HRM Assignment 10 : HRM and Personnel Management

{ Posted on 7:53 PM by Ariel Serenado }
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In this context, let’s first review the differences and similarities of Personnel Management and Human Resource Management. Probably, the people behind personnel management and human resource management are the personnel manager and the human resource manager. By their functionalities we may be able to identify their differences and similarities.

The function of a personnel manager usually begins with the staffing process. The manager may be focused on screening and interviewing applicants, with an eye to placing individuals with the right skill sets in the right position within the company. Along with placement, the HR manager may also oversee, or at least be involved in, the creation of entry level training programs, as well as continuing education opportunities for existing employees. Determining company policies and procedures as they relate to personnel is another important aspect of the personnel management process. HR functions often include drafting vacation, sick leave, and bereavement policies that apply to all employees. The personnel management team is also often responsible for managing any healthcare program provided to the employees as well.

One aspect of company organization that needs the input of effective personnel management is the drafting of a company handbook. Establishing operation policies and procedures, requirements for employment, commendation and disciplinary procedures, and even something as simple as a dress code has to be compared with state and federal guidelines before the handbook is ready for release to the company at large. Personnel managers and the HR staff are ideal for drafting and reviewing the company handbook. Sometimes overlooked in the course of personnel management is the emotional welfare of the employees. Increasingly, more personnel managers understand that a well-adjusted employee is an asset to the company. To this end, many people in charge of personnel management try to provide opportunities for employees who are in need of counseling to receive support from the company.

This support often involves scheduling time during working hours for the counseling sessions, and perhaps picking up the cost if insurance does not cover counseling. As with continuing educational programs, counseling is seen as another way that the company invests in the future relationship between the employee and the employer. A good HR manager understands this and will strive to make sure this sort of support is available. Depending on the size of the organization, it may be possible for one person to handle all personnel management functions. As a company grows, it may be necessary to expand from a single personnel manager to a full-fledged personnel management, or Human Resources team. By understanding the needs of the company at each point in its growth, management can readily see to the addition to the Human Resources team over time.

Definitions of Personnel Management may somehow differ depending on a field it is concerned, and these are the following:

• Administrative discipline of hiring and developing employees so that they become more valuable to the organization. It includes (1) conducting job analyses, (2) planning personnel needs, and recruitment, (3) selecting the right people for the job, (4) orienting and training, (5) determining and managing wages and salaries, (6) providing benefits and incentives, (7) appraising performance, (8) resolving disputes, (9) communicating with all employees at all levels.

Source: http://www.businessdictionary.com/definition/personnel-management.html

• The part of management that is concerned with people and their relationships at work. Personnel management is the responsibility of all those who manage people, as well as a description of the work of specialists. Personnel managers advise on, formulate, and implement personnel policies such as recruitment, conditions of employment, performance appraisal, training, industrial relations, and health and safety. There are various models of personnel management, of which human resource management is the most recent.

Source: http://dictionary.bnet.com/definition/Personnel+Management.html

• Within organizations that employ people, this is the function with policy responsibility for the selection and recruitment of staff, training, performance assessment, career development, disciplinary proceedings, pre-retirement advisory work, equal opportunities policies, pay bargaining, and industrial relations. In small organizations these functions may be combined with other management responsibilities; in large organizations a substantial separate department may be involved in setting policy, its implementation, and in keeping up to date with developments in labor law. In recent years the newer alternative term 'human resource management' has come into use, reflecting the increased importance of this function in labor-intensive service-sector industries.

Source: http://wiki.answers.com/Q/Definition_of_personnel_management

• Planning, organizing, and administering all activities related to personnel.

Source: http://www.biology-online.org/dictionary/Personnel_management

• Skills in communicating effectively, developing teams, managing diversity, managing conflict, delegating responsibility, coaching and training, giving and receiving constructive feedback, and motivating and guiding either individuals or groups to achieve specific goals.

Source: http://www.cedanet.com/meta/personnel_management.htm

Definition of Human Resource Management

• Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. Human Resource Management can also be performed by line managers.

