Posted by: nuleadership | July 4, 2011

Outsourcing the Great American Dream

In the 1957 classic movie “Desk Set, the technology revolution begins. The setting takes place at the “Federal Broadcasting Network.”  Bunny Watson (Katharine Hepburn), is responsible for researching and answering questions at the organization’s library.  With a merger pending, the company looks to automation.  In fact, organization ordered two computers  called “Electronic Brains.” Richard Sumner (Spencer Tracy), the computer inventor, is brought into the network in order to phase out the library functions in lieu of the human staff.  Bunny Watson fights to demonstrate the value of her human existence.

In a hypercompetitive environment, many businesses are outsourcing major functions rather than perform them in-house.  Today’s businesses have built elaborate systems for better efficiency and effectiveness.  Of course, they are driven by the quest for increasing profitability.  Robert Jacobs, Richard Chase, and Nicholas Aquilano, authors of Operations & Supply Management, suggest that operations management has been a key element in the improvement in productivity in businesses across the world.  Many times executive focus on the major expense to operate – labor.

It’s a simple equation:  productivity equals outputs divided by inputs.  If organizations can reduce their inputs for their operations, they can increase output (more profit).  Therefore, companies seek to reduce their inputs to obtain ‘more get.  Two of the chief strategies are to outsource non-core functions abroad or add new technologies to generate new efficiencies. These strategies are aimed at reducing labor costs, primarily people.

Since 2000, over 3 million U.S. jobs in the manufacturing sector have been moved abroad to countries like China, India, and
Korea. Yet, few executives worry about the aftermath of outsourcing initiatives.  The remaining workforce is shell shocked and
stressed since they are required to do the work of the laid off workforce.  Sadly, many supervisors feel that these workers should be happy to have a job.

Gareth Jones and Jennifer George, authors of Contemporary Management, maintain that one of the most important resources in all organizations is the human capital component. Many people wonder if American’s businesses cannot compete in
manufacturing and other high tech industries, will they forever forgo the Great American Dream for next generation of workers.

How do organizations stimulate their workers while outsourcing key components of their organizations abroad for greater efficiencies?

© 2011 by Daryl D. Green

 

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Responses

  1. Integrity, Transparency and Outsourcing

    Transparency as part of the outsourcing process could help contribute to workforce stability in spite of the possibility of lay-offs. According to the Deloitte 2008 Ethics and Workplace Survey, most employees believed that leadership openness helped “contribute to a more ethical workplace” (Transparency, 2008, p.23). People tend to respond more positively when they are aware of all of the facts and have an understanding as to why doing something is important. If the steps required are apparent and the reasoning is present, the people involved will better adapt.

    If a company behaves responsibly, employees can follow suit. Deloite’s study states that 68% of employees “believed that openness by the leaders created a more values-based organization” (Transparency, 2008, p. 23). Transparency allows the employee to make educated decisions about work. Removing or hiding the truth contributes to the loss of employee autonomy. Remind employees that they are part of what makes the company function and succeed by utilizing transparency during a transition to outsourcing.

    References:

    Deloitte. (2011). Avoiding the “ditch”: Making an effective transition to outsourcing. Retrieved from http://www.deloitte.com/view/en_US/us/Services/additional-services/Service-Delivery-Transformation/e6500f1ac28ee210VgnVCM3000001c56f00aRCRD.htm

    Transparency, flexible work schedules boost employee productivity and ethical behavior. (2008). Journal of Accountancy, 205(6), 23. Retrieved from EBSCOhost.

    • Hi Laura,

      Outstanding points! Transparency is the buzz word today.
      Transparency = Trust
      How do managers foster transparency during the aftermath of a downsizing initiative?

      • Again, keeping the lines of communication open is key. Tell employees why they are still there and educate them how to stay valuable with the company since it has evolved. Offering development programs for employees to stay current can help create indispensible employees. If they can evolve with the company, they will make it even better!

    • Laura,

      My comments focused on being open and honest as well. Employees are a reflection of their corporate culture. How a company behaves and carries itself is usually how their employees behave as well. Being transparent is very important and leads to stimulation.

