Introduction 3
Discussion 4
  Strategic Focus 4
  Cost-Benefit Analysis 5
Recommendations 5
  Improved Service 6
  Selecting an Outsourcer 6
  Advantages and Disadvantages of Outsourcing 7
Conclusion 7
Bibiliography 8


Many organizations have outsourced several of their responsibilities elsewhere, while others are planning to implement this action in the near future. Outsourcing refers to subcontracting business activities to an external third party organization (Terms & Definitions, 2006). The strategic goal of an organization to outsource its functions, particularly HR functions, is to reduce their costs of certain activities in order to gain profits. Some of the HR functions that can be outsourced are: Payroll, Training, Recruiting, and Health and Safety.

In order to meet their goals of improving their service quality and making more financial gains, Texas Instrument (TI) has successfully outsourced several of their functions in past (Harris, 2004). However, there have been instances where the clients are not satisfied with the service received by one of the outsourced companies (Macaulay, 2000). Dawn McWhirter, HR manager at TI Canada had to face a similar scenario when the work for their payroll functions was outsourced. The issue occurred when she faced numerous errors by the external provider. She had to spend more than she had budgeted for in order to resolve the errors made by the outsourcer. These additional expenditures included paying various employees, including her, it was similar to doing the same work twice.

Thus, outsourcing is not always effective; many cases have proved that the goal of cost savings in never materialized (Sullivan, 2004). It has drastic effect on the organization as incidences above may lead to the company reducing their labour force, thus increasing the unemployment rate within the community and have adverse economic affects. A main internal risk when outsourcing HR departments is the employee...