Problem Solution

Abstract

Outsourcing, as a strategic plan to increase profitability and promote international growth, requires skillful intellectual planning and expert relationship building techniques, including the establishment of significant business relationships with all stakeholders. Communication is paramount in retaining talent, maintaining a competitive edge, and creating an environment of trust and loyalty. In addition, systematically and proficiently maneuvering through the decision making process, practicing active listening, and utilizing expert opinions during the developmental phase of outsourcing contracts will generate optimal outcomes, build strong team relationships, and improve career development opportunities for all employees. The following benchmarking study examines the outsourcing processes employed by four companies faced with similar problems and attempts to derive the optimal solution for a company in the planning stages of its outsourcing strategy, Global Communications. Based on the evaluation of the outsourcing processes employed, the authors propose solutions for implementing outsourcing within Global Communications as an effective cost-cutting strategy to increase sales volumes and profitability and achieve long term growth in a competitive market.

Global Communications Benchmarking

Identification of issues and benchmarking discussion

In the Global Communications (GC) scenario, the leadership team developed a two-pronged aggressive approach to address diminishing returns, economic pressures, company stock value depreciation, increasing competition, and the viability of the company and its ability to continue as a Ѓegoing concernЃf. The companyЃfs approach entailed: (1) increasing sales volumes by introducing new services, including video and broadband by partnering with a satellite provider, and (2) improving profitability by using cost-cutting measures, including outsourcing and reductions in force. A total of four companies were used to benchmark their strategies against the strategies employed by GC; these four companies used outsourcing as their strategy to increase revenue and create company growth.

Boeing Commercial Airplanes (Boeing), English Heritage, Hershey Foods Corporation (HFC), and DuPont were benchmarked for their use of outsourcing. Boeing, an aircraft manufacturer, outsourced a high percentage of its 787 Dreamliner aircraft engineering and design work with the primary goal of maintaining stable employment. English Heritage, a company responsible for historical preservation, selected Atos Origin (AO) as its outsourcing provider to improve its delivery of information technology (IT) services to its 130-plus sites across the United Kingdom. Hershey Foods Corporation (HFC) outsourced its logistics functions to manage declining returns and long term growth success. DuPont has continually endeavored to focus on its core businesses and has regularly divested its non-core businesses; therefore it is no surprise that the company opted to outsource its secondary businesses.

Application of the concepts

In the GC scenario, the company failed to include proper employee and union representation in the planning phase of the decision making process which resulted in the union not supporting the companyЃfs strategy and a damaged employee relationship. In contrast, Boeing was successful in its outsourcing plan. ЃgThis 787 outsourcing strategy certainly didnЃft sit well with the Union or Boeing employees following BoeingЃfs September 11, 2001 lay offs of more than 5,000 union members even as Boeing was hiring more than 1,000 Russian aerospace engineers for its Moscow design center. The union leaders were able to support this strategy because Boeing leaders were engaging The Society of Professional Engineering Employees in Aerospace (SPEEA) employees union in discussions over outsourcing and actively listening to their concerns in the planning stages of the decision making process.Ѓh (Holmes, 2006). ЃgAn agreement that can be found that is better for both parties than what they would have reached through distributive negotiations is considered an integrative negotiation which calls for a progressive win-win strategyЃh (Kreitner & Kinick, 2004, p. 504). Boeing leaders realized that in order to succeed, top-level executives must negotiate their ethical vision with all the major stakeholders. ЃgAt Boeing, we look all around the world for the best technology, the best intellectual capability, and for the best manufacturing capability in a serious effort to improve our competitiveness. We keep the best partners in terms of quality, cost, and capability. Boeing and their partners work on the top-level designs together then the suppliers go off and come up with the detail design of parts. More than 70% of the work on the 787 Dreamliner aircraft tasks involved Japanese, Russian and Italian engineers. Boeing did not fear sharing technology and skills with other foreign professionals.Ѓh (Holmes, 2006).

In the GC scenario, the leadership team had difficulty collaborating as a team which resulted in group think and a dominating management style utilized by the team leader. In contrast, the director of English Heritage hired a consulting firm, AO, to act as an advisor in contract negotiations and help the company frame the specifications of its outsourcing contracts. English Heritage established rigorously-enforced penalties to emphasize high performance outcomes in the event that targets were not met. Technical quality assurance experts were kept on staff to test the outsourcerЃfs proposals, and in-house project management teams kept enough work forces in place to ensure adequate supply of work to meet staff ratios. To AOЃfs advantage, English Heritage established a clause in the contract where Atos would supply optional extras when demand dictates allowing Atos to gain extra revenue and served as a training ground for AtosЃh (Computer weekly, 2006). ЃgGroup decision making has several advantages and can improve both the quality and acceptance of the decision. Groups tap a greater pool of knowledge and provide more diverse perspectives than any single individual could generate acting aloneЃh (Gomez-Mejia, 2002, p. 215). English Heritage and AO established a partner relationship with the common goal of a commitment to continuous improvement.

GC did not use an effective decision making process involving sequential steps. On the contrary, HFC began its outsourcing process by establishing a team, consisting of representatives from all the key areas in its organization, such as logistics, engineering, customer service, finance, and information systems (Mazel, 2001); this team was responsible for selecting the outsourcing provider.