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Outsourcing Essay

923 words - 4 pages

Since its inception more than 20 years ago, IBM has been a leader in its field. Despite this success, over the course of the last several years, IBM has found that in order to keep itself competitive, corporate restructuring has been necessary. As such, practices such as downsizing and outsourcing have become quite popular for the company. To this end, Johannes and Armstrong (2002) report that IBM has recently signed a deal with Fidelity's Employer Services Company to outsource its human resource department. Of the IBM's 1,200 human resource employees, Fidelity will retain 450. As such, with one fail swoop IBM downsizes its company and outsources some of its peripheral work.Even though Johannes and Armstrong do not take a stance in their article regarding the practice of outsource--choosing instead to focus only on the facts of the IBM/Fidelity deal--industry wide, the process of outsourcing carries with it a negative connotation. Most employees feel threatened by the process and most laymen feel that companies are simply being stingy in their willingness to share the wealth. While these images are indeed quite pervasive, as many corporate leaders have found over the course of the last two decades, outsourcing can have a number of benefits for the organization that can not only improve the company's bottom line, but also make the organization a better place to work for those that remain.Looking at the benefits of outsourcing from the perspective of IBM and organizations in general, it can be argued that there are three important benefits to the process: a focus on core competencies; improve services for employees; and reduced costs for the organization. By outsourcing peripheral work, such as human resources, companies are better able to focus on their core competencies. What this effectively means is that by outsourcing peripheral services, companies are able to function on a much leaner organizational structure. This allows change to occur at a much more rapid pace, which in turn facilitates the company meeting its core objectives.To illustrate the impact of this benefit, a recent article published in CA Magazine (2004) notes: "Furthermore, 35% of respondents said outsourcing allows their companies to implement strategies and change at a faster rate. And more than half (57%) the executives surveyed said they experience control gains within the first eight months of an outsourcing agreement" (p. 12). This change has been so dramatic for organizations that most are now seeing outsourcing as a means for creating change within the organization, rather than just simply cutting costs: "Industry leaders are beginning to view outsourcing as a prescription for change versus an antidote to rising costs" (p. 12).Although streamlining the organization has a number of benefits for improving the efficiency of the company, it can also serve to improve the financial status of the company. Interestingly,...

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