Should a company hire new workers or outsource an HRM function due to Term Paper

Should a company hire new workers or outsource an HRM function due to an increase demand of the companys product - Term Paper Example Should a company hire new workers or outsource an HRM function due to an increase demand of the company’s product? Outsourcing is an organizational trend practiced by most companies and its primary objective is to reduce costs and shorten workloads. It is economically beneficial to outsource an organizational function instead of hiring new employees. This is one simple way to reduce costs of acquiring additional manpower. Activities that can be outsourced include production or manufacturing, management functions like payroll system, financial processing, procurement, distribution and logistics, and other general services functions. Almost any kind of organizational activity can be outsourced but it is not advisable to outsource what is called core activity. Most firms in Europe and the United States outsource production and manufacturing activities. There are benefits for this kind of activity and arrangement on the part of the two companies but there are also drawbacks, for example, the quality of the product might be jeopardized. Some people judge service quality by comparing the service offered by an outsourcing company with the services that they used to have. There is also the disruption on the continuity of the services over a prolonged period of time, added with problems in the course of outsourcing. But through outsourcing, we can also have an improved operational process, although this is not to mean that we can outsource any activity in the organization in order to reduce costs. Abstract This essay will explain a firm’s choice of applying outsourcing to human resource. Instead of hiring new employees, a firm can hire the services of an outsourcing company to provide HRM functions. This is one of the simplest ways to acquire manpower but at the same time it answers to cost-cutting measures of a firm. With so many expenses a firm has to endure, outsourcing is seen as the answer. Moreover, through outsourcing we can institute changes and innovations and improve operational processes with the help of another organization. The question is: is it all positive? No, there are repercussions and drawbacks. Not all processes and functions can be outsourced. Managers and employees of firms that have experienced outsourcing have warned that there are functions that should be executed by managers and employees who are organic in the company. Another disadvantage is that outsourcing jeopardizes quality. Also, firms that outsource core competencies do not see the imp ortance of focusing on employees’ capability and knowledge considering that there is a relation between contented employees and contented customers. Introduction Firms find outsourcing as an easy way to produce products without much costs of production. Human resource is also another area where outsourcing can be done. Outsourcing is a trend in organizations where partnership of suppliers and businesses are involved, and networking is enhanced. There are hosts of other functions that can be done with outsourcing. But there are negative repercussions if outsourcing is not well planned and studied before it is applied. There may be economic benefits in the short term, but in the long run there can be negative effects, and some of these include cultural factors and cultural integration, continuity of skill of employees, and so on. The negative effects can also result into loss of savings or added expenditures on the part of the firm that applied outsourcing to HRM functions. An example of this negative repercussion is that there could be loss of skill on the employees, and some employees can feel insecure of their job that they opt to resign. If there are losses, then what good is outsourcing?