    • Hi Laura,

      I totally agree with your point. We all know that the key ingredient to successful outsourcing is frequent and fast feedback; keep your customer in the loop, let the customers know about all your progress and problems and get him involved (Eric, 2009). I totally agree with you Laura when you stated that “Transparency as part of the outsourcing process could help contribute to workforce stability in spite of the possibility of lay-offs” I believe that if you are transparent, your customers will trust you and hence improve your business performance and definitely attract more vendors!

      Reference:
      Brown, E. (2009) Project Shrink, Retrieved July 24, 2011. From http://www.projectshrink.com/transparency-in-outsourcing-1046.html

  2. In today’s hypercompetitive business market, outsourcing is a very common practice for many manufacturing companies. According to Jacobs, Chase and Aquiliano, manufacturing peaked in the 1950s due to increased automation and outsourcing (2009). Since this point, the world has experienced significant growth in the service sector. Technology and company’s desire to create the most efficient processes have forced jobs out of the U.S. Oftentimes, automation and outsourcing depletes valuable human capital that could benefit a company’s future. One way to retain and stimulate employees would be to allow them to present cost cutting measures and solutions to production problems. So, I would give the power to the employees to sustain the business and keep the production domestically. I believe there is no one more knowledgeable about a process or position in a manufacturing facility than the individual directly involved. The U.S. and other countries should focus on keeping manufacturing jobs alive because a strong economy is balanced in agriculture, manufacturing and service.

    Reference:

    Jacobs, F.R., Chase, R.B. and Aquilano, N. J. (2009). Operations Supply & Management. 12th ed. New York, NY: McGraw-Hill/Irwin.

    • Hi Jamie,

      Great comments! Worker involvement is a key element.
      Do you financially reward this participation or not? Knowledge is power!

    • Jaime,

      I really like your approach. You are going for the show not tell aspect of stimulation. Your approach would be very affective in my opinion!

  3. It helps if the organization will talk to the employees to calm their fears. Simply saying something on a regular basis can help motivate them. Helping to educate your base group of employees is important. According to Micah Issitt, “Concern over outsourcing is heightened during times of financial recession, when the practice is one of several phenomena commonly blamed for the tribulations of America’s job market. Analysts have found that, during the 1990s, outsourcing of American labor created more jobs than it destroyed by allowing companies to increase productivity, to allocate domestic employees to managerial or supervisory roles, and to dismantle unproductive labor divisions. The overall prosperity of a company can ultimately improve opportunities for domestic employment.” This information is good for the workforce to know.
    The organization might provide some of the benefits that the upper management enjoys, such as opportunities for professional development. With this incentive employees would at least feel empowered. In the event that they are laid off, they would be ready and may even welcome it.

    Reference:
    Issitt, Micah “Point: Outsourcing Benefits America and the Global Economy.” Points of View: Outsourcing (2008): 2. Points of View Reference Center. EBSCO. Web. 6 Nov. 2009

    • Heidi,
      Excellent! Good communication is critcal!

    • Employees do have an opportunity when outsourcing is considered. When routine work is eliminated the ability to allow intuition and creativity work is at full force allowing opportunity and unique solutions to be found. Sharon Cunningham suggest with outsourcing “there is less emphasis on task requiring detail orientation, math skills, and use of logic and following procedures. Employees’ use of empathy, creativity, and intuition will provide quality management and service.” According to Cunningham the “left-brained” work of numbers and analysis will be given to the outsourcing and the “right brained” work of empathy, wisdom, and creativity will be strengthened in the work force resulting in stronger services and solutions.

      Reference:
      Cunningham, S. (2008). Smart Business Is a No-Brainer. Best’s Review, 109(4), 39. Retrieved from EBSCOhost.

