpower will ensure that problems are fixed much faster, and the company will be able to save on unforeseen costs. In conclusion, the costs of outsourcing services far much outweigh the benefits.