How Outsourcing is affected by the Current Economic Recession

How Outsourcing is touch by the Current Economic RecessionAn investigation into Companies Usage of Outsourcing and a Critical Analysis of How Outsourcing is affected by the Current Economic Recession, Specificall(a)y in relation to northerly Ireland.Aims and ObjectivesThe Aim of this question is to determine whether or not the current frugal recession has affected companies decisions to outsource. It is important to decipher whether or not companies have increase their usage of outsourcing as a direct result of the recession or whether the increase or decrease in outsourcing is due to other factors. The Aim of this enquiry shall be applied in relation to Northern Ireland companies and build a general consensus that Northern Ireland based companies during this time of economic pressure argon increasing their outsourcing. Based on this there shall be three objectives of the look into. These shall beTo determine companies have increased their outsourcing during the unstable economic climate.To determine that this increase is due to the unstable economic climate andTo determine the relation of outsourcing and the unstable economic climate to Northern Ireland Companies. brilliance of the ResearchIn todays volatile and largely unstable economic climate, it is important to note that the recession as it is referred to affects not just large corporations such as banks and multinationals, but ordinary people living in an everyday environment. The state of the scrimping affects the modest corner shop consumer right to the small to medium size business entrepreneur. The word recession has become a word synonymous in everyday language. It is due to this that it can be seen to be important that research is carried out to determine exactly how this has impacted the behavioural patterns of people, businesses and theories.This research is important, and more so relevant, to today than ever before with numerous companies being forced to lash be and overheads, and inevit ably, manpower, as they try to stem the tide of financial loss.The term Outsourcing is subcontracting a service to a third party and the decision to employ this belief is based upon the companies hopes to achieving a uplifteder margin of profit by lowering their running costs. Lankford et al 1999 defines it as the procurement of products or services from sources that ar outdoor(a) to the organisationIt is believed today that firms should aggressively adopt the practice and the practice is almost becoming a given, and consultants presentations talk of a revolution in outsourcing. The academic literary works on the subject has grown in kind. (Lonsdale and Cox, 2000)Outsourcing for businesses has been an integral part of a well oiled operating system for many years. It came to the fore in the mid-eighties and has since been used in business lexicon, and it is today in the midst of the economic downturn that it has been a vanguard of companies value systems.Few management practic es have attracted as much attention as outsourcing is enjoying at the present time (Lonsdale Cox, 2000)The idea of a subcontracting deal to make the most of time and m 1y in the depths of economic downturn would seem akin a perfect opportunity to cut the cost of overheads and use resources efficiently. Faith (2009, p.36) agrees, stating As the recession persists, managements are enforcing stricter budgets. All departments are reviewing their processes to find ways to reduce costs and save m maviny. Outsourcing is an area where companies can limit expenditureResearch into the recession and its effect on outsourcing has never been more important than it is today, and while companies cannot predict when the recession is going to end, and with the increasing uncertain future and the possibility of more volatility, research into this area of business practice is vital.In a historical sense, the United Kingdom has experienced the onslaught of a recession before. The last recession struc k in the eighties, and this is where companies found the advantages of using outsourcing during a period of economic downturn (Charsley, 1986) Within Northern Ireland, research into the recession linked with outsourcing within Northern Irish companies has been under researched and indeed very exactr work has been published.So while periods of boom and bust continue throughout the decades in the worlds economy, research into aspects of the need of cost cutting exercises through outsourcing remain essential. at that place have been many research papers in the area of outsourcing and the implementation of such a business rationale, as there has been in the area of recession, all the same the development of one in relation to the other has only been lightly touched on, and this is one of the main reasons for the importance of research into this common area, and hopefully gibe to academic debate.Critical Literature ReviewA review of literature published suggests that the recession h as caused many firms to reshape and refocus their energies into cost cutting exercises, and one of these comes in the form of outsourcing. The literature suggests that there are pros and cons of such an exercise, and that there whitethorn be a negative impact of such an implementation. This research is tick to highlight the benefits of outsourcing as a discover business tool, especially in a period of economic downturn and that it has increased during recent times in this period of economic instability.Past recessions have changed the way businesses operate and the ability to outsource entire departments have compounded this change. Industrial organisations in the late 1980s and early 1990s experienced a luxuriant environment brought slightly by an increase in internationalisation and a downturn in the economy (Tucci et al, 1997)As a result of cost-cutting efforts during this period, many companies are opting to go the outsourcing route to cover either routine and/or non-core wo rk. (Charsley, 1987) This proposal by Charsley would back up the research to determine that the increase in outsourcing is due to the unstable economic climate.The disintegration, outsourcing and off-shoring of manufacturing and other non-core leads have been seen as irresistible trends (Shi and Gregory, 2003, 2005 Sturgeon, 2002 Arnold, 2000)Outsourcing and the recession appear to come deal in hand when a business is restructuring to save costs. The advantages of such a restructuring and outsourcing during a recession have been highlighted in Joanna Faiths article in