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The Express Tribune > Business

The case for outsourcing By Mustafa Nemat Published: August 30, 2010 Share Tweet Email

Chief Executive Saad Ali with other members of the team. photo: express KARACHI: More and more businesses worldwide are contracting out functions, or business processes, that were previously thought to be important, internal tasks sacred to the organisation. Even in Pakistan, corporations – local and multinational – are increasingly outsourcing processes such as marketing, corporate social responsibility programmes and human resource management. Unilever, for example, has handed over the responsibility of marketing various ‘Ponds’ products to an external firm specialising in retail enablement.

“The organisations supervise the results while our teams deliver them,” explained Saad Ali, chief executive of Helium Private Limited.

Helium is primarily a business process outsourcing company with over 450 employees on its payroll and offices in three major cities of Pakistan. Although the firm is more popularly known for providing marketing solutions, such as brand activations and road shows, it offers a range of outsourcing services. The company is involved in everything from handling back office operations, including finance and administration, for an international technology giant to running corporate social responsibility programmes for oil marketing companies like Shell Pakistan. “Organisations like Coca Cola and P&G are looking to outsource not just to cut costs but also to achieve flexibility in the long run,” said Ali. “Specialisation and headcount control were two important trends that emerged towards the end of the 1900s,” he added. These developments gained popularity because they were believed to be efficient cost control measures and once they had been achieved internally, the next logical step was to outsource. “Companies want to control their destiny and one way they can achieve this is by tagging expenses with revenues,” commented Ali. By doing this not only can costs be managed better, they also become more predictable. Citing the example of distribution, he highlighted that at one point in time it was common for companies to control the distribution of their products themselves but now almost all large firms hired external distributors who handled the entire process. The common practice is to link the distributors’ commission with sales revenue. This means that even though the distributors earn more when sales are high, they are also the first ones to take a hit in case turnover drops. Meanwhile, it is the distributors who make infrastructural investments to make sure the product is available in the market and not the corporation, further reducing risk for the latter by making costs both manageable and predictable. Responding to a question regarding what functions could practically be outsourced, Ali cited the case of Nike, one of the pioneers of outsourcing. He said that except for marketing and finance, the company has outsourced almost all functions, including manufacturing and supply chain management. Published in The Express Tribune, August 30th, 2010.

https://propakistani.pk/2009/09/24/employment-outsourcing-its-implications-on-employer-andemployees/

Employment Outsourcing, its Implications on Employer and Employees! Posted 8 years ago by Aamir Attaa    

Pakistan Telecom Market is undergoing outsourcing trend. We know that Huawei has outsourced its employees while there are rumors that at least one cellular company is considering outsourcing options, at large. In this regards, we are bringing some facts about employment outsourcing. Note: These facts are prepared after consultation with HR heads, study of law and input from industry experts. What is Out-Sourcing: The performance or the work done by outside parties, on a recurring basis, of tasks that would otherwise be performed in-house. Challenges: This thing has been in practice that some companies are outsourcing their employees without taking legal aspects into consideration. If you employ a person right from the start as outsourced employee, it is alright but if you are going to outsource the permanent employee of the company who is working there for 3-5 years then it might have serious implications if challenged in the court of Law. The complications may arise due to contractual nature of the employees, there are certain types of employees working in a large company i.e. 1. Permanent employees (Open-end contract, hired for indefinite period), can’t be outsources unless it is negotiated by offering handsome benefits for switching from permanent to outsourced employee and taken consent in writing from employee in order to avoid legal ambiguities. 2. Contractual employees (Fixed-term contract, hired for a fixed period for a certain project), can be outsourced after completion of contract period or terminate as per requirement.

3. Temporary employees (Short-term need fulfilment for a certain task between 3-6 months), can be outsourced after completion of period or terminate if not required. 4. Consultants (Highly qualified individuals above 60 years of age or firms), already not on company payroll but a fee is paid depending upon the task. Poor Reasons to Outsource:    

Do not outsource just because you are frustrated Do not outsource as a last resort, just because you have tried everything else Do not outsource if you can save the same amount of cost through curtailing unwanted expenditures on luxuries.

Outsourcing Myths:     

Outsourcing is just a fad Outsourcing can be kept secret from employees Outsourcing is only for the largest companies Messes must be fixed before outsourcing Outsourcing is for everyone

Outsourcing existing employees may be considered by employees as:      

A Challenge to their career, giving impression that you were not important. A tool to cut down the employee benefits cost. An easy termination in future simply through email to the company without having responsibility. No career ahead hence employees resign in demotivation and agitation. Other employees also fear the same and may look for another job immediately. Competitors may take this move as “the crisis in the company doing outsourcing”