  4. According to a recent article focusing on outsourcing by Thompkins, the most important aspect of outsourcing is determining the core and non-core functions. “Identifying core and non-core functions hinges on how you touch customers” (Thompkins, 9). By this he means that businesses must determine which processes would have a significant impact on the profitability of the company if outsourced. For example, a company would not want to outsource a “primary focus” such as those that are visible to the customer that differentiate your business or contribute to creating your competitive advantage.
    I feel this is paramount in the decision making process and plays a key role in developing your outsourcing strategy. In my opinion, the most successful outsourcing consists of portraying to the employees that they are contributing to the primary core function that makes the business successful. And as Laura already stated, it doesn’t hurt to be open and honest with them either. Overall, if employees are informed and aware, companies are more likely to maintain a higher morale and avoid the need to continue creating efficiencies. They would already have them.
    Reference:
    Thompkins, J. A. (2005, November/December). The business imperative of outsourcing. Industrial Management, 47(6) p. 8-13.

    • Hi Miike,

      Great point! Businesses need to consider customer impacts as a result of outsourcing!

  5. Different forms of downsizing generate differences in perceptions and attitudes among workers. Compared to layoffs, outsourcing is seen as potentially less harmful for their jobs and less threatening for their future employment. Kostopoulos and Bozionelos (2010) noted that organizations can stimulate their workers by having open communication by management. It also depends upon whether employees viewed management as ethical. Good ethics provides a counterbalance of the negative influence of outsourcing perceptions of management fairness, empowerment, and work satisfaction. This means that the harmful effects of outsourcing reactions diminish when top management spends time to properly communicating the reasons behind outsourcing. Management action can act to buffer or neutralize some of the detrimental effects of outsourcing, particularly if managers communicate wisely and behave ethically.

    Reference:
    Kostopoulos, K., & Bozionelos, N. (2010). Employee Reactions to Forms of Downsizing: Are There Any Lesser Evils?. Academy of Management Perspectives, 24(4), 95-96. doi:10.5465/AMP.2010.55206391

    • Christian, very interesting! People’s perceptions of change (downsizing vs outsourcing)!

  6. Mark (2011) states “It is often assumed that manufacturing workers in developing countries, as recipients of outsourced jobs, would achieve economic benefits and organizational power. The author argues that job growth in developing countries through outsourcing to competing firms has often actually resulted in declining unionization and lower wage rates relative to traditional, integrated manufacturing firms. Using time-series data on union membership from 1980-2003 for Honduras and El Salvador as well as 2004 Household Survey Data for El Salvador, he examines the determinants of unionization rates and wages in the manufacturing sectors. He found out that the competitive outsourcing hurts labor at the plant-level in three ways: first, it reduces labor’s strike leverage by geographically dispersing the production process; secondly, it increases the threat of plant mobility by decreasing plant-level investments; and lastly, it increases labor costs relative to total costs, which creates an incentive for employers to keep wages low and unions out.”

    References
    ANNER, M. (2011). THE IMPACT OF INTERNATIONAL OUTSOURCING ON UNIONIZATION AND WAGES: EVIDENCE FROM THE APPAREL EXPORT SECTOR IN CENTRAL AMERICA. Industrial & Labor Relations Review, 64(2), 305-322. Retrieved from EBSCOHOST

    • Jeruto, good points by Mark! Do you agree or disagree with the author’s statements?

      • I agree with author in that I know that if companies engage in outsourcing it can increase efficiency to their company. For example, a companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. But on the other hand, an outside provider’s cost structure and economy of scale can give a firm an important competitive advantage. Outsourcing can also benefit a company by controlling capital cost in that outsourcing converts fixed costs into variable costs; it also releases capital for investment elsewhere in your business, and allows the company to avoid large expenditures in the early stages of its business (all business.com 2011).

        Reference:
        All business.com. (2011). Benefit of outsourcing for small business. Retrieved July 25, 2011 from http://www.allbusiness.com/human-resources/workforce-management-hiring/1084-1.html

  7. Outsourcing in the hospitality industry has been around for years and is increasing each year. Services such as payroll, laundry, reservations, grounds keeping, information technology and purchasing are just a few areas that hotels are outsourcing in order to help reduce costs, with many IT projects, revenue management and reservation jobs outsourced abroad. While these areas are effective in decreasing costs for hotels, there is concern about quality, especially when customers need information and are directed to a representative in another country. Not only are there customer complaints of the representative’s inability to help them due to language differences, but there is also concern about guest security.
    In order to motivate workers, it is imperative that managers provide additional training and education for on-site workers in order for them to grow and provide personalized customer service. Empowerment is also vital to guest relations, as the associate must be equipped to make decisions instantly that could affect the guests’ stay and perception of the location. The associate owning his/her job equates to quality on-site service.