Outsourcing becomes luxury in recession where she states that the advantage of outsourcing rather than hiring internal resources is that if the state of the company declines, there is no need to make redundancies This helps stave the negative consequences of firing staff and difference the workforce unsettled, while saving the companys reputation within the market. Mukesh Butani from BMR Advisors in India believes t hat If you outsource you can just terminate or alter the contract in seasons of peak and downturn however Graham Beck of PA Consulting stated that many firms who were involved in multi-sourcing were unaware of the risks. These include the integration of all the suppliers after the multi-sourcing, in spite of admitting that multi-sourcing would drive down costs. (Financial Management, 2009, p.7) PA Consultings outsourcing survey found that with the result of the recession firms are re-evaluating their outsourcing contracts or in effect outsource more elements of their firm.Research has as well as found that Human imaging chiefs have lost control over making outsourcing decisions, as finance directors and chief executives look to rein in costs during the recession (Logan 2009)In January 2009, a study by outsourcing firm Ceridian found that 20% of two hundred and fifty senior Human Resource professionals had the ultimate say in outsourcing recruitment, payroll and benefits for their organisation. Thirty one percent (31%) of the decision making went to the CEOs.Steve Joyce of Ceridian (2009) stated that The credit crunch has left no business function untouched, and it is clear in some organisations now that HR directors are not masters of their own strategy.Barker (2009) believes that In a recession, sometimes it is not assertable to take a long-term perspective, especially where firms are really facing an emergency, and it becomes a matter of survival to cut costs wherever they canCharsley, 1987, states the opportunities brought about by outsourcing are several Charsley saw these as, firstly, management could balance the work force with the load, since contracted employees and can be brought on board or push aside This could be done without the headaches generally involved in changing permanent staff levels.He in any case identified that management can focus on core work and more easily determine actual cost to the organization provided by non-core support units.In his book, Management Consultancy-A Cost Effective Resource Charsley states The ability to determine costs and allocate them across different parts of the organisation alike leave management to consider new structural forms that index enhance the firms overall competitive positionHowever in an interview of 1,000 firms all around the world about their experiences with outsourcing, also by the PA Consulting Group, the results deliver that the most common outcome was a fairly neutral one.As a result of the cost-benefit analysis comparing contract labour to company personnel, many managers were and are becoming more bequeathing to opt for the contractor through outsourcing contracts because of the total cost of continuing the relationship with the company employeeTo summarise, there has been very little research conducted to verify whether or not within Northern Ireland the recession has had a direct impact on the decision of companies to outsource more of their business. B y conducting further research into this field the function of this investigation is to shed more light on the topic as it is of high significance in this turbulent economic climate. Many authors agree that outsourcing is an integral part of the business acumen. The shaping and refocus of business objectives because of the recession has led to this. However there a smattering of experts who believe that outsourcing has led to the relationship between the company and employee being stretched.Proposed MethodologyThe study being undertaken can be described as an exploratory research study. The research blueprints to find and explain the relationships between the outsourcing and the recession amongst companies in Northern Ireland. The research aims to assess the phenomena of companies outsourcing to cut their overheads and to maximise profit in the time of high economic uncertainty, and to find out what is happening to seek new insights to ask questions and to assess phenomena in a ne w light (Robson, 2002 taken from Saunders, 2007) This research propose is set to explore information and develop theories from which will directly relate to previous literature. This is an inductive approach.The use of primary sources for the purpose of this research is decided on the fact that the researcher can focus on specific issues and have a higher level of control over how the information is pick uped and used. The research can be implemented on a strict timescale.A survey strategy shall be implemented in-order to meet the aims and objectives of the research. Survey strategies are frequent in business and management research and are frequently used to answer questions raised by previous research. The benefits of a survey strategy are that they allow a large amount of data to be collected from a large population in an economical way. Survey data is also seen as straightforward to comprehend and illustrate.To conduct this survey, questionnaires shall be drawn up and sent t o companies based around Northern Ireland. In social research, questionnaires are one of the most widely used in data collection. For the questionnaires a sample shall be selected from the wider population. The population in this case is all the registered companies in Northern Ireland. Because it is not feasible to send questionnaires to all the companies in Northern Ireland, for the purpose of the research, an appropriate sampling frame shall be drawn up. This is a complete list of all the cases from which the sample shall be made from. The sampling base shall be unbiased, current and accurate. Upon collaborating a suitable sampling frame the close stage of the process will be to decide how many (the sample size) and the rule by which the companies shall be chosen.Large sample sizes can be sought without the burden of major costs, and produces quantifiable data. In this instance, systematic sampling shall be used. The reason behind this is it works well with either a small or la rge number of cases. It is also suitable for geographically dispersed cases. Actual lists are not always needed either. The relative costs are low and is relatively easy to explain.The next stage of the research having