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HR outsourcing among Malaysian manufacturing companies

SYNOPSIS As we know, over the years, many business focused more on Total Quality Management (TQM), business process, reengineering, rightsizing, downsizing, restructuring in order to boost market and company goals. The other way is company implement outsourcing that allows management to be concerned about their business activity including their resources. Hence, HR manager find that by doing outsourcing, it is the best way to upgrade effort and skills in their business activities. The researcher also identifies, many companies use outsourcing will get more benefit but, there is a risk if the company fails to use it properly. Nevertheless, the researcher recognized the advantages and disadvantages of outsourcing similar to other strategies available to businesses due liberation that should be undertaken before any outsourcing is carried out by a business entity. Other than that, they also focused on the trend towards HR outsourcing by refer to Lever, 1997, outsourcing is becoming a common practice among companies and it is used widely in a variety of business activity. HR outsourcing is also seen as an effective way to improve efficiency by gaining access to experts in HR areas. Due to Smith et al.2006, by doing outsourcing, it enables companies to profit from the rising comparative advantage of specialized service providers who have expertise in the areas concerned.

HR outsourcing among Malaysian manufacturing companies


Comment about the journal.

Based on the definition from the book of Human Resource Management, 11 th edition, Outsourcing or contracting with a vendor to perform on a recurring basis an HRM activity previously performed by a firm, is growing in popularity. It is likely to continue as decision maker search for ways to improve the financial and operating performance of firms. Refer to the article titled Outsourcing; Human Resource Management; Value Analysis, writer identify a number of large and medium-size organizations have outsourced the routine, transactional functions of HR management. They have seen this as a way of saving money while also freeing in-house HR to function more strategically. Human Resource outsourcing is when a company gets an outside party to perform some or all of their HR functions. It also can be used for a number of different HR related activities. Presently, Malaysia has been recognized as one of the preferred destination for outsourcing; however, it faces some challenges. One with the major challenges for Malaysia outsourcing industry is to overcome constraints with regards to stability. As refer to the journal, I agree that, many companies realize the importance of outsourcing and are beginning to expand this practice. It is also as a strategy results in the better deployment of business activities. (Elmuti,2003). According to the researcher, they recognized the advantages and disadvantages of outsourcing however, it depending how well the HR manager well planned and executed their company. As we take a look at the advantages, it refers to the access to experts and advanced technology, time pressure in order to deploy their task, reduce cost, strategic focus on their job task, flexibility, improve the quality of the product and services also shift the burden of risk and uncertainty. Nevertheless, there are some negative impacts of outsourcing which include loss of management control, internal expertise and skills, define cost consideration and also declining in innovation because of they only focused on the same way of business activity. Other than that, it will effect on employees morale that tends to lower service quality also will occurs disruptions and clashes of opinions.

HR outsourcing among Malaysian manufacturing companies

If we look into the quote from Prime Minister Datuk Seri Najib Tun Razak, he thanked to Malaysian which have multi-cultural environment, the ranking enables the country to offer multiple language skills and a high value workforce capable of interacting as well as meeting the needs of customers across the globe. Apart from that, the reason why the outsource of HR functions in Malaysia, specifically it tends increase in demand and productivity, and when there is an increase in productivity it leads to get higher profit and growth that have encourage companies step forward towards strategic outsourcing activities. Then, if we refer to the types of HR functions to be outsourced, through recent survey by Smith, 2006, we can conclude that the companies usually do outsourcing in the field of recruitment by 68% followed by 61% in HRIS (Human Resource Information System). However, 56% indicates involved in training and the rest 49% focus on the benefit administration. Nevertheless, in making decision, companies should consider investigate the impact of outsourcing in future towards companys performance. When these connections are broken, unifying the workforce to accept major organizational change becomes more difficult. To do so, every company needs to differentiate between core and non core functions. By referring to the core function, it is crucial to the company itself whereby it is competitiveness and must be kept internally. But, for noncore function, it tend to give lower impact on overall performance that encompass specialist activity like training and recruitment also personal administration such as payroll, HRIS and pension. If we take a look at the environment of outsourcing in Malaysia, agree with the researcher that there are fastest changes in technologies, international trade, resource flows and competitions. So that, every company needs to upgrade their skills and equipped themselves to meet current challenges. Other than that, by referring to Klaas, 2003, there are so many companies have been using Professional employer companies (PEO) in order to perform HR functions such as payroll and benefit with the aim to get rid of their HR inefficiencies.

HR outsourcing among Malaysian manufacturing companies

However, as refer to the researcher, the main reason why Malaysia engaged with outsourcing is when they do not have the experts to perform HR function. They need assistance from external vendors to design, develop and perform HR function effectively. Refer to the article titled Outsourcing for the Malaysian marketplace, the writer stressed that through the challenges, he has been identified a multi-pronged and focused strategy to Malaysia to capture the burgeoning global outsourcing opportunities. To do so, in order to sustain growth, Malaysia needs to cut its own niche that fits its strengths and focused to drive success of the Malaysian outsourcing industry for the long run.

HR outsourcing among Malaysian manufacturing companies


Summary.

In todays increasingly competitive business world, driving down costs is important in any organization. Cost saving is the main reason most companies opt for HR outsourcing. Moreover, outsourcing also allows refocusing on those business activities that are important without scarifying quality in business activity. There is a key to a satisfactory outsourcing outcome and preparation and oversight. Every company should have their own benchmark and measurement also continuously monitor the progress of outsourcing to ensure the effectiveness and efficiency for the near future.

HR outsourcing among Malaysian manufacturing companies


Reference.

1. Hasliza Abd Halim, Norbani Che Ha.(2010), HR outsourcing among Malaysian manufacturing companies Journal of Business Stategies, Vol. 11, No.6. 2. Duncan Bakshmidt. Outsourcing for the Malaysian marketplace Article from Author Palace. 3. Dharmender Singh (2010) Malaysia among top three Outsourcing destination in the world Article from The Star. 4. Mandy Sim (2010) Human Resource management; Value analysis. Article from Human Resource Management International Digest. 5. John M. Ivancevich (11th edition, 2010) Human Resource Management Text book from Mc Graw Hill International Edition.