    References:
    Simon, E. Y. (2010, April 26). Pros and cons of hospitality outsourcing. Retrieved October 30, 2010, from Hotel News Now: http://www.hotelnewsnow.com/Articles.aspx/3209/Pros- and-cons-of-hospitality-outsourcing

  8. According to Steiner and Steiner, “Statistics on outsourcing lack the power to rigorously define the trend, but suggest that media and scholarly attention may exaggerate its importance.” Perception and understanding is necessary to maintain employee efficiency and effectiveness during a changing global business environment. Outsourcing is usually perceived to be a bad thing for employees—but it doesn’t have to be. Reorganization generally helps a company cut a lot of costs, but hurts morale. Employees need to be aware of reorganization well before it happens. However, an employee that lives in fear of losing their job is unproductive. It is therefore also important to align employees with corporate strategies and provide open communication lines. Employees who understand the financial reasons for reorganization may actually stand behind their company.

    Reference:
    Steiner, J. & Steiner, G. (2009). Business, Government, and Society A Managerial Perspective. 12th ed. New York, NY. McGraw-Hill/Irwin. p. 517-519.

    • Windy, good points!
      Good communications is an underlinging theme!

  9. The key to making an outsourcing transition a success is to move individuals as quickly as possible from the fear and resistance stage to the buy-in and support stage. This can be done by communicating regularly. Fear comes from being kept in the dark. It is important to ask questions, get feedback, and be prepared to provide honest answers. Providing clear guidelines on how future relationships will work and what the implications are going to be is important. Recognize and praise employees. A little word of encouragement or feeling of importance goes a long way, which can be exemplified by the Hawthorne Effect. Finally and most importantly, do not let the communication and motivation diminish once outsourcing has taken place. Motivation needs to be a continuous process if success is desired culturally and profitably.

    Reference:
    Fitzgerald, J. (2005, December). Keep motivational efforts continuous. HRO Today, 4(10), Retrieved from http://www.hrotoday.com/content/1130/keep-motivational-efforts-continuous

    • Hi Keisha,

      So true! Getting buy-in is vital during change and uncertainty!

  10. In the article “Downsizing the Company Without Downsizing Morale”, the authors identify two key factors that directly influence downsizing success: (1) the survivors’ level of trust in their organization’s leadership and (2) the survivors’ empowerment (Mishra, Mishra, & Spreitzer, 2009). Through their research the authors found that only if survivors have a high degree of trust and empowerment are they apt to be optimistic and willing to actively participate in solutions to improve the organization (Mishra, Mishra, & Spreitzer, 2009) . In order to promote such an environment, the middle managers of the downsizing company must be well trained to become liaisons between top management and employees. Open lines of communication are critical during hard times and middle managers must be trained to communicate the organization’s vision and mission. They must also be trained in conveying the compassion that top management should be articulating. Middle managers must be well versed in two-way communication and prepared to help reduce the anxiety and uncertainty of their employees.

    Mishra, A.K., Mishra, K.E., & Spreitzer, G.M. (2009). Downsizing the Company Without Downsizing Morale. MIT Sloan Management Review, 50(3), 39-44.

    • Suzanne, excellent! Trust is a critical component for success in this situation.

      • I so agree with your view. There are so many times, people are put into a management role that have the skill set to do the job, but it does not necessarily mean they are great communicators. This is truely a skill that must be learned and practiced. Middle mangement are the ones that are given the task of making sure staff are informed and communicated, so it would only make sense for that group to have the most training and be the best communicators.