Source: http://humanresources.about.com/od/glossaryh/f/hr_management.htm

• "Human resource management is responsible for how people are treated in organizations. It is responsible for bringing people into the organization, helping them perform their work, compensating them for their labors, and solving problems that arise" (Cherrington, 1995, p. 5). There are seven management functions of a human resources (HR) department that will be specifically addressed: staffing, performance appraisals, compensation and benefits, training and development, employee and labor relations, safety and health, and human resource research.

Source: http://www.answers.com/topic/human-resource-management

• A model of personnel management that focuses on the individual rather than taking a collective approach. Responsibility for human resource management is often devolved to line management. It is characterized by an emphasis on strategic integration, employee commitment, workforce flexibility, and quality of goods and services.

Source: http://dictionary.bnet.com/definition/human+resource+management.html

• Administrative activities associated with human resources planning, recruitment, selection, orientation, training, appraisal, motivation, remuneration, etc. HRM aims at developing people through work.

Source:http://www.businessdictionary.com/definition/human-resource-management-HRM.html

• Human Resource Management (HRM) involves all management decisions and practices that directly affect or influence people, or human resources, who work for the organization

Source:http://books.google.com.ph/books?id=kUZx2l3atyAC&pg=PA32&lpg=PA32&dq=definition+of+human+resource+management&source=bl&ots=4Dcr0CQMk7&sig=OL9CnYbD3ZVjQrCXZPFekW1pdm8&hl=tl&ei=hkLDSpuHAYrIsAO497DAAg&sa=X&oi=book_result&ct=result&resnum=3&ved=0CA8Q6AEwAjge#v=onepage&q=definition%20of%20human%20resource%20management&f=false

• Term that is replacing personnel management and implying that personnel managers should not merely handle recruitment, pay, and discharging, but should maximize the use of an organization's human resources.

Source:http://www.allbusiness.com/glossaries/human-resources-management-hrm/4959860-1.html
• “HRM is a series of integrated decisions that form the employment relationships; their quality contributes to the ability of the organizations and the employees to achieve their objectives.”

• “HRM is concerned with the people dimensions in management. Since every organization is made up of people, acquiring their services, developing their skills, motivating them to higher levels of performance and ensuring that they continue to maintain their commitment to the organization are essential to achieving organizational objectives. This is true, regardless of the type of the organization government, business, education, health, recreational, or social action.”

• “HRM planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources to the end that individual, organizational and social objectives are accomplished.”

Source: http://www.docstoc.com/docs/10373623/HUMAN-RESOURCE-MANAGEMENT

HRM Assignment 8: SONA

{ Posted on 1:54 PM by Ariel Serenado }
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For this assignment we tasked to identify at least three sections related to Human Resource being discussed by PGMA in her SONA last July this year. As we all know the Human Resource is mainly referring to the people that encompass a certain organization or simply the PEOPLE, therefore the sections that i will be mentioning are things that are of related to the development of the people in this fast changing environment. Perhaps, as I review over the full text of the SONA I have come to identify the following sections discussed by PGMA in her SONA:

Microfinance


Basically, this microfinance is engaged for the poor descendants of the country.

1. What is Microfinance?

"Microfinance is the supply of loans, savings, and other basic financial services to the poor." (CGAP) In pursuant of this matter there microfinance institutions who are greatly involved in this financing. A microfinance institution (MFI) is an organization that provides microfinance services, ranging from small non-profit organizations to large commercial banks.

"Historical context can help explain how specialized MFIs developed over the last few decades. Between the 1950s and 1970s, governments and donors focused on providing subsidized agricultural credit to small and marginal farmers, in hopes of raising productivity and incomes. During the 1980s, microenterprise credit concentrated on providing loans to poor women to invest in tiny businesses, enabling them to accumulate assets and raise household income and welfare. These experiments resulted in the emergence of nongovernmental organizations (NGOs) that provided financial services for the poor. In the 1990s, many of these institutions transformed themselves into formal financial institutions in order to access and on-lend client savings, thus enhancing their outreach.

2. . Why there is a need for financial services by way of microfinance?

