The Effects of Outsourcing on Organizational Performance

In: Social Issues

Submitted By vidocq
Words 16447
Pages 66
CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY
Firms need to constantly renew and develop new capabilities and resources as they respond to challenges in their environment. These resources can be developed in-house or developed among strategic partners or purchased. Outsourcing entails the delegation of tasks or jobs from internal production to an external entity such as sub-contractor. It is the process of placing the development of system components in another development organization with the aim of achieving cost reduction and a gain in terms of production capacity and development. The main striking features of the Nigerian economy today is that available infrastructures of all types fall far below the quantities and qualities required. This naturally results in overstretching of most facilities. Despite huge potentials in almost every sector, poor overall economic performances have made it inevitable to tap unduly and at high cost and less profit than they should be. According to Alaofin (2003), “operating costs are high in Nigeria inspite of relatively cheap labour hence, running any business according to international standards is therefore costly”. He further stated that facilities management as an area is just evolving in Nigeria through janitorial services which is the best development component, has been around for nearly (5) five decades. Security services are in the stage of development. He stated that there are various merits of outsourcing which include better focus, economics of scale in purchasing and specialization. Dalhat(2009) in analyzing the development of a service industry coalition in Nigeria stated that services regulatory bodies exist, and active with existence of a strong professional class. That a well developed services sector enhances competition, leading to stimulation of economic activities and ultimately…...

Similar Documents

Improving Organizational Performance Paper

...Improving organizational performance Paper PSY/428 Improving organizational performance Paper The current economic health of business around the world leaves little to no room for error concerning productivity. With this the science of organizational psychology can make a positive change of the company (Jex & Britt, 2008). The following paper will illustrate what cause and effects can have on a company through the use of the improving organizational performance simulation. In the following the concepts of choices made during the simulation will be discussed; as well, what motivational theories to use and what are the affects to reduce workplace stressors. In the first part of the simulation the student is introduced to the organization as an organizational psychologist for hire. The psychologist is hired to improve the failing company before it is too late to recover. Upon introduction to the company the first search for information done was to implement an JDI (job descriptive index), along with profiling the personal, and viewing a blog that was available (Apollo Group Simulation, 2005). With the information that was available, the members of the company were not happy because that the organization is not living up to his or her expectations prior to joining, and his or her suggestions are not taken seriously. This was the correct choice according to the simulation. As the simulation did demonstrate through the survey, and blog that the employees...

Words: 1802 - Pages: 8

Impact of Outsourcing in Improving Productivity in Modern Organizational

...Impact of Outsourcing in improving productivity in modern Organizational Introduction In today’s world of ever increasing competition, organizations are forced to look for new ways to generate value. The world has embraced the phenomenon of outsourcing and companies have adopted its principles to help them expand into other markets (Bender 1999). Strategic management of outsourcing is perhaps the most powerful tool in management, and outsourcing of innovation is its frontier (Quinn 2000). Outsourcing is a management strategy by which an organization delegates major, non-core functions to specialized and efficient service providers, or as Corbett (1999). President of Michael F. Corbett and Associates asserts, Outsourcing is nothing less than the wholesale restructuring the corporation around our core competencies and outside relationships. The traditional outsourcing emphasis on tactical benefits like cost reduction (for example, cheaper labor cost in low-cost countries), have more recently been replaced by productivity, flexibility, speed and innovation in developing business applications, and access to new technologies and skills (Greer, Youngblood, and Gary 1999; Bacon 1999). The market for providers of outsourced services of all types is growing rapidly. In 1996, American firms spent over $100 billion in outsourced business activities (Casale and Overton 1997). Other estimates place the total U.S. market for outsourcing at more than $300 billion by the year 2001 (Dun......

Words: 4012 - Pages: 17

Effects of Outsourcing on Organization Performance

...ABSTRACT This paper examines how outsourcing affects a business positively and/or negatively.    During this paper I will discuss the advantages and disadvantages of outsourcing. There are many reasons why a company may choose to outsource a particular function of their business. The end result in mind is saving time and/or money. Before a company considers outsourcing it should first do a competitive analysis of its company before initiating an outsourcing analysis. The company should also consider the advantages and disadvantages of outsourcing. The advantages are the following: reduction in critical resources, provides ability to focus on core business, yields cost savings, provides flexibility, reduction overhead costs, etc.   The disadvantages are as follows: loss of managerial control, hidden costs, threat to security and confidentiality, quality problems, tied to financial well-being of another company and bad publicity and ill-will. Outsourcing is the strategic use of outside resources to perform activities that are usually handled by internal staff and resources. By using a well-managed outsourcing agreement, companies can gain in markets that would otherwise be uneconomical. This study was designed to explore why companies are undertaking outsourcing projects and identifies factors that may facilitate or impede outsourcing projects. In addition, this article examines the relationships between outsourcing strategies and organizational performance. The results show......