    • I agree that middle managers could be the key in keeping the frontline motivated and alleviating fears, however middle management has been the largest level displaced. According to Mabert and Schmenner, “Middle managers make up 5 to 8 percent of the work force, but represent 22 percent of the eliminated positions.” So how do managers who fear for their own security, motivate frontline employees during difficult economic times? The authors conclude that management must first evaluate and change the work and process before any downsizing occurs. This will result in vital positions and valuable employees saved, but also “the better the process reengineering accomplished, the more likely productivity will gain after the downsizing.”

      References: Mabert, V. A., & Schmenner, R. W. (1997). Assessing the roller coaster of downsizing – business management. Retrieved July 22, 2011, from CBS Interactive Business Network: http://findarticles.com/p/articles/mi_m1038/is_n4_v40/ai_20141964/.

      • Angela,

        Excellent question: “So how do managers who fear for their own security, motivate frontline employees during difficult economic times? “

      • During tough times, often a person’s true personality traits will shine through. During downsizing and/or job loss due to outsourcing, means of motivation may run low for many including employees and managers. There is more to motivation than just that of the job itself. There are four main key points, or needs, discussed in the article that the writer feels one must establish in order to push forward not just in a job, but in life in general. The author feels that a person must establish the need for perspective, the need for self- control, and the need for self-determination (Kersten, E.L.). Without first recognizing these key points about oneself, then motivating others is even more difficult of a task.

        Kersten, E. L. (2008, November). Outsourcing motivation. Conference Board Review. pp. 65-66. Retrieved from EBSCOhost.

  11. One key to employee motivation during uncertain times is for leaders to lighten up, not tighten up. When times are uncertain, as with outsourcing, leaders tend to run tighter – more militaristic style organizations as a measure to offset fewer resources. Leaders make the mistake of barking out orders without mention of vision, direction, or outcomes. In fact, roughly half of the employees surveyed by Gallop over the years indicated they did not know what was expected of them at work. These are the exact opposite of what should happen since the result is even greater stress and anxiety for the remaining workers. Therefore, if reduced stress and greater motivation are the objectives, then the key strategy is to lighten-up and add three simple ingredients to the mix.
    1) Set and clarify expectations
    2) Provide and Explain a clear vision for each remaining worker
    3) Engage employees using recognition programs

    Reference:
    White, E. How to Motivate Workers in Tough Times. The Wall Street Journal Online. November 7. 2008. Retrieved from http://online.wsj.com/article/SB122531548636981645.html

  12. Specialization has become one of the most important ideals in business today. For your company to be successful it is key that you understand what you do best and focus on succeeding within that. Making sure that the workforce you have is skilled and educated in their specific tasks allows a business to be more agile and innovative. Large vertically integrated companies with complex managerial systems that treat employees as an expense rather than an asset cannot function well in the new economy. Utilizing what are being called network clusters allows several specialized organizations to network and create a final product. For example one company may research and design a product, while a second would engineer and manufacture it, and a third may handle distribution. It is this model that can allow for organizations to stimulate their workers while outsourcing key components. It is the ability of the mangers to integrate knowledge, technology, and communication that will allow this balance to be successful.

    Reference:
    Coleman, H.J., Miles, R.E. and Snow, C. C. (2000). Technology, Organizations, and Innovation. In Dawson, P., McLaughlin, I. and Preece, D, (Ed.), Managing 21st century network organizations (Vol. IV, pp. 1621-1623). New York, New York: Routledge.

  13. The benefits of outsourcing is that, U.S companies can generate significant savings by outsourcing their back office operations to developing countries where those functions can be performed at a cheaper rate without compromising quality. The primary motive of most corporate outsourcing is to take advantage of huge wage gap between industrialized and developing nations. Organizations can stimulate their workers while outsourcing key components of their business by liberating its highly paid analysts, engineers, from routine tasks to enable them concentrate on innovative technologies and businesses that will enhance core competency, gains in efficiency, productivity, quality and add greater value to the business. Organizations can also motivate their workers while outsourcing by giving the workers increased wages and other benefits from savings generated from downsizing and paying lower wage costs for functions performed in developing countries. Also, outsourcing can result in job creation in the U.S. while obtaining cheap wages abroad. The labor savings from global outsourcing can be substantial. Organizations can use the savings to innovate around their business to create better employment opportunities for the employees while also giving them better incentives to work.