"Comprehensive impact studies have demonstrated that:

• Microfinance helps very poor households meet basic needs and protect against risks;
• The use of financial services by low-income households is associated with improvements in household economic welfare and enterprise stability or growth;
• By supporting women's economic participation, microfinance helps to empower women, thus promoting gender-equity and improving household well-being;
• For almost all significant impacts, the magnitude of impact is positively related to the length of time that clients have been in the programme." (UNCDF Microfinance)

"Poor people, with access to savings, credit, insurance, and other financial services, are more resilient and better able to cope with the everyday crises they face. Even the most rigorous econometric studies have proven that microfinance can smooth consumption levels and significantly reduce the need to sell assets to meet basic needs. With access to micro insurance, poor people can cope with sudden increased expenses associated with death, serious illness, and loss of assets.
Access to credit allows poor people to take advantage of economic opportunities. While increased earnings are by no means automatic, clients have overwhelmingly demonstrated that reliable sources of credit provide a fundamental basis for planning and expanding business activities. Many studies show that clients who join and stay in programs have better economic conditions than non-clients, suggesting that programs contribute to these improvements. A few studies have also shown that over a long period of time many clients do actually graduate out of poverty.
By reducing vulnerability and increasing earnings and savings, financial services allow poor households to make the transformation from "every-day survival" to "planning for the future." Households are able to send more children to school for longer periods and to make greater investments in their children's education. Increased earnings from financial services lead to better nutrition and better living conditions, which translates into a lower incidence of illness. Increased earnings also mean that clients may seek out and pay for health care services when needed, rather than go without or wait until their health seriously deteriorates." (CGAP) "Empirical evidence shows that, among the poor, those participating in microfinance programs who had access to financial services were able to improve their well-being—both at the individual and household level—much more than those who did not have access to financial services.

3. Is microfinance the solution to poverty?

My own view is that we have to approach extreme poverty a little like the way in which a doctor might approach a patient. Sometimes its terrible governance and the question is how to improve the governance and the hope for the kind of change that is needed. In other places it's the terrible burden of disease that may be addressable by good public health measures. In other places it is to show how to grow more food. In other places its how to get business going and microfinance has proven to be an incredibly powerful tool.

Once the basics are in place, the people are eating and can survive, then microfinance can play a huge role in helping a poor community find ways through the market to get new opportunities, to earn new income, to start saving, making investments and start the process of climbing the ladder of economic development in your children, in your business or your farm and continuing up the process of improving skills, specialization, new business ventures and so on. We've learnt that microfinance can be a wonderful tool for that." - Jeffrey Sachs, the Earth Institute at Columbia University, Director

"In the last two decades, substantial progress has been made in developing techniques to deliver financial services to the poor on a sustainable basis. Most donor interventions have concentrated on one of these services, microcredit. For microcredit to be appropriate however, the clients must have the capacity to repay the loan under the terms by which it is provided. Otherwise, clients may not be able to benefit from credit and risk being pushed into debt problems. This sounds obvious, but microcredit is viewed by some as "one size fits all." Instead, microcredit should be carefully evaluated against the alternatives when choosing the most appropriate intervention tool for a specific situation.

Microcredit may be inappropriate where conditions pose severe challenges to standard microcredit methodologies. Populations that are geographically dispersed or nomadic may not be suitable microfinance candidates. Microfinance may not be appropriate for populations with a high incidence of debilitating illnesses (e.g., HIV/AIDS). Dependence on a single economic activity or single agricultural crop, or reliance on barter rather than cash transactions may pose problems. The presence of hyperinflation or absence of law and order may stress the ability of microfinance to operate. Microcredit is also much more difficult when laws and regulations create significant barriers to the sustainability of microfinance providers (for example, by mandating interest-rate caps).

Some points also were tackled by PGMA, it may not said verbally but it can be understood, these are the following:

? Grants can be used to help overcome the social isolation, lack of productive skills, and low self-confidence of the extreme poor, and to prepare them for eventual use of microcredit. Small grants and other financial entitlements can work well as first steps to "graduate" the poor from vulnerability to economic self-sufficiency.

