Outsourcing Business Functions: A Case Study of Hewlett Company, Australia

Outsourcing 2 Advantages and Disadvantages of Outsourcing Business Functions: A Case Study of Hewlett Company, Australia. Hewlett has adopted outsourcing as a mechanism by which organizations share their responsibilities with third-party agents. This research seeks to analyze the advantages and disadvantages of outsourcing business activities in Australia using Hewlett as a case study. PROJECT OBJECTIVE The objective of this study is to examine the advantages and disadvantages of outsourcing business functions with Hewlett as a case study.

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Advantages and Disadvantages of Outsourcing Business Functions: A Case Study of Hewlett
Company, Australia.
by
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Table of Contents
1. INTRODUCTION..............................................................................................................3
2. PROJECT OBJECTIVE.....................................................................................................3
3. PROJECT SCOPE..............................................................................................................3
4. LITERTAURE REVIEW...................................................................................................4
5. RESEARCH QUESTIONS................................................................................................6
5.1 Primary Question..............................................................................................................6
5.2 Secondary Questions........................................................................................................6
6. RESEARCH DESIGN AND METHODOLOGY..............................................................7
6.1 Qualitative Research.........................................................................................................7
6.2 Quantitative Research.......................................................................................................7
6.3 Validity and Reliability....................................................................................................8
6.4 Research Limitations........................................................................................................8
6.5 Time Schedule..................................................................................................................8
7. CONCLUSION.................................................................................................................10
Reference..................................................................................................................................11
Appendices...............................................................................................................................12
Appendix 1: Questionnaire...................................................................................................12

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1. INTRODUCTION
Globalization has made it easy that companies do not have to manufacture everything for
themselves. Outsourcing is one of the most appropriate mechanisms enabling firms to
concentrate on that which they are well equipped to do. According to Oshri, Kotlarsky, and
Willcocks (2015) outsourcing has been recognized as a typical corporate management
strategy. Multiple studies have considered outsourcing as one of the most effective workforce
management strategies in gaining competitive advantage (Liu, Guo, and Lee, 2011; Namkung
and Jang, 2008). Arya, Mittendorf, and Sappington (2008) contend that outsourcing is the
most used concept in most of the firms. However, most of some industries are still not
confident about value perception of outsourcing. Furthermore, outsourcing in Australia is still
is still limited to small-medium size enterprises. Nonetheless, outsourcing has been attributed
to operations’ cost reduction, the efficiency of operations, risk sharing, and increased
competitiveness. This research seeks to analyze the advantages and disadvantages of
outsourcing business activities in Australia using Hewlett as a case study.
2. PROJECT OBJECTIVE
The objective of this study is to examine the advantages and disadvantages of outsourcing
business functions with Hewlett as a case study.
3. PROJECT SCOPE
This paper will analyze the advantages and disadvantages of outsourcing. The various
reasons for outsourcing will be discussed, and the possible threats of outsourcing business
activities will as well be assessed. The outsourced business operations of Hewlett will be
evaluated, and any associated benefits and dis-benefits pointed out. This paper will also
recommend strategies for effective outsourcing to Hewlett Company.

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4. LITERTAURE REVIEW
Oshri, Kotlarsky, and Willcocks (2015) opine that outsourcing is a mechanism by which
organizations share their responsibilities with third-party agents. The third party takes full
responsibility for the outsourced functions. Organizations generally outsource specific
business functions to improve efficiency. Additionally, outsourcing allows the company to
focus more on its internal operations and to minimize costs of business operations. Hewlett
Company outsources some of its functions to third parties for efficiency and effectiveness.
Organizations outsource business functions to attain competitive advantage. This happens in
situations that the companies do not have the resources to invest in improving the quality of
service or product to meet the standards of the market. Outsourcing also reduces the overall
cost of business operations such as employee remunerations, production costs among others.
Developed countries often outsource their functions to developing countries by establishing
branches there to take advantage of the available cheap labor. Hewlett has adopted
outsourcing as a means of attaining cost benefits in the competitive market (Vining and
Globerman, 2017). An organization can also outsource its functions to concentrate and
improve on key internal operations.
Hewlett Company seeks to become innovative in its key operations and therefore outsources
some of the business activities. Chou, Techatassanasoontorn and Hung (2015) observe the
Hewlett produces the hardware parts and then information is sent to the outsourced parties.
Hewlett can improve service quality and achieve better customer satisfaction. Worthington
(2015) elucidates that firms outsource business activities that require specific specialization
skills. However, it is crucial that the organization should have employees that are skilled
concerning the outsourced functions to benchmark the performance of the third party. Instead
of training the employees concerning the emerging technology, companies prefer to
outsource activities to third-party companies that can efficiently perform the tasks. This

