Advantages And Disadvantages Of Outsourcing Business Functions In Australia – Case Study Of Hewlett

Project Objective

Discuss about the Information Technology And Communication Technology On Firm.

Globalization has made it easy that companies do not have to manufacture everything for themselves. Outsourcing is one of the most appropriate mechanisms enabling firms to concentrate on that which they are well equipped to do. According to Oshri, Kotlarsky, and Willcocks (2015) outsourcing has been recognized as a typical corporate management strategy. Multiple studies have considered outsourcing as one of the most effective workforce Management strategies in gaining competitive advantage (Liu, Guo, and Lee, 2011; Namkung and Jang, 2008). Arya, Mittendorf, and Sappington (2008) contend that outsourcing is the most used concept in most of the firms. However, most of some industries are still not confident about value perception of outsourcing. Furthermore, outsourcing in Australia is still is still limited to small-medium size enterprises. Nonetheless, outsourcing has been attributed to operations’ cost reduction, the efficiency of operations, risk sharing, and increased competitiveness. This research seeks to analyze the advantages and disadvantages of outsourcing business activities in Australia using Hewlett as a case study.

The objective of this study is to examine the advantages and disadvantages of outsourcing business functions with Hewlett as a case study.

This paper will analyze the advantages and disadvantages of outsourcing. The various reasons for outsourcing will be discussed, and the possible threats of outsourcing business activities will as well be assessed. The outsourced business operations of Hewlett will be evaluated, and any associated benefits and dis-benefits pointed out.  This paper will also recommend strategies for effective outsourcing to Hewlett Company.

Oshri, Kotlarsky, and Willcocks (2015) opine that outsourcing is a mechanism by which organizations share their responsibilities with third-party agents. The third party takes full responsibility for the outsourced functions. Organizations generally outsource specific business functions to improve efficiency. Additionally, outsourcing allows the company to focus more on its internal operations and to minimize costs of business operations. Hewlett Company outsources some of its functions to third parties for efficiency and effectiveness. Organizations outsource business functions to attain competitive advantage. This happens in situations that the companies do not have the resources to invest in improving the quality of service or product to meet the standards of the market. Outsourcing also reduces the overall cost of business operations such as employee remunerations, production costs among others. Developed countries often outsource their functions to developing countries by establishing branches there to take advantage of the available cheap labor. Hewlett has adopted outsourcing as a means of attaining cost benefits in the competitive market (Vining and Globerman, 2017). An organization can also outsource its functions to concentrate and improve on key internal operations.

Project Scope

Hewlett Company seeks to become innovative in its key operations and therefore outsources some of the business activities. Chou, Techatassanasoontorn and Hung (2015) observe the Hewlett produces the hardware parts and then information is sent to the outsourced parties. Hewlett can improve service quality and achieve better customer satisfaction. Worthington (2015) elucidates that firms outsource business activities that require specific specialization skills. However, it is crucial that the organization should have employees that are skilled concerning the outsourced functions to benchmark the performance of the third party. Instead of training the employees concerning the emerging technology, companies prefer to outsource activities to third-party companies that can efficiently perform the tasks. This enables the organization to reduce the overall cost and time for the business operations and also to attain a competitive edge.

Kerzner (2018) found out that organizations outsource their operations to enhance organizational efficiency at the workplace. Outsourcing contract is usually granted to the best performing third party to ensure the services provided meet the market standards. After outsourcing, the remaining internal activities demand the full attention of the workers, and therefore they are completed efficiently. De Weerdt and Hirvonen (2016) notes that outsourcing enables risk sharing with third-party agents. This is because the third-party agent is mandated with the responsibility of attaining the agreed quality and standard and are liable for compensation in case they do not perform up to standard.

On the other hand, outsourcing has been attributed to various drawbacks. Bloom et al. (2014) found out that outsourcing forfeits managerial authority by transferring it to the third party even though ownership is retained. This limits the desires and dictates of the outsourcing company with regard to the standards of performance especially when they were not outlined in the agreement (Gorla and Somers, 2014). Hewlett Company was unable to control its data centers in California, thus hindering effective managerial control and decision making.

Outsourcing can also be costly due to the changes in the third party economic market. Any change in rules and regulations of the market hosting the third party agent may demand additional legal charges which will have to be met by the outsourcing company. Durst, Edvardsson, and Bruns (2015) assert that outsourcing is commonly done in different countries, and this may hamper communication due to the language barrier as a result of the strong accents in either country. Hewlett outsources its operations to Singapore in which most of the customers are only conversant with their national language apart from English. Such a scenario frustrates most of the consumers leading to poor customer service (Gurung and Prater, 2017).