? Investments in infrastructure, such as roads, communications, and education, provide a foundation for economic activities. Community-level investments in commercial or productive infrastructure (such as market centers or small-scale irrigation schemes) also facilitate business activity.

? Employment programs prepare the poor for self-employment. Food-for-work programs and public works projects fit this model. In many cases, these programs may be out of reach for cash-strapped local governments but within the purview of donors.

? Non-financial services range from literacy classes and community development to market-based business-development services. While non-financial services should be provided by separate institutional providers, there are clear, complementary links with the demand for and impact of microcredit.

? Legal and institutional reforms can create incentives for microfinance by improving the operating environment for both microfinance providers and their clients. For example, streamlining microenterprise registration, abolishing caps on interest rates, loosening regulations governing non-mortgage collateral, strengthening the judicial system, and reducing the cost and time of property and asset registration can foster a supportive climate for microfinance."

Resiliency plan


Depending on your requirements, our consultants can help you document cross-enterprise actions and appropriate responses to create a true resilience plan:

• Action steps to recover files before their loss causes a disaster
• Emergency and incident identification and escalation definitions
• Crisis response plans to mitigate human loss and mitigates impact
• Departmental plans that address localized systems and processes
• Data Center and facilities plans, including those for multivendor technologies and networks
• Workplace plans for your staff situated at local, remote or homework locations
• Corporate plans for HR, payroll and many cross-business unit applications
• Call center plans for both internal resources and third-party agencies that use your customer sales and support systems and databases
Resilience Plans and Procedures Development occurs in four primary areas:
• Crisis Management Plan Development - defines the preparatory actions taken prior to and immediately following an emergency to mitigate damage and loss of life and property
• IT Plan Development - defines the IT actions to adapt and respond following a declaration of disaster using recovery strategies and prioritization that supports the recovery requirements of the business
• Business Unit Plan Development - defines actions to support critical business units and their processes, goals and objectives following a declaration of disaster
• Technical Procedures Development - defines the procedures to recover the IT equipment, data and network that support critical business processes
• Business Procedures Development - defines the procedures to recover business processes in the event of
a disaster
IBM’s Business Resilience and Continuity consultants will:
• Predefine the conditions that may cause your plan to go into effect
• Create definitions that accurately portray your organization’s
disaster definition
• Identify decision-makers and their roles before, during and after
an incident
• Inventory the resources required to bring your business units and IT systems back online
• Identify backup technique, frequency and location for data retrieval
• Prioritize and sequence the restoration actions defined in your recovery plan into a detailed timeline and checklist
• Predefine an operations center
to coordinate status, issues
and assignments
• Develop communication strategies for keeping your employees and customers informed
• Organize your recovery plan into a flexible, easily maintained format
• Identify steps and precautions to maintain the same level of security that you have on a daily basis
• Validate your recovery plan using diverse recovery exercise approaches, such as conducting simulations based on real-life disaster declarations

Health insurance


Solution: Preventive, high-quality care for better health.

By ensuring that health plans cover free preventive services for everyone, investing in prevention and wellness, and promoting primary care, health insurance reform will work to create a system that prevents illness and disease instead of just treating it when it’s too late and costs more.
Health insurance reform legislation will establish medically driven priorities and standards on quality, require quality reporting by hospitals, and provide incentive payments for high-quality performance. As a result, older women will have better information to support their health care choices and will receive higher quality care.

Solution: Making high-quality, affordable long-term care a reality.

Health insurance reform will create a new voluntary long-term care insurance program to help cover the costs of support services for the millions who need them. Legislation will also establish new reporting, accountability, and oversight requirements for nursing homes, and impose stiffer penalties on nursing homes with serious quality deficiencies.

Health insurance reform will develop national priorities on quality, standardize quality measurement and reporting, invest in patient safety, and reward providers for high-quality care, especially related to patients discharged from a hospital. Investments in comparative effectiveness research will empower seniors and their doctors with information on which treatments work and which don’t, so that they can make more informed decisions. Health insurance reform will also invest in advanced primary care services that will better coordinate and integrate care for our nation’s seniors, to ensure that they get recommended treatments, particularly for chronic diseases.

