Outsourcing (Australia)
Kraut & Korman (1999) cite the 1997 Survey of Human Resource Trends where 1700 organisations were surveyed. The results indicated 50% of respondents outsourced more HR functions than they did three years ago. Mike Johnson (1997) maintains outsourcing isn't a new idea. He sees the concept of outsourcing as an ever-changing process, and notes how we as individuals 'outsource the things we cannot do ourselves or are too busy to do...Just like companies...' The work of Peters, Greer & Youngblood (1998) also shows that outsourcing has been around for a long time. However, they add that it is now far more widespread, and part of an increasing trend. This increase can be seen both in the number of organisations participating in outsourcing, and the number of functions that are being outsourced.Outsourcing has fostered the concept of 'core' activities staying within an organisation (Domberger 1998). According to the Australian Government Publishing Service (1996), outsourcing is when an organisation opts to have an 'activity or function' performed for them by an external agency, which has overall responsibility for the activity. Directly related to core competency in outsourcing is the desire for increased efficiency. Similar
This makes it necessary to conduct extensive research into prospective contractors to be familiar with their particular culture. There are transaction costs in researching, negotiating, administering, and controlling numerous contractors (Peters, Greer & Youngblood 1998). Monitoring and transition costs represent other areas of concern. Dare Jennings and Andrew Rich (the two owners of Mambo) made the strategic decision to separate production and design by outsourcing the production side of the business to Gazal Apparel. In addition, Laabs says that no-one ever hears about the 'botched systems', the missed deadlines and the lack of communication that leads to negative outsourcing experiences. This move enables Tripac to concentrate on making the plant as efficient as possible, and the decision has been so successful that Tripac says it will 'never revert to a standard, directly employed workforce'. ly, Ivancevich (1998) defines outsourcing as 'the practice of hiring another firm to complete work that is important and must be done efficiently'. When an organisation becomes more flexible it is better able to adapt to changing opportunities and to handle fluctuations (Johnson 1997; Keppler 1998). the challenge is deciding what your secret is'. Ivancevich (1998) agrees a growing number of firms are outsourcing HRM activities. Other reasons for cost saving include the ability to provide services at a lower cost than is feasible internally, being able to make costs more predictable and therefore controlled, and transforming to variable costs. The Australian Outsourcing Summit 2000 focused on this importance, and on the emergence of outsourcing as a powerful tool for transforming organisations and driving innovation (Corbett 2000). Contract workers may have a lower level of commitment, may turn out to be poor quality workers, and may be less company oriented (Johnson 1997).
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Acceptance Essays