Literature Review

Dhillon, Syed and de Sá-Soares (2017) argue that outsourcing can be so fatal due to a breach of information security. This is because the outsourcing company is forced to share critical information to third party agent during outsourcing and in case there is a breach of information security, then the company might suffer substantial losses more so to its competitors.

1. What are the advantages and disadvantages of outsourcing business functions in Hewlett Company?

1. Which business functions are commonly outsourced by Hewlett Company?
2. What are the reasons for outsourcing business activities at Hewlett Company?

This study will employ both qualitative and quantitative methods (mixed approach). This method enables the combination of a set of tools which produces overall results of the statistical analysis (Creswell and Creswell, 2017).

This paper will use a qualitative approach to build an in-depth insight of the research topic. The researcher began by formulating the research questions geared towards providing answers to the topic under investigation. The research questions were developed after a critical review of relevant literature. The study will use a case study design because it is much more effective in circumstances where a detailed evaluation of a single unit is required (Onwuegbuzie et al. 2012 and Garg and Kothari, 2014). By the use of Selective sampling approach, a sample of fifteen directors, executive, and line managers will be selected from a target population of 50 employees of Hewlett Company. In-depth interview technique and small group discussions will be used to collect data. The collected data will then be analyzed using content analysis method.

This paper is to adopt a descriptive research design since this approach emphasizes the significance of the variables being investigated (Taylor et al., 2015). Additionally, the approach is most appropriate in describing the characteristics of a given subject or group of subjects (Kothari, 2009). Primary data will be collected through survey method using structured questionnaires; therefore, the researcher will design structured questionnaires with close-ended questions to allow comparability (Bryman and Bell, 2015). The researcher will deliver the questionnaires by hand to the respondents to fill them and then be picked by the researcher after a week. The target population comprises of the directors, executive and line managers of Hewlett Company. A sample size of 15 employees will be developed using the 10% proposal of Mugenda, and Mugenda (2012) as equal representation of the overall population. Purposive and random sampling method will be used to develop the sample. This approach is to be used because it ensures that all items in the sample are without bias incorporated into the research. The collected data will then be verified for comprehensibility and inclusivity, categorized, coded and tabulated. Statistical Package for Social Science (SPSS version 20) will then be used to analyze the data and then presented in terms of tables and diagrams for easy interpretation.

Research Questions

The researcher is to carry out a pilot study of some four managers of different departments seven days to the actual survey. This will help to affirm the suitability of the proposed research design.

The reliability of the study will be determined using the Cronbach’s Alpha coefficient. According to Kothari (2009), an average of Cronbach Alpha coefficient below 0.7 is reliable. Also, the more the number of items included in the research tool the higher the probability of achieving a stable approximation of data reliability. Data validation will be ascertained in the phase of the coding process using SPSS through coding simple array and limit validation to check for uniformity and order of the input items.

The study is limited to a single company, and the outcomes are likely to be different from other outsourcing companies in other sectors because of the difference in the nature of business operations. The sample size was not only limited to one company but was also not large enough to generalize and apply the findings in a larger context.

The study is expected to take approximately three months beginning on the first week of March to the end of May. Data collection is expected to take most of the research time which is two weeks. This is because it will involve personal dissemination of the questionnaires to all the 20 respondents of various departments, then giving them a span of one week to fill them and then collecting them. Topic selection and write-up will each take eight days because topic selection will involve literature review and the write-up will as well be involving.  The rest of the activities will each take less than eight days to accomplish. The researcher expects to submit a final copy of the report in the last week of May.

Conclusion

The main objective of this study is to analyze the advantages and disadvantages of outsourcing within Hewlett Company. There is a lot of pressure from the current market on the quality, performance, and effectiveness of products, especially in the electronics industry. In response to these needs, it is required that the Management to minimize cost; hence the organizations are exploring new techniques on how to react to these issues. The management is always faced with the tough decision on whether to buy, outsource or make a product. Outsourcing business functions can be regarded as a strategic decision many benefits that are associated with it. An organization can outsource various business functions including human resource Management, ICT, customer care management among others.  Outsourcing has both advantages and disadvantages. Outsourcing helps in minimizing operational costs, enables the organization to focus on remaining activities, enables skill acquisition, improves operational efficiency, and encourages risk sharing. On the other hand, outsourcing can lead to loss of managerial control, can be costly due to changes in market conditions, communication barriers, and can cause a breach of information security. Therefore, an organization should consider the advantages and disadvantages of the activity to be outsourced in order to make the right decision.

Research Design And Methodology

Reference

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