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enables the organization to reduce the overall cost and time for the business operations and
also to attain a competitive edge.
Kerzner (2018) found out that organizations outsource their operations to enhance
organizational efficiency at the workplace. Outsourcing contract is usually granted to the best
performing third party to ensure the services provided meet the market standards. After
outsourcing, the remaining internal activities demand the full attention of the workers, and
therefore they are completed efficiently. De Weerdt and Hirvonen (2016) notes that
outsourcing enables risk sharing with third-party agents. This is because the third-party agent
is mandated with the responsibility of attaining the agreed quality and standard and are liable
for compensation in case they do not perform up to standard.
On the other hand, outsourcing has been attributed to various drawbacks. Bloom et al. (2014)
found out that outsourcing forfeits managerial authority by transferring it to the third party
even though ownership is retained. This limits the desires and dictates of the outsourcing
company with regard to the standards of performance especially when they were not outlined
in the agreement (Gorla and Somers, 2014). Hewlett Company was unable to control its data
centers in California, thus hindering effective managerial control and decision making.
Outsourcing can also be costly due to the changes in the third party economic market. Any
change in rules and regulations of the market hosting the third party agent may demand
additional legal charges which will have to be met by the outsourcing company. Durst,
Edvardsson, and Bruns (2015) assert that outsourcing is commonly done in different
countries, and this may hamper communication due to the language barrier as a result of the
strong accents in either country. Hewlett outsources its operations to Singapore in which most
of the customers are only conversant with their national language apart from English. Such a

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scenario frustrates most of the consumers leading to poor customer service (Gurung and
Prater, 2017).
Dhillon, Syed and de Sá-Soares (2017) argue that outsourcing can be so fatal due to a breach
of information security. This is because the outsourcing company is forced to share critical
information to third party agent during outsourcing and in case there is a breach of
information security, then the company might suffer substantial losses more so to its
competitors.
5. RESEARCH QUESTIONS
5.1 Primary Question
1. What are the advantages and disadvantages of outsourcing business functions in
Hewlett Company?
5.2 Secondary Questions
1. Which business functions are commonly outsourced by Hewlett Company?
2. What are the reasons for outsourcing business activities at Hewlett Company?

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6. RESEARCH DESIGN AND METHODOLOGY
This study will employ both qualitative and quantitative methods (mixed approach). This
method enables the combination of a set of tools which produces overall results of the
statistical analysis (Creswell and Creswell, 2017).
6.1 Qualitative Research
This paper will use a qualitative approach to build an in-depth insight of the research topic.
The researcher began by formulating the research questions geared towards providing
answers to the topic under investigation. The research questions were developed after a
critical review of relevant literature. The study will use a case study design because it is much
more effective in circumstances where a detailed evaluation of a single unit is required
(Onwuegbuzie et al. 2012 and Garg and Kothari, 2014). By the use of Selective sampling
approach, a sample of fifteen directors, executive, and line managers will be selected from a
target population of 50 employees of Hewlett Company. In-depth interview technique and
small group discussions will be used to collect data. The collected data will then be analyzed
using content analysis method.
6.2 Quantitative Research
This paper is to adopt a descriptive research design since this approach emphasizes the
significance of the variables being investigated (Taylor et al., 2015). Additionally, the
approach is most appropriate in describing the characteristics of a given subject or group of
subjects (Kothari, 2009). Primary data will be collected through survey method using
structured questionnaires; therefore, the researcher will design structured questionnaires with
close-ended questions to allow comparability (Bryman and Bell, 2015). The researcher will
deliver the questionnaires by hand to the respondents to fill them and then be picked by the
researcher after a week. The target population comprises of the directors, executive and line
managers of Hewlett Company. A sample size of 15 employees will be developed using the

