OUTSOURCING HUMAN RESOURCE FUNCTIONS AND PERFORMANCE
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
In the 1990s, outsourcing in human resources moved from employing payroll processing businesses to handing off duties that were traditionally handled by assistants and professionals in the field, such hiring, arranging benefits, and handling unemployment claims. While many firms outsource just one procedure, some small businesses outsource their whole human resources department. For one reason or another, small enterprises to huge corporations determine that outsourcing human resources activities is a strategy to increase productivity and reduce employment costs. For large companies with thousands of employees, outsourcing a task like payroll processing may be more convenient than hiring two to three payroll clerks and investing in complex equipment, or hiring a company that specializes in payroll processing (Elmuti, 2003). While the company is concentrating on other issues related to beginning a new firm, small businesses may determine that outsourcing human resources processes is more affordable and effective than creating a human resources department (Elmuti, 2003).
.
As small business owners balance the benefits and drawbacks of outsourcing human resources, organizational performance is a crucial factor to take into account. According to one school of thought, a company can concentrate its efforts and resources on creating the product it sells. As a result, a firm may focus its resources on engineering and research and development rather than hiring new employees, managing employee records, and performing other HR-related duties. The second school of thinking, which focuses more on talent and human capital, holds that a business can find itself lacking the talent necessary to establish an effective human resources division. In this instance, human resource outsourcing overcomes the problem businesses encounter while looking for an internal human resources specialist. In the first case, a company focusing on product design and sales may decide that the cost of outsourcing human resources can be readily justified by paying greater attention to product sales. An organization that lacks the necessary leadership skills for a human resources department can justify the cost of human resource outsourcing by having faith in the level of competence that these businesses provide.
Without needing to make investments in people and technology, a well-designed human resource outsourcing plan can enable firms to concentrate on their core capabilities and boost productivity (King, 2007; Lau & Zhang, 2006). Also, by using this production approach, businesses can increase their profitability and improve their ability to serve both domestic and foreign clients (Maidment, 2003). As an illustration, consider Nike Inc., which produces only the essential parts of the “Nike Air” product locally and outsources almost rest of its shoe production. Nike Inc. can now completely concentrate on its core skills, including manufacturing design, marketing, distribution, and sales, as a result of this outsourcing (Entrekin & Court, 2001).
1.2 STATEMENT OF PROBLEM
In an effort to boost organizational performance, improve service and product quality, shorten production cycle times, cut costs, raise focus on key competencies, and outsource an ever-growing range of tasks, including human resource services, in recent years. Organizations appear to be concentrating on a small number of tasks and hiring outside vendors to handle the rest.
Despite the trend toward outsourcing human resources, there is little proof that it improves performance. Both persuasive arguments for and against outsourcing as a strategy for gaining a sustainable competitive advantage have been made. On the one hand, firms may be able to better concentrate on their most value-creating operations by outsourcing human resource management chores to specialized groups, maximizing the potential effectiveness of those activities. Moreover, expenses may decrease and investments in facilities, equipment, and labor may be scaled back as outsourcing increases. A greater reliance on outsourcing, on the other hand, may result in less innovation (Kotabe, 1992), potential competition from outsourcing partners (Bettis et al., 1992), and a loss of control over the work at hand, according to anecdotal evidence. Outsourcing’s consequences on performance are so unknown. Nonetheless, the researcher is investigating how Stanbic IBTC Bank Plc’s organizational performance is impacted by outsourcing human resource services.
1.3 OBJECTIVES OF THE STUDY
The goals of this study are as follows:
to investigate how Stanbic IBTC Bank Plc’s organizational performance is affected by outsourcing human resource services.
to determine the advantages of outsourcing Stanbic IBTC Bank Plc’s human resource services.
to determine the connection between organizational success and human resource outsourcing.
1.4 RESEARCH QUESTIONS
What effect does outsourcing human resource tasks have on Stanbic IBTC Bank Plc’s organizational performance?
What advantages does Stanbic IBTC Bank Plc. gain from outsourcing its human resource operations?
What connection exists between organizational performance and human resource outsourcing?
1.5 HYPOTHESIS
HO: In Stanbic IBTC Bank Plc, there is no connection between outsourcing human resource operations and organizational success.
HA: In Stanbic IBTC Bank Plc, there is a considerable correlation between outsourcing human resource operations and organizational performance.
1.6 SIGNIFICANCE OF THE STUDY
The relevance of this study is as follows:
The results of this study will be helpful to the management of Stanbic IBTC Bank Plc and all other corporate organizations in Nigeria in determining how they might use outsourcing of human resources as a strategy for improving the efficiency and performance of their companies.
This study will also be used as a resource for other academics and researchers who are interested in conducting additional research in this area, which, if put to use, could lead to the development of fresh explanations for the subject.
1.7 SCOPE/LIMITATIONS OF THE STUDY
The goal of this study on the effect of outsourcing human resource services on organizational performance at Stanbic IBTC Bank Plc is to determine how outsourcing human resource functions has affected the efficiency and performance of the organization.
RESTRICTIONS OF STUDY
Financial constraints – A researcher’s ability to find relevant materials, literature, or information and collect data efficiently is often hindered by a lack of funding (internet, questionnaire and interview).
Time restraint: The researcher will do this investigation together with other academic activities at the same time. As a result, less time will be spent on the research project.
REFERENCES
Outsourcing and industrial decline, Bettis RA, Bradley SP, and Hamel G. 1992;6(1):7–22 in Acad Manage Exec.
D. Elmuti (2003). The alleged effects of outsourcing on business performance. 18(2), 33–41, American Journal of Business.
L. Entrekin and M. Court (2001). Practices in human resource management: Adaptation and change in a globalized world. Worldwide Labor Organization.
King, W. R. (2007). Effects of international sourcing on the future IS organization. 121–128 in Information Systems Management, 24(2).
Kotabe M. R&D, manufacturing, and marketing interactions in global sourcing strategy. 1992: Quorum, New York.
Zhang, J., and Lau, K.H. (2006). driving forces behind and barriers to outsourcing in China. 36(10, 776–792 International Journal of Physical Distribution & Logistics Management.
The Maidment, F.H. (2003). using people (13thed.). McGraw-Hill/Dushkin: The United States of America.
Leave a Comment