Activity 2.1.6
WHY ARE HR FUNCTIONS BEING OUTSOURCED?
Discuss the advantages and disadvantages to BP of outsourcing its HR function.
Outsourcing occurs when a business buts back on its operations to focus on its core activities. In this
context, BP is cutting back on its HR function (the employees) and subcontracting its HR function to
outsiders. This means that some work usually handled by the business’ internal HR function is now
being handled by another business or organization.
BP’s decision to outsource its HR function certainly comes with certain advantages. One of them
include cost savings of the business on HR salaries and administration costs. This is because when
BP’s HR function is subcontracted to another business, less employees will be needed to complete
the job as it is handled by another organization. According to the case study, after BP’s decision to
outsource its HR function, its core HR staff were cut by 65% - from 100 down to 35 people. With less
employees, BP will not have to spend a large sum of the money on salaries of the employees.
Another advantage BP will experience for outsourcing its HR function include increased quality of
work. When a business outsources its HR function means they are subcontracting its HR function to
another business, in other words, work is done by another business. This could definitely increase
the quality of completed as other businesses in charge of BP’s HR function are highly likely experts or
specialists that specializes in the jobs they are given. Considering that work is done by specialists and
professionals would also mean more productivity, increased accuracy and more consistent work.
This is also evident in the case study as it was stated that “payroll processing became more accurate
and HR processes have been standardized across the company”. This proves that outsourcing BP’s
HR function would benefit the company.
On the other hand, there are also some drawbacks BP will have to experience for outsourcing its HR
functions. One drawback would be wasting some money on subcontracting the HR functions.
Although BP will be able to cut back on employees under the HR function, which will save cost
money on salaries of employees, BP will still need to spend some cash on paying other businesses or
organizations to get the jobs done for them. In this case, it will not necessarily be cheap because the
people getting the job done will highly likely be experts or specialists.
Another disadvantage include some miscommunication or struggle in terms of decision-making. This
is because when BP decided to outsource its HR function, it means they are willing to let other
businesses and organizations - that are not part of the business - to handle. This may lead to
miscommunication as outsiders will not fully understand the way the business work and have
possibilities of not cooperating well with other divisions within the business. When this happens,
misunderstanding could occur, which ultimately will lead to further problems down the road. For
instance, if a business suddenly is in need of creative people that will come up with new innovation
but has not informed the organization in charge of its HR function, the organization might end
administrating incompetent employees in the area they are seeking. This proves how BP’s decision in
outsourcing its HR functions could possibly lead to misunderstanding and miscommunication.
WHY ARE HR FUNCTIONS BEING OUTSOURCED?
Discuss the advantages and disadvantages to BP of outsourcing its HR function.
Outsourcing occurs when a business buts back on its operations to focus on its core activities. In this
context, BP is cutting back on its HR function (the employees) and subcontracting its HR function to
outsiders. This means that some work usually handled by the business’ internal HR function is now
being handled by another business or organization.
BP’s decision to outsource its HR function certainly comes with certain advantages. One of them
include cost savings of the business on HR salaries and administration costs. This is because when
BP’s HR function is subcontracted to another business, less employees will be needed to complete
the job as it is handled by another organization. According to the case study, after BP’s decision to
outsource its HR function, its core HR staff were cut by 65% - from 100 down to 35 people. With less
employees, BP will not have to spend a large sum of the money on salaries of the employees.
Another advantage BP will experience for outsourcing its HR function include increased quality of
work. When a business outsources its HR function means they are subcontracting its HR function to
another business, in other words, work is done by another business. This could definitely increase
the quality of completed as other businesses in charge of BP’s HR function are highly likely experts or
specialists that specializes in the jobs they are given. Considering that work is done by specialists and
professionals would also mean more productivity, increased accuracy and more consistent work.
This is also evident in the case study as it was stated that “payroll processing became more accurate
and HR processes have been standardized across the company”. This proves that outsourcing BP’s
HR function would benefit the company.
On the other hand, there are also some drawbacks BP will have to experience for outsourcing its HR
functions. One drawback would be wasting some money on subcontracting the HR functions.
Although BP will be able to cut back on employees under the HR function, which will save cost
money on salaries of employees, BP will still need to spend some cash on paying other businesses or
organizations to get the jobs done for them. In this case, it will not necessarily be cheap because the
people getting the job done will highly likely be experts or specialists.
Another disadvantage include some miscommunication or struggle in terms of decision-making. This
is because when BP decided to outsource its HR function, it means they are willing to let other
businesses and organizations - that are not part of the business - to handle. This may lead to
miscommunication as outsiders will not fully understand the way the business work and have
possibilities of not cooperating well with other divisions within the business. When this happens,
misunderstanding could occur, which ultimately will lead to further problems down the road. For
instance, if a business suddenly is in need of creative people that will come up with new innovation
but has not informed the organization in charge of its HR function, the organization might end
administrating incompetent employees in the area they are seeking. This proves how BP’s decision in
outsourcing its HR functions could possibly lead to misunderstanding and miscommunication.