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10% proposal of Mugenda, and Mugenda (2012) as equal representation of the overall
population. Purposive and random sampling method will be used to develop the sample. This
approach is to be used because it ensures that all items in the sample are without bias
incorporated into the research. The collected data will then be verified for comprehensibility
and inclusivity, categorized, coded and tabulated. Statistical Package for Social Science
(SPSS version 20) will then be used to analyze the data and then presented in terms of tables
and diagrams for easy interpretation.
The researcher is to carry out a pilot study of some four managers of different departments
seven days to the actual survey. This will help to affirm the suitability of the proposed
research design.
6.3 Validity and Reliability
The reliability of the study will be determined using the Cronbach’s Alpha coefficient.
According to Kothari (2009), an average of Cronbach Alpha coefficient below 0.7 is reliable.
Also, the more the number of items included in the research tool the higher the probability of
achieving a stable approximation of data reliability. Data validation will be ascertained in the
phase of the coding process using SPSS through coding simple array and limit validation to
check for uniformity and order of the input items.
6.4 Research Limitations
The study is limited to a single company, and the outcomes are likely to be different from
other outsourcing companies in other sectors because of the difference in the nature of
business operations. The sample size was not only limited to one company but was also not
large enough to generalize and apply the findings in a larger context.
6.5 Time Schedule
The study is expected to take approximately three months beginning on the first week of
March to the end of May. Data collection is expected to take most of the research time which

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is two weeks. This is because it will involve personal dissemination of the questionnaires to
all the 20 respondents of various departments, then giving them a span of one week to fill
them and then collecting them. Topic selection and write-up will each take eight days
because topic selection will involve literature review and the write-up will as well be
involving. The rest of the activities will each take less than eight days to accomplish. The
researcher expects to submit a final copy of the report in the last week of May.
Activity Start date End date
Duration
(Days)
Topic Selection
07/03/201
8
15/03/201
8 8
Developing research questions
22/03/201
8
28/03/201
8 6
Formulation of Questionnaire
03/04/201
8
08/04/201
8 5
Preparing Project proposal
09/04/201
8
14/04/201
8 5
Pilot study
08/04/201
8
11/04/201
8 3
Collecting data
18/04/201
8
02/05/201
8 14
Data analysis
07/05/201
8
13/05/201
8 6
Write-up
18/05/201
8
26/05/201
8 8
Submission 27/05/201 30/05/201 3

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8 8

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7. CONCLUSION
The main objective of this study is to analyze the advantages and disadvantages of
outsourcing within Hewlett Company. There is a lot of pressure from the current market on
the quality, performance, and effectiveness of products, especially in the electronics industry.
In response to these needs, it is required that the management to minimize cost; hence the
organizations are exploring new techniques on how to react to these issues. The management
is always faced with the tough decision on whether to buy, outsource or make a product.
Outsourcing business functions can be regarded as a strategic decision many benefits that are
associated with it. An organization can outsource various business functions including human
resource management, ICT, customer care management among others. Outsourcing has both
advantages and disadvantages. Outsourcing helps in minimizing operational costs, enables
the organization to focus on remaining activities, enables skill acquisition, improves
operational efficiency, and encourages risk sharing. On the other hand, outsourcing can lead
to loss of managerial control, can be costly due to changes in market conditions,
communication barriers, and can cause a breach of information security. Therefore, an
organization should consider the advantages and disadvantages of the activity to be
outsourced in order to make the right decision.