    Reference:
    Jacobs, R. Chase, R. Aquilano, N. (2009). Operations & Supply Management. New York. McGraw-Hill/Irwin

  14. Your employee is your biggest asset and expenditure. So it makes sense to make sure they are happy, motivated and engaged. And one way to get there is through communication. Communication is essential to motivating staff and keeping them informed. They need to feel they are a vital component to the organizations decision making process and not just someone that shows up to do a job. As stated by Supply Chain Sandard.com, 2009, Good communication with the staff is more than at the floor level, it is from senior management.
    Being in healthcare, our market has a sense of uncertainly. No one is sure what impact the healthcare reform will have on our industry, so communicating with employees is huge. Our leadership team believes this as well. Twice as month we have Hospital Update day that is driven by our senior leadership team. This gives all employees the opportunity to not only hear the updates within our organization, but also gives the employees the opportunity to ask those “tough questions”. This has proven to be a huge satisfier. Our employees have a greater sense of ownership which not only motivates but keeps them engaged.

    http://www.supplychainstandrad.com motivation in a downturn.html.01.July, 2009

    • Suzanne,

      Great points! Keeping workers inspired helps the bottom-line (if you’re in the beavioral school)!

  15. When an organization starts downsizing, the remaining workers are often left with a sense of anxiety and “Am I next?”, resulting in decreased productivity and increased resentment towards their company. Managers can avoid these situations by having open and honest discussions with their employees. As others have previously mentioned, an atmosphere of transparency, coupled with an open-door policy, can help to alleviate many of these feelings of anxiety in employees. “Merely recognizing employee concerns can help alleviate them. Relatively inexpensive employee counseling can become memorable at times like these. These actions, coupled with incentives that elicit new ideas for improving operations can send important positive messages at a time of stress. They can foster “ownership” behaviors — loyalty, high productivity, and referrals of others as potential employees — that enhance the lifetime value of members of the organization,” (Goldsmith 2009).

    Reference: Goldsmith, Marshall. (2009, May 29). How to Keep Employees Motivated. Success Television. Retrieved July 23, 2011. Retrieved from http://social.successtelevision.com.

  16. Organizations today face a great challenge in stimulating their workers while outsourcing components of their organization abroad. It is hard to keep positive work ethic while giving jobs to employees in other countries. Most employees feel betrayed or angry and work morale decreases; as a result production can suffer. Companies can try to diffuse these negative ramifications of outsourcing by the following: usually being honest with their workers upfront about their outsourcing practices helps with any feelings of betrayal-while workers may not agree or like the idea, it is better to know up front than find out their company lied to them later on. This act is called “Transparency”. Transparency pays, according to Robert Eccles, author of “Building Public Trust “. Eccles shows that companies with fuller disclosure win more trust .The more companies say about where they are making money and how they are spending their resources; the more confident workers or even investors can be about the company fundamentals. This practice builds more trust within the workplace. Other practices, such as offering more benefits or more appealing retirement options can also help with morale.

    McClure, Ben (Oct 24, 2010). The Importance Of Corporate Transparency. Retrieved from http://www.investopedia.com/articles/fundamental/03/121703.asp#ixzz1T5IhqKqE

  17. Outsourcing has become a blame for many American losses of jobs. The effects of outsourcing benefit the company, the area the outsourcing is moved to, and generally the end consumer. It is difficult to see these benefits when a person is let go from a company due to the outsourcing of their previous job.
    Keeping employees stimulated while outsourcing key components of the organization is challenging for the company, and for the employee themselves. Outsourcing changes the structure of the company, but also the lifestyles of the employees affected. Companies may encourage their employees to reenter the American educational infrastructure. This benefits the company by gaining a person with knowledge and skills, and it benefits the employee by gaining knowledge and skills that keep them employed during a time of great change.