Sources:

http://www.healthreform.gov/reports/seniorwomen/index.html
http://www-935.ibm.com/services/us/bcrs/pdf/ss_resilience-plans-and-procedures-development.pdf
http://www.kiva.org/about/microfinance/

MIS Assignment 8: Outsourcing and In-sourcing

{ Posted on 11:35 AM by Ariel Serenado }
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For this assignment we are tasked to stand as to whether we prefer outsourcing or in-sourcing.

In some point of my discussions during the group reporting in HRM, I have made mentioned about outsourcing of a certain company that we adopted. In the case of the company we visited some services are actually outsourced, like their activities on counseling they actually outsourced teams, organizations that could handle the said activity in behalf of the employees who has the authority to do that kind of service. However, this certain companies also held companies in which the service involved is referred “in-house”. For me both in-house and in-source actually have identical meaning but then in-source is somewhat technical that anyone would doubt at some point, but both really have the same implications.

Before making into a firm preference I would like to emphasize first the distinct definition of the two – outsourcing and in-sourcing.

Outsourcing – What is Outsourcing?

For companies looking for a competitive advantage, outsourcing is a hot topic. The reason is the promise that outsourcing will help a company focus on more on it’s core competencies.

Outsourcing is contracting with other company or person to do a particular function. Almost every organization outsource in some way. Typically, the function being outsourced is considered non-core to the business. All insurance company, for example, might outsource its janitorial and landscaping operations to firms that specialize in those types of work since they are not related to insurance or strategic to the business, outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers.

Although outsourcing has been around as long as work specialization has existed, in recent history, companies began employing the outsourcing model to carry out narrow functions, such as payroll, bill and data entry. Those processes could be done more efficiently and therefore cost-effectively, by other companies with specialized tools and facilities and specially trained personnel.

Currently, outsourcing takes many forms. Organizations still hire service providers to handle distinct business processes, such as benefits management. But some organizations outsource whole operations. In most common forms are information technology outsourcing (ITO) a business process outsourcing (BPO). Business process outsourcing encompasses call center outsourcing, human resources outsourcing (HRO), finance and accounting outsourcing, and claims processing outsourcing. These outsourcing deals involve multi-year contracts that can run into hundreds of millions of client firm are transferred and become employees for the service providers. Dominant outsourcing service providers in the information technology outsourcing and business process outsourcing fields include IBM, EDS, CSC, HP, ACS, Accenture and Capgemini.

Some nimble companies that are short on time and money, such as start-up software publishers, apply multisourcing – using both internal and service provider staff – in order to speed up the time to launch. They hire a multitude of outsourcing service providers to handle almost all aspects of a new project, from product design, to software coding, to testing, to localization, and even to marketing and sales. In the context of outsourcing it encompasses four stages, these are the following:

1.) Strategic thinking, to develop the organization’s philosophy about the role of outsourcing in the activities. This stage is really vital to an organizations for this kind of thinking commonly results to a centralize manner of giving due importance to the specific roles of outsourcing for the betterment of the organization.

2.) Evaluation and selection, to decide on the appropriate outsourcing projects and potential locations for the work to be done and service providers to do it. This stage will asses the right and suited outsourcing activities for the organization to adapt.

3.) Contract development, to work out the legal, pricing and service level agreement (SLA) terms; and

4.) Outsourcing management or governance, to refine the ongoing working relationship between the client and outsourcing service providers. This stage must be taken into account especially that due and effective supervision will really affect the current business process being involved by the client and the outsourcing service providers.

In all cases, outsourcing success depends on three factors: executive-level support in the client organization for the outsourcing mission; and ample communication to affected employees; and the clients’ ability to manage its service providers. The outsourcing professionals in charge of the work on both the client and provider sides need a combination of skills in such areas as negotiation, communication, project management, the ability to understand the terms and conditions of the contracts and service level agreements (SLAs), and, above all, the willingness to be flexible as business needs change. The challenges of outsourcing become especially acute when the work is being done in a different country (offshored), since having an offshore transaction would mean having constraints on language, cultural and time zone differences.

