“Optus cut jobs by outsourcing HR and finance teams.”
How can outsourcing HR and finance staff, in order to cut costs, be a sound organizational decision? For HR professionals, the headline in the article for this particular blog topic brings up some key strategic questions.
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First and foremost, the decision to cut jobs is financial. Given that the biggest expenditure on a corporate balance sheet is usually employee compensation, it is a natural correlation to make – cut the biggest expenditure to curtail the financial losses.
It is, however, a deceptively easy solution that does not always produce the desired result.
In this particular article, the outsourced HR functions are in the areas of data analytics and trend analysis. These data management tools are used by HR to promote organizational and business systems decisions and sound strategic planning. If HR is to deliver value on these strategic functions, of course, the search for the ‘fastest, cheapest, best’ solutions should be an ongoing part of strategic evaluation. These are critical functions that HR should be driving in order to provide technology based solutions that contribute to lines of business success and organizational growth.
Outsourcing routine, technology-based processes seems to offer an easy solution. It may be ‘easier’ but, as a long-term sustainable solution, it too may miss the mark in supporting organizational success.
On the other hand, digital systems integration and data-management platforms can harness the technical complexities of critical HR systems. Automated processes can be implemented internally to produce significant cost-savings and improve operational results.
Outsourcing appears to be a cheap and fast solution. Is it the right solution? In this case, we do not have the full account of facts and insights behind this specific organizational decision.
It does, however, emphasize the need for HR to understand and monitor technology-based systems. Further, HR must have an active voice as part of data based operational processes so that outsourcing any function (including HR) comes as one alternative in a range of sustainable solutions.
Discussion Questions:
- Why do you think Optus is choosing to outsource as the preferred solution in this case?
- Identify four HR administrative functions that can be automated using current technology based solutions.
- As an HR professional, what advice will you give to Optus about the impact of outsourcing on employee engagement and morale?
- What decisions would you make about outsourcing HR functions in this particular case?