    Bernstein, A., Engardio, P., & Kripalani, M. (2003). Is your job next? Business Week, 50-60. Retrieved from http://www.drummajorinstitute.org

    • One problem with what you saying Jennifer about workers going back to school to get higher education if they lose their job is that workers who just lost their jobs and know it’s very hard to get another job due to outsourcing does not have the money or means to go back to college. I do agree with you though about having a higher education well hopefully keep you in your job for longer than the other workers with no higher education. Like Cindy Perman said in her article Outsourcing Jobs to … Detroit?
      “Fortune 100 firms, said they preferred to have the work done in the United States” (Perman 2011), they prefer it done in the States but don’t want to pay the high salaries that Americans demand. Companies save money on salaries by outsourcing but it does hurt the country as whole. Companies can always move to a different country if the needs is there, but countries cannot move.

      Perman, Cindy (March 11, 2011). Outsourcing Jobs to … Detroit?. Retrieved from http://www.cnbc.com/id/42030774/Outsourcing_Jobs_to_Detroit

      • You do make a very valid point about losing the job no matter the education. If outsourcing is going to happen, it’s going to happen no matter what kind of degree the employee has. The chances of course of keeping or moving positions are greater with higher education. It was interesting to find the difference in attitudes from those employees that survive a downsizing compared to those that survive job loss due to outsourcing. The attitudes of those employees that do not get let go due to downsizing may haunt them later on in the job field. There is an “increased likelihood of negative attitudes toward employers and poorer perceptions of their work environment (Kostopoulos, K., & Bozionelos, N.).” The findings did not hold true however for those involved with job disruption due to outsourcing.

        Kostopoulos, K., & Bozionelos, N. (2010). Employee reactions to forms of downsizing: Are there any lesser evils? Academy of Management Perspectives, 24(4), 95-96. doi:10.5465/AMP.2010.55206391

  18. Companies see profit and market dominance, employees are more into increasing income and more benefits. Communication,Transparency, on focusing on values of employees bring more driven and responsibility. seeing eye to eye toward the same goal is the key. Delivering value through efficiency is a primary reason
    companies employ outsourcing strategies within their
    businesses. As Dr. Maya Angelou says, “I want all my senses
    engaged. Let me absorb the world’s variety and uniqueness.”
    Businesses should explore all outsourcing options to provide
    the most efficient and cost-effective services to their
    customers. Developing a multi-source strategy or a domestic
    outsourcing model are ways to balance value and risk and
    should be explored as approaches to reaching optimal
    efficiency. Through the proper outsourcing model companies
    can reduce and manage costs, concentrate on key functional
    areas of the company and leverage the value of niche
    competition in the marketplace As you evaluate your choices and decisions in outsourcing different components of your operations, you will need to consider the advantages of outsourcing. When done for the right reasons, outsourcing will actually help your company grow and save money. There are other advantages of outsourcing that go beyond money. Here are the top seven advantages of outsourcing. (1. Focus On Core Activities,2. Cost And Efficiency Savings,3. Reduced Overhead
    Overhead costs of performing a particular back-office function are extremely high. Consider outsourcing those functions which can be moved easily.4. Operational Control
    Operations whose costs are running out of control must be considered for outsourcing. 5. Staffing Flexibility
    Outsourcing will allow operations that have seasonal or cyclical demands to bring in additional resources when you need them and release them when you’re done.6. Continuity & Risk Management,7. Develop Internal Staff
    Having a domestic outsourcing relationship allows your
    company to communicate on all levels more frequently,
    which reduces your risks and keeps the costs of doing
    business lower

    reference :
    “Lower Cost Domestic Sourcing: A Niche Opportunity for the
    US”,
    July 2007
    Conscient Partners, LLC
    “Abroad and back – outsourcing the wrong move for U.S.
    fi rm”,
    12 May 2004
    Ed Parry, News Editor SearchCIO.com
    Gartner Research Services
    “Having a domestic outsourcing relationship allows your
    company to communicate on all levels more frequently,
    which reduces your risks and keeps the costs of doing
    business lower.”
    To

    Top 7 Outsourcing Advantages
    Outsourcing Advantages: A Back-Office Operations Illustration

    By James Bucki, About.com Guide


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