Words: 866 - Pages: 4

Effects of Outsourcing on Organisational Performance

...PRACTICES AND PROCEDURAL DIFFERENCES BETWEEN PRIVATE AND PUBLIC SECTOR PROCUREMENT 1. Regulation by law in public sector while in private practices and procedures are governed by internal policies of the entity 2. Procedures are bureaucratic and lengthy in public sector while in private sector lead times are short 3. Competitive bidding distinctively practiced in public sector, in private sector any other sourcing method other than competitive bidding can be applied 4. Public funds are used to meet public sector activities in private sector funds from shareholders are used 5. In public sector unfairly treated bidders are assisted by an appeals board, in private sector aggrieved bidders have no recourse 6. Public procurement is geared towards provision of quality and efficient services, in private sector procurement is geared towards increasing rate of return 7. In public sector supply chain management is more theoretical than practical, in private sector it is practiced 8. In public sector the procurement systems are more manual, unlike in private sector where in most case systems are automated 9.In public sector there are various committees created for the purpose of ensuring transparency and accountability in the process, while in private sector one or very few committees exist. 10. Professional qualifications and membership is highly emphasized while in private less emphasized 11. Negotiation in public sector is limited to 2 committees; in private sector......

Words: 476 - Pages: 2

Hr Strategy and Organizational Performance

...HR Strategy and Organizational Performance [Name of Writer] [Name of Institution] HR Strategy and Organizational Performance Introduction Human resource management is in the selection of policy and techniques related to human resource management agency. Taken together, these techniques and preferences are messages to employees, managers and interested persons abroad about the value of the agency placed on human resources. Unfortunately, international managers have had to adopt sensible policies in the field of organization for fixing the responsibility and cost control. First, employers continue to place administrative employees, Professional, scientific and technical through the civil service systems for important positions. The state of relatively high positions, security, payment and benefits that go with these positions are considered essential for productivity and long-term retention of these employees. This includes preventive education through programs for employee wellness and treatment plans by employee health. Second, employers have attempted to put caps on benefit costs and legal liability risks by increasing the use of working mechanisms secondary (such as employment contract or contingent) to pair the changing job titles. While the phenomenon of the working contingent recognized as characteristic of the modern workforce, the precise number of contingent workers are in dispute between staff and managers economists. Estimates ranging from 2 percent to 16......

Words: 3100 - Pages: 13

Performance Excellence and Organizational Change

...PERFORMANCE EXCELLENCE AND ORGANIZATIONAL CHANGE Performance Excellence Profile: Park Place Lexus Click below link for Answer http://workbank247.com/q/performance-excellence-and-organizational-change/3411 http://workbank247.com/q/performance-excellence-and-organizational-change/3411 At its two locations in Plano and Grapevine, Texas, Park Place Lexus (PPL) sells and services new and pre-owned Lexus vehicles, and sells Lexus parts to the wholesale and retail markets. PPL is part of the family of Park Place Dealerships (PPD), which includes eight dealerships with 12 franchises. In 1994, PPL began benchmarking business practices outside of the automobile industry, with the intent of emulating the best business practices it could find and bringing innovation to the industry. Four years later, the company conducted its first internal assessment using the Baldrige criteria for performance excellence to identify areas for improvement, and adopted the brand “Experts in Excellence” as a sign of its dedication to quality. Today, PPL ranks among the country’s top Lexus dealers. With its mission, “To provide an extraordinary automotive purchase and ownership experience” as a foundation, the dealership’s “House of Quality” graphically depicts the organization’s direction and represents its culture. The four Core Convictions—integrity, outstanding client experience, commitment, and winning—provide the structure of the house. Known as “The Big Hairy ...

Words: 10049 - Pages: 41

Organizational Performance

...Research Paper: Knowledge Management and Organizational Performance By James Smith This is a custom research paper writing on Knowledge Management and Organizational Performance A feature of the modern era therefore is the extent to which change is seen as being ubiquitous. This notion of change pervades both the realm of the popular as well as more analytical texts. Clearly the reasons for societal changes are complex but according to Lash and Urry (1987) they can broadly be explained by the liberalization of global capital and the information technology revolution. Lash and Urry (1987) characterize these changes as heralding the emergence of a new form of capitalism, that of disorganized capitalism, while other writers consider the contemporary period to amount to a rupture with modernity itself. Any change in society should also impact upon the way in which knowledge is distributed and organized within that given society. For a successful company however it is of course not sufficient to respond to changes in the environment; rather it is desirable to anticipate those changes and to adapt before anyone else. This is a source of competitive advantage for an organization. Thus change needs to be a continual process which takes place iteratively rather than as discrete events. The capacity to change in this way involves the whole organization and requires an understanding of how organizations can learn to adapt continually. More particularly it requires the......