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Reference
Arya, A., Mittendorf, B. and Sappington, D.E., 2008. The make-or-buy decision in the
presence of a rival: strategic outsourcing to a common supplier. Management
Science, 54(10), pp.1747-1758.
Bloom, N., Garicano, L., Sadun, R. and Van Reenen, J., 2014.The distinct effects of
information technology and communication technology on firm organization. Management
Science, 60(12), pp.2859-2885.
Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.
Chou, S.W., Techatassanasoontorn, A.A. and Hung, I.H., 2015. Understanding commitment
in business process outsourcing relationships. Information & Management, 52(1), pp.30-43.
Creswell, J.W. and Creswell, J.D., 2017. Research design: Qualitative, quantitative, and
mixed methods approaches. Sage publications.
De Weerdt, J. and Hirvonen, K., 2016. Risk sharing and internal migration. Economic
development and cultural change, 65(1), pp.63-86.
Dhillon, G., Syed, R. and de Sá-Soares, F., 2017. Information security concerns in IT
outsourcing: Identifying in congruence between clients and vendors. Information &
Management, 54(4), pp.452-464.
Durst, S., Edvardsson, I.R. and Bruns, G., 2015. Sustainable knowledge management and the
outsourcing of core competences—Does that fit together? Initial insights from a literature
review. In Sustainable operations management (pp. 15-35).Springer, Cham.
Garg, G. and Kothari, C.R., 2014. Research Methodology. Methods and Techniques. New
Age International Publishers. New Delhi-110002.

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Gorla, N. and Somers, T.M., 2014. The impact of IT outsourcing on information systems
success. Information & Management, 51(3), pp.320-335.
Gurung, A. and Prater, E., 2017. A research framework for the impact of cultural differences
on IT outsourcing. In Global Sourcing Of Services: Strategies, Issues And Challenges (pp.
49-82).
Kerzner, H., 2018. Project management best practices: Achieving global excellence. John
Wiley & Sons.
Kothari, C.R., 2009. Research methodology: An introduction. New Age International
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Liu, C.T., Guo, Y.M. and Lee, C.H., 2011. The effects of relationship quality and switching
barriers on customer loyalty. International Journal of Information Management, 31(1),
pp.71-79.
Mugenda, O.M. and Mugenda, A.G., 2012. Research methods dictionary. Nairobi.
Namkung, Y. and Jang, S., 2008. Are highly satisfied restaurant customers really different? A
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Onwuegbuzie, A.J., Leech, N.L. and Collins, K.M., 2012. Qualitative analysis techniques for
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Oshri, I., Kotlarsky, J. and Willcocks, L.P., 2015. The Handbook of Global Outsourcing and
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Taylor, S. J., Bogdan, R., & DeVault, M. (2015). Introduction to qualitative research
methods: A guidebook and resource. John Wiley & Sons.

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Vining, A.R. and Globerman, S., 2017. The outsourcing decision: a strategic framework.
In Global Outsourcing Strategies (pp. 27-40). Routledge.
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84). Springer, Cham.

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Appendices
Appendix 1: Questionnaire
A SURVEY ON THE ANALYSIS OF THE ADVANTAGES AND DISADVANTAGES OF
OUTSOURCING OF BUSINESS ACTIVITIES OF HEWLETT, AUSTRALIA
SECTION 1: DEMOGRAPHIC CHARACTERISTICS
1. Please specify your gender: Male [ ] Female [ ]
2. Please indicate your highest education level?
High school [ ] Technical College [ ]
University degree [ ] Master degree [ ] Others (specify…….)
3. Which department do you belong to?
ICT [ ] HRM [ ] Finance [ ] Supplies, stores &Transport [ ]
Customer care [ ] Procurement [ ] Others (specify……..)
4. How long have you worked for this company?
Less than 5 years [ ] 5 to 9 years [ ]
10 to 14 years [ ] Over 15 years [ ]

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SECTION 2: A D V A N T A G E S O F OUTSOURCED SERVICES
5. Does your unit outsource any business functions?
Yes [ ] No [ ]
If Yes, Please indicate the extent to which the organization outsources its functions using
the scale of 1 to 5, where No extent =1 Little extent =2 Average extent =3
Great extent =4 Very Great extent =5
Advantages No extent Little
extent Average
extent Great
extent Very
Great
extent
1. Cost Reduction ie operating
cost, recruiting cost
2. Efficient delivery
3. Risk-sharing
4. Focus on core business
processes
5. Skill acquisition
Others (kindly specify)