Organizations who are interested in outsourcing are often curious to know more about disadvantages and advantages of offshoring. By gaining insights about the good and bad of outsourcing, organizations can decide if outsourcing is right for them. Most organization jump headlong into outsourcing, without actually finding out if outsourcing is good for their business. Before outsourcing, ensure that you are aware about the pros and cons of outsourcing. The advantages and disadvantages of outsourcing can help your organization decide if outsourcing is right for their business. The following are the advantages and disadvantages of “outsourcing”:

Advantages of Outsourcing

The benefits of outsourcing are:

Less capital expenditure – For example, by outsourcing information technology requirements, a company does not have to buy expensive hardware and software.

Less management headache – For example, by outsourcing business process such as accounting, company nom longer has to hire and manage accounting personnel.

Focus on core competencies – Outsourcing non – core related processes will allow a business to focus more on its core competencies and strengths, giving it a competitive advantage.

Specific advantages of outsourcing are as follow:

  • With outsourcing your organization can experience increased efficiency and productivity in non-core business processes
  • Outsourcing can help you streamline your business operations
  • Offshore outsourcing can help you save on time, effort, manpower, operating costs and training costs amongst others
  • Outsourcing can make your organization flexible to change
  • You can experience an increased control of your business with outsourcing
  • Your organization can save on investing in the latest technology, software and infrastructure as your outsourcing partner would be investing in these
  • Outsourcing can give you assurance that your business process are being carried out efficiently, proficiently and within a fast turnaround time.
  • By outsourcing, your company can save on management problems as your offshore partner will be managing the team who does your work
  • By outsourcing, you can crater to the new and challenging demands of your customers.
  • Outsourcing can help your organization to free up its cash flow
  • Outsourcing can give your business a competitive advantage as you will be able to increase productivity in all the areas of your business
  • Outsourcing can help your organization to cut is operational costs to more than half

If you want your organization to stay ahead of competition, concentrate on core competencies and make use of the latest technologies, then outsourcing can help your organization achieve all this and more. In outsourcing, the advantages of outsourcing are more than the disadvantages of outsourcing. The pros of outsourcing have driven more organization to step into offshoring and experience the benefits that it has to offer.

Furthermore, one of the biggest advantages can be lower personnel costs. By outsourcing job duties to non-employees, a business does not have to pay consistent wages or offer additional employee benefits. The company may pay lower taxes because independent contractors, the people who complete the outsourced projects, pay their own withholding, social security, and other taxes. This can add up to substantial savings. Some businesses choose to take their outsourcing one step further by choosing a vendor, located in another part of the world. Doing so typically saves them more money because they end up paying a much lower wage than would be necessary in their home country. The disadvantage is that these vendors may not understand English and communication is more difficult. Many times, outsourcing speeds up production time. Since the third-party vendor will only be concentrating on one specific task, instead of numerous office duties, actual production time can be greatly increased.

Some businesses choose to take their outsourcing one step further by choosing a vendor, located in another part of the world. Doing so typically saves them more money because they end up paying a much lower wage than would be necessary in their home country. The disadvantage is that these vendors may not understand English and communication is more difficult.

Many times, outsourcing speeds up production time. Since the third-party vendor will only be concentrating on one specific task, instead of numerous office duties, actual production time can be greatly increased. In turn, it can cause community uproar and even a decrease in business and profits. This happens when local consumers make the decision to shop elsewhere, as a way to voice their disdain. Outsourcing customer service jobs, to foreign countries, is on the rise. Many large corporations including credit card companies, shopping networks and computer manufacturers are making this change. The problem with this is a lack of communication. It can be very frustrating for a consumer who is calling in with a customer service issue. When this individual cannot understand the customer service representative they are speaking with, it just causes more frustration and does little to solve the problem.