Words: 1018 - Pages: 5

The Impact of Organizational Performance

...The Impact of Human Resource Management Practices on Perceptions of Organizational Performance Author(s): John T. Delaney and Mark A. Huselid Source: The Academy of Management Journal, Vol. 39, No. 4 (Aug., 1996), pp. 949-969 Published by: Academy of Management Stable URL: http://www.jstor.org/stable/256718 . Accessed: 13/08/2013 00:20 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. . Academy of Management is collaborating with JSTOR to digitize, preserve and extend access to The Academy of Management Journal. http://www.jstor.org This content downloaded from 128.248.155.225 on Tue, 13 Aug 2013 00:20:09 AM All use subject to JSTOR Terms and Conditions RESEARCH NOTES ? Academy of Management Journal 1996, Vol. 39, No. 4, 949-969. THE IMPACT OF HUMAN RESOURCE MANAGEMENT PRACTICES ON PERCEPTIONS OF ORGANIZATIONAL PERFORMANCE JOHN T. DELANEY University of Iowa MARK A. HUSELID Rutgers University In 590 for-profit and nonprofit firms from the National Organizations Survey, we found positive associations between...

Words: 9719 - Pages: 39

The Effect of Organizational Culture on Employee Performance at Barclays Bank, Ghana

...UNIVERSITY OF PROFESSIONAL STUDIES ACCRA THE EFFECT OF ORGANIZATIONAL CULTURE ON EMPLOYEE PERFORMANCE AT BARCLAYS BANK, GHANA TABLE OF CONTENTS CHAPTER ONE: INTRODUCTION 1 1.1 Background of the Study 1 1.2 Statement of the Problem 2 1.3 Purpose of the Study 3 1.4 Objectives of the Study 3 1.5 Research Hypotheses 4 1.6 Significance of the Study 4 1.7 Scope and Organization of the Study 5 CHAPTER TWO: LITERAURE REVIEW 7 2.1 Introduction 7 2.2. Theories of Organizational culture 7 2.3 Other theories 13 2.4 Empirical Literature Review 23 2.5 Operational Definitions of Terms and Constructs 29 2.6 General Overview of the Banking Sector 30 CHAPTER THREE: METHODOLOGY 32 3.1 Introduction 32 3.2 Design of the Study 32 3.3 Population and Sampling 33 3.4 Sources of Data 34 3.5 Study Instrument…………………………………………………………………………………………………....35 3.6 Analytical Techniques…………………………………………………………………………………………...35 3.7 Analysis of Data 34 3.8 Variables…………………………………………………………………………………………………………………36 3.8.1 Dependent Variables………………………………………………………………………………………36 CHAPTER FOUR: RESULTS AND DISCUSSION 40 4.1 Introduction........................................................................................................40 4.2 Data presentation………………………………………………………………………………………………40 4.3 Testing of hypothesis 41 4.4 Findings 47 CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 56 5.1......

Words: 5888 - Pages: 24

Factors Influencing Organizational Performance

...leadership along with the other factors that can have significant relation with organizational performance in the context of Mirage Company. Our aim is to understand how transformational leadership can help to increase organizational over all performance along with other factors. Introduction Mirage Company started its journey in the year 2000. The company is locally owned and its operations are confined in the borders of Bangladesh. Basically, it is a High-tech company. It manufactures various software programs and provides building automation and security services. As we know there are some factors that are significantly related with an organizations overall performance. Such factors include IT, trust culture, learning strategy, flexible structure and design, and transformational leadership. If we think in the context of Bangladesh transformational leadership is quite new and the other factors are very obvious for an organization. Recently, Mirage Company’s organizational performance is declining. Therefore, our objective is to investigate that transformational leadership along with the other factors have any significant relation with organizational performance in the context of Mirage Company. Problem Statement In the earlier study Rhodes, Hung, Lok, Lien, and Wu (2008) noted that IT systems had the most significant relationship with organizational performance. Though, the organizational performance of Mirage Company is reducing despite having a comprehensive IT......

Words: 2388 - Pages: 10

Effects of Informal Group in Organizational Performance

...THE FORMAL EFFECTS OF INFORMAL GROUPS IN AN ORGANIZATION We know that groups are vital to the understanding of organizational behavior because they are the building blocks of the larger organization. In today’s organization, where productivity and efficiency demand collaboration within and across functional, physical and hierarchical boundaries, collaboration in employee networks has become critical to innovation, and to both individual and company performance. The heavy emphasis on teams and group decision making in today’s organizations only increase the importance of understanding teams and groups for managers. As we have discussed in our class, groups are usually divided into formal and informal groups. Formal group is one deliberately formed by the organization to accomplish specific task and achieve goals. And most managers would put so much emphasis on the creation, maintenance and control of formal structure in getting things done to achieve organizational objectives. According to Parker and Cross (2004), most managers have little understanding of how their employees actually interact to get work done. In fact, organizational charts fail to reveal the often hidden social networks that truly drive or hinder an individual’s performance. Mullins (2010) articulates that informal groups are very powerful social net works which are constructed in response to and through actions of their members. Mullins (2010) further articulates that managers and supervisors......