identified the method by which the data shall be collected, the sample and the sampling technique is to decide upon the technique of data collection. For this research it is proposed to collect the data via postal questionnaire. This is decided upon the characteristics of the respondents and the size of the sample.Having designed the questionnaire the next step is controling. The purpose of piloting the questionnaire is to refine it so that the respondents have no ambiguity as so how to answer the questions and the questionnaire exhibits face validity thus ensures accurate feedback of results. In addition to this it shall provide some form of validity to the questionnaire and the results. Reliability of the results is the main aim here. Initially to pilot the questio nnaire, a group of experts in the field of which the questionnaire is to given to, should be asked to complete it. Allowing suggestions to improve the questionnaire would further enhance the content of the questionnaire. Upon completion of the pilot, the necessity adjustments can be made. The pilot should also ensure that the structure of the questions is correct and there is an established flow allowing an easier understanding of what is being asked. For the purpose of this research it would be suggested that ten pilot questionnaires be distributed amongst a field of experts to ensure that any trace of ambiguity or misinterpretation be eliminated before the actual questionnaires are distributed. The responses of the questionnaire will provide an idea of reliability and sustainability. It is good research practice to follow through with a pilot of the questionnaire.The final stage is administering the questionnaire. Attempts must be made to maximise the response rate. In order to d o this, factors such as appearance, type of delivery and incentives, should be considered.In order to achieve the aims and objectives of this research, the key data collection method employed shall be interviews. For the purpose of the research the key figures to be interviewed shall be managers from the Human Resource (HR) departments. Reasons for this are that evidence from front research suggests that it is this department who are in charge of outsourcing despite Logan, (2007) suggesting that many companies are taking this responsibility away from the HR departments.To conduct the interview for the purpose of the research a semi- organize interview shall be implemented as opposed to a fully structured one. The drawbacks of the fully structured interviews in research like this are the fact that the answers that may be given could be irrelevant, providing little or no use to the research, the questions are normally closed and thus does not allow freedom to operate outside the cons traints of the questions and removes the interviewers ability to back track and highlight certain topic areas.As questionnaires shall be produced and sent out to conglomerate companies, the need for a structured interview is further outweighed as fully structured interviews are broadly similar to structured questionnaires.To complete the semi structured interview the main areas of the research to be covered shall be worked out in advance so the overall focus of the interview can be guided by the researcher.The advantage of using the interview situation is that the response rate can tent to be higher than perhaps if requesting information in a non face to face environment. The ability to judge the seriousness of the answers can be helpful in interpretation as well as noting system language.The planned sequence of questions may change during the semi structured questionnaire. This is a huge advantage, as a number of topic areas may covered concurrently and the interviewee may rever t back to a question to be covered in more detail. The naturalism of conversation can take effect and allow the interviewee peace of mind.Before the interview takes place, the interviewee shall be asked whether or not it is possible to ask for the interview to be recorded for further evaluation. This would be an advantage as the flow of the interview shall not be disturbed.In-order to gain access to the HR department within the companies, adequate time shall be allowed to let the organisations allow feedback, and the talk follow up clutch. A clear account of purpose shall be given to the company. This should clear all concerns regarding credibility. The gatekeeper is the sole source through which contact should be made to gain access to the interviewee. This is done to ensure feasibility of the actual interview.The analysis of the semi structured interviews shall take the form of transcribing the conversations and from that withdrawing key themes and concepts which may help with t he implantation of the research objectives. This is known as grounded theory approach, a widely used method for generating a theory from research. The data derived from this research method shall be qualitative data, and shall emerge from the data collected rather than being imposed.Having completed the transcriptions of the interviews, and the keys themes of note are recognised, the information must then be change into a form of quantifiable data which allows easier understanding. This involves coding. The data is split into segments which are relevant and meaningful to the overall research and the aims and objectives. The purpose of this is to highlight any trends which may appear from the qualitative data and add weight to what the research is investigating in a statistical manner. As more data is analysed the codes may change. The broadcast used to carry out statistical analysis is SPSS.Time ScaleThe research shall commence on January 11th 2010 and will be collated over the ma nnikin of the following fourteen weeks. It shall conclude on April 16th 2010. Here is a detailed plan of the timescale of each proposed stage of research. While conducting the research it will be important to note that there will be time allowed for contingencies should there be any unforeseen circumstances occur.Due to Undertake performanceActivityWeek 1-3Background readingWeek 3Construction of QuestionnaireWeek 4Pilot questionnaire/Select Sample SizeWeek 5Feedback from pilot questionnaire and modify accordinglyWeek 6Perform final questionnaire, allow three weeks for postal surveys to return and begin interviewsWeek 9Collect data from Postal Questionnaires. Begin interview Transcriptions.Week 10Begin coding of questionnaire resultsWeek 12Results and DiscussionConclusion and recommendationsWeek 14Final compose prepared and Submitted