Disadvantages of Outsourcing

Before deciding on outsourcing your company's business process, keep in mind the disadvantages of outsourcing:
Less managerial control - It may be harder to manage the outsourcing service provider as compared to managing your own employees.
Outsourcing company goes out of business - If your outsourcing service provide goes bankrupt or out of business, your company will have to quickly transition to a new service provider or take the process back in-house.
May be more expensive - Sometimes it is cheaper to keep a process in-house as compared to outsourcing.
Security and confidentiality issues - If your company is outsourcing business processes such as payroll, confidential information such as salary will be known to the outsourcing service provider.
Moreover, here are the list of the advantages of outsourcing:

  • At times, it is more cost-effective to conduct a particular business process, rather than outsourcing it
  • While outsourcing services such as payroll processing services and tax preparation services, your outsourcing provider will be able to see your company’s confidential information and hence there is a threat to security and confidentiality in outsourcing
  • When you begin to outsource your business processes, you might find it difficult to manage the offshore provider when compared to managing processes within your organization
  • In case, your offshore service provider becomes bankrupt or goes out of business, your organization will have to immediately move your business processes in-house or find another outsourcing provider
  • The employees in your organization might not like the idea of you outsourcing your processes and they might express lack of interest or lack of quality at work
  • Your outsourcing provider might not be only providing services for your organization. Since your provider might be catering to the needs of several companies, there might be not be complete devotion to you and your company
  • By outsourcing, you might forget to cater to the needs of your valuable customers as your focus will be on the business process that is outsourced
  • In outsourcing, you may lose your control over the process that is outsourced
  • Outsourcing, though cost-effective, might have hidden costs, such as the legal costs incurred while signing a contract between companies. You might also have to spend a lot of time and effort in getting the contract signed
  • With outsourcing, your organization might suffer from a lack of customer focus
  • There can be several disadvantages in outsourcing, such as, renewing contracts, misunderstanding of the contract, lack of communication.
Outsourcing occurs when a business secures (purchases) products and/or services from a third party, as opposed to producing them in-house. There are several advantages and disadvantages to outsourcing.

Now, let us discuss the advantages and disadvantages of In-sourcing.

What is In-sourcing?

In-sourcing

The opposite of outsourcing can be defined as in-sourcing. When an organization delegates its work to another entity, which is internal yet not a part of the organization, it is termed as in-sourcing. The internal entity will usually have a specialized team who will be proficient in the providing the required services. Organizations sometimes opt for in-sourcing because it enables them to maintain a better control of what they outsource. In-sourcing has also come to be defined as transferring work from one organization to another organization which is located within the same country. In-sourcing can also mean an organization building a new business centre or facility which would specialize in a particular service or product.

Organizations involved in production usually opt for in-sourcing in order to cut down the cost of labor and taxes amongst others. The trend towards in-sourcing has increased since the year 2006. Organizations who have been dissatisfied with outsourcing have moved towards in-sourcing. Some organizations feel that they can have better customer support and better control over the work outsourced by in-sourcing their work rather than outsourcing it. According to recent studies, there is more wok in-sourced than outsourced in the U.S and U.K. These countries are currently the largest outsourcers in the world. The U.S and U.K outsource and in-source work equally.

Moreover, In-sourcing is a business practice in which work that would otherwise have been contracted out is performed in house.
In-sourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced. An example is the use of in-house engineers to write technical manuals for equipment they have designed, rather than sending the work to an outside technical writing firm. In this example, the engineers might have to take technical writing courses at a local college, university, or trade school before being able to complete the task successfully. Other challenges of in-sourcing include the possible purchase of additional hardware and/or software that is scalable and energy-efficient enough to deliver an adequate return on investment (ROI).

In-sourcing can be viewed as outsourcing as seen from the opposite side. For example, a company based in Japan might open a plant in the United States for the purpose of employing American workers to manufacture Japanese products. From the Japanese perspective this is outsourcing, but from the American perspective it is in-sourcing. Nissan, a Japanese automobile manufacturer, has in fact done this.