Words: 1403 - Pages: 6

Strategic Capabilities and Organizational Performance

...not have or have difficulty in obtaining. In turn this helps explain how some organisations are able to achieve superior performance compared with others. They have capabilities that permit them to produce at lower cost or generate a superior product or service at standard cost in relation to other organisations with inferior The resource-based capabilities.1 These concepts underlie what has become known as the resourceview of strategy: the based view of strategy2 (though it might more appropriately be labelled the competitive advantage ‘capabilities view’): that the competitive advantage and superior performance of and superior performance an organisation is explained by the distinctiveness of its capabilities. of an organisation is The chapter has six sections: explained by the distinctiveness of its capabilities ● Section 3.2 discusses the foundations of strategic capability and considers the distinction between resources and competences. ● Section 3.3 is concerned with a vital basis of strategic capability of any organ- isation, namely the ability to achieve and continually improve cost efficiency. ● Section 3.4 considers what sort of capabilities allow organisations to sustain competitive advantage over time (in a public sector context the equivalent concern might be how some organisations sustain relative superior performance over time). ● Section 3.5 discusses how the concept of organisational knowledge relates to strategic capability......

Words: 18530 - Pages: 75

The Effect of Outsourcing on Organisational Performance

...not be acting concerned you have to imagine the company will take steps to compete. That may not mean matching prices with Wal-Mart -- there are parts of the Whole Foods shopping experience worth a certain premium -- but it should mean lower prices. The Fresh Market will likely have to follow along, which may be a challenge as it lacks the scale to force lower prices on many vendors or offer large enough volume buys to get better deals. The winners here should be consumers -- specifically Wal-Mart customers who now have access to a better quality of groceries at reasonable prices. Wal-Mart may not be a natural fit with organic foods but if its customers say they want them and can buy them at reasonable prices, that should have a ripple effect leading to better health, stronger farms, and overall larger scale and lower prices to produce organic goods. Apple Watch revealed: The real winner is inside Apple recently revealed the product of its secret-development "dream team" -- Apple Watch. The secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see where the real money is to be made, just click here! John Mackey, co-CEO of Whole Foods Market, is a member of The......

Words: 1166 - Pages: 5

Improving Organizational Performance Paper

...Improving Organizational Performance Kyle Petty PSY/428 July 27, 2011 Dr. Jerry Punch Improving Organizational Performance The Airdevils is a stunt organization whose quality of performance has plummeted in past two years. The founder, Celsey, has made some assumptions that the performance decline is a reflection of the heavy recruitment throughout the year and the unfamiliarity between the team members. Celsey was confident that the team members of Airdevils would resolve matters with passage of time; however, after two years the problems surfaced, matters have become worse and the time had come to figure out the root cause of the problems. Celsey administered the Job Description Index (JDI) survey to Airdevils employees and the results reflected a very low-level of job satisfaction, especially the stunt performers (Apollo Group Inc, 2005). The organization, through an outside consulting firm progresses through four phases to address and improve employee’s job performance. In phase one the Airdevils hired Dream Teamworks (DT) to assist in identifying the reason for the low job satisfaction in the stunt performers group. After interpreting the JDI survey DT concluded the cause of low job satisfaction among stunt performers was the lack of exciting challenges in their current job profiles. The main driver for this is the rigid organizational structure that has......

Words: 1527 - Pages: 7

Effects of Outsourcing

...What is outsourcing? We have all heard the term thrown around but what does it really mean? Outsourcing is defined as contracting, sub-contracting, or 'externalizing' non-core activities to free up cash, personnel, time, and facilities for activities where the firm holds competitive advantage(BD,09).Outsourcing happens when company’s choose to purchases their needed products and or services from an outside supplier ( mainly other countries), rather than doing the same work within their own facilities. Why companies outsource. The main reason companies outsource is because it saves them money. Many different types of jobs are outsourced, IT, telecommunications, auto manufacturers, physicians and so on. Outsourcing by General Motors to avoid high wages paid to auto workers was a major issue with the United Auto Workers union in the 1990’s. Companies view outsourcing as a way to drastically cut their cost when it comes to paying for supplies, facility’s and employees. Company’s also save money because they do not have to pay for healthcare or worry about keeping up with OSHA regulated standards. Here are the top five reasons companies outsource: 1. Reducing Costs - This is the number one reason why companies outsource. In most situations you can find cheaper labor through outsourcing and if the quality level is the same there is no reason why you should not outsource. 2. Improved Business Focus - By directing a part of the work towards outsourcing you gain......

Words: 1098 - Pages: 5