Some advantages and disadvantages that encompasses In-sourcing:

Advantages to In-sourcing:
  • Helps economy
  • More jobs become available to others
Disadvantages to In-sourcing
  • More expensive
  • Less chance for new companies to succeed
Despite some disadvantages, there are still instance which other people take in-source into account. Wherein they find in-source a way to transform business as usual into business as exceptional. All salt-worthy executives know that the name of the game is reinvention, and those who play best win. What many don’t realize is that they can play the game a lot better, and improve their company’s performance by growing a culture of innovators from within, not by continuing to acquire innovation resources from without. If pervasive innovation is what you want, there’s only one way to get it: in-source it, and make it part of everyone’s job.

In-sourcing Innovation provides a straightforward depiction of why leading organizations are making innovation more systematic and structured.

There are also firms and organizations supporting the in-sourcing – FAIR supports efforts to “in-source” but advises a deliberate and systematic approach based on facts and analysis. The Federal Acquisition Innovation and Reform Institute (FAIR) support efforts to “in-source” critical positions and personnel so that the government possesses adequate organic capability to address the challenging and daunting tasks ahead of us. However, we recommend that the administration, Congress, and agencies proceed with caution, through a deliberate and systematic approach to in-sourcing based on facts and analysis. Agencies should also adopt realistic timelines for recruiting and integrating new personnel as well as developing new business processes, if required... Rushing to undo what has been in the making for years, perhaps decades will be counterproductive.

Guidance for in-sourcing should address the critical question of ‘inherently
governmental’ and core competencies. As the Obama administration, Congress, and agency leadership lay out guidance and legislation regarding positions that should be in-sourced, the most important questions that we should be asking are:
  • What are ‘inherently governmental’ positions? Are there any currently beingperformed by contractors and if so, how can they in-sourced immediately?
  • What core competencies are critical to achieving agency and program missions?
  • Which positions are tied to core competencies?
  • What is the right balance between government versus contractor positions (in the short term and longer term)?
  • Beyond number of positions, does the government have the ability to create
  • Efficient business models to deliver capability and expertise being provided by
Contractors?
  • Where should government still continue to leverage government expertise and technical capabilities?? How and when should positions be in-sourced? What are critical processes and policies, such as the hiring process and the pay system, that need to be improved to attract the required number of staff?
Perhaps there are doubts turned into confusing thoughts between outsourcing and in-sourcing. In that way, we probably ask this question -- What is best for your organization?

If your organization has a number of non-core processes which are taking plenty of time, effort and resources to perform in-house, it would be wise to outsource these non-core functions. Outsourcing in this case, would help you save on time, effort, manpower and would also aid you in making quicker deliveries to your customers. If you require expertise services in areas which do not fall under your core competency, then outsourcing will be a good option as you can get access to expertise services. For reducing costs and making faster deliverable, outsourcing is again a good option.

If your work involves production, then it would be more ideal for your organization to opt for in-sourcing, as you can save on transportation costs and exercise a better control over your project.

It is not necessary to choose outsourcing over in-sourcing or vice versa. Your organization can outsource and in-source at the same time. By outsourcing and in-sourcing simultaneously, you can have the best of what both offers and your business can get a competitive advantage!

the use of in-house personnel or an internal department to meet an organization's need for specific services. In-sourcing is seen as a reaction to the growing popularity of outsourcing that has not always met expectations. An in-sourcing strategy is chosen where it appears that a better service can be provided from internal resources than from an external supplier. In some cases, organizations opt for a combination of outsourcing and in-sourcing, in which external service providers work in cooperation with in-house personnel.


Sources:

http://www.ictstandards.com/Advantages_And_Disadvantages_Of_Outsourcing.htm
http://www.webspacestation.com/it-outsourcing-news/articles/outsourcing.html
http://www.outsource2india.com/why_outsource/articles/advantages-disadvantages-outsourcing.asp
http://www.articlesbase.com/management-articles/outsourcing-the-advantages-and-disadvantages-of-outsourcing-536182.html
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
http://whatis.techtarget.com/definition/0,,sid9_gci1185946,00.html
http://www.sourcingmag.com/content/what_is_outsourcing.asp
http://www.thefairinstitute.org/downloads/The%20Move%20to%20Insourcing_June%202009.pdf





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