Deck 13: Outsourcing

Question 1

Outsourcing is a special organizational function that does not require a cost-benefit analysis.

Answer 1

False

Question 2

The major information risk to the HR department when using outsourcing is the potential for violations of confidential employee data.

Answer 2

True

Question 3

Technology has been an important driver of the outsourcing trend.

Answer 3

True

Question 4

Quality improvement is typically cited as a benefit of outsourcing,and therefore it is written into the outsourcing contract.

Question 5

Recruiting is an HR function that is most likely to be outsourced.

Question 6

The real sources of competitive advantage are not products but management's ability to consolidate skills and technologies into competencies to adapt to changing circumstances.

Question 7

When HR activities are outsourced to foreign countries,this is called HRO,or human resources outsourcing.

Question 8

According to the textbook,in 2010,approximately 50 percent of all large Canadian companies outsourced some HR services.

Question 9

Outsourcing is a contractual relationship for the provision of business services by any available provider with relevant expertise.

Question 10

There is a new trend for organizations to outsource absence management because claims are complex,confidential,and medically oriented.

Question 11

Organizations that outsource achieve a ratio of 1:100 (one HR person to 100 employees).

Question 12

Outsourcing can result in an organization's employees losing some of its KSAOs.

Question 13

In the U.K. ,most HR managers cited in an outsourcing survey were dissatisfied with the frequency and quality of the communication from the supplier.

Question 14

When selecting an outsourcing company,reference checks should be done to verify the quality of its previous work.

Question 15

A competency is a combination of technology,management,and collective learning.

Question 16

Two disadvantages of outsourcing include the potential disintegration of an organization's culture and the loss of control over proprietary knowledge.

Question 17

Because an outsourced function is not as visible to the employees as an in-house function,there may be issues of confidentiality.

Question 18

The two most frequent causes of outsourcing problems are poor service definition and cost overruns.

Question 19

Typically a company will outsource its HR functions if the labour laws and regulations governing employees are too complex for the company's current level of expertise.

Question 20

Emerging research on outsourcing low-value,routine activities demonstrated that HR staff did not focus more on strategic or higher-value work.

Question 21

The most important deliverables to SaskCentral when it was searching for an outsourcing solution included accuracy,knowledge of legislation,and cost-effectiveness.

Question 22

Once an organization has selected a vendor,what would be the next step in managing outsourcing?

A) cost-benefit analysis
B) reviewing policies
C) negotiating the contract
D) monitoring the arrangement

Question 23

What are two primary risks associated with outsourcing?

A) increased costs and displaced workers
B) impact on public and private relations
C) service and security
D) loss of strategic and operational control

Question 24

Which organizational activity performs better than outsourcing with respect to cost savings?

A) management by objectives
B) balanced scorecard
C) re-engineering
D) continuous improvement

Question 25

What percentage of HR professionals resist outsourcing because they worry about losing their jobs?

A) one-tenth
B) one-quarter
C) one-third
D) one-half

Question 26

What are two primary reasons why organizations outsource?

A) financial savings and strategic focus
B) strategic focus and restructuring
C) access to advanced technology and ability to service remote locations
D) improved internal and external service levels

Question 27

What was the public relations consequence for a catering company that had been outsourced by British Airways when 70 000 passengers were stranded at Heathrow Airport in the U.K.?

A) brand image damage
B) bankruptcy
C) no known consequences
D) decreased business

Question 28

When selecting a vendor,an organization needs a description of the responsibilities to be outsourced and an invitation to potential providers to present their proposal for carrying out the job.What is this called?

A) vendor checklist
B) supplier sequencing
C) request for proposal
D) sender request

Question 29

What other HR strategy provides a negative impact on employees similar to that of outsourcing?

A) acquisitions
B) restructuring
C) mergers
D) divestitures

Question 30

For an organization,the major information security risk is the loss of personnel information.

Question 31

Why do large organizations rarely outsource their entire HR departments?

A) Outsourcers specialize in market niches and so no one company does all functions.
B) Organizations do not wish to relinquish total control over all HR functions.
C) Organizations have different cultures than their outsourcing vendors.
D) Outsourcers need to be monitored,and this extra time has associated costs.

Question 32

Which of the following HR functions is most likely to be outsourced by organizations?

A) HR planning
B) HR strategy
C) pension administration
D) restructuring

Question 33

Which of the following is NOT a function of the evaluation team in an outsourcing decision?

A) analyzing bids
B) applying due diligence
C) choosing the vendor
D) negotiating the contract

Question 34

According to one survey in the textbook,about 80 percent of companies reported that outsourcing service agreements did not reduce overall costs.

Question 35

What is one of the primary risks associated with outsourcing?

A) increased costs
B) decreased employee morale
C) impact on public relations
D) loss of strategic control

Question 36

What happened to Schwinn,a U.S.bicycle manufacturer?

A) Its outsourcing vendor,Giant Manufacturing in Taiwan,stole its confidential employee information,which resulted in many lawsuits against Schwinn.
B) Its outsourcing vendor,Giant Manufacturing in Taiwan,became insolvent and was unable to fulfill its annual order for Schwinn.
C) Its outsourcing vendor,Giant Manufacturing in Taiwan,became a competitor and damaged Schwinn's business.
D) Its outsourcing vendor,Giant Manufacturing in Taiwan,used lower quality materials to make Schwinn's bikes,which increased product defects.

Question 37

What is the first step in managing outsourcing?

A) cost-benefit analysis
B) selecting the vendor
C) negotiating the contract
D) monitoring the arrangement

Question 38

Activities that are most likely to be outsourced include ones that are repetitive,predictable,and infrequent.

Question 39

Which of the following activities is most likely to be outsourced by organizations?

A) confidential activities
B) HR strategy activities
C) employee layoff activities
D) rule-based activities

Question 40

Which of the following characteristics is NOT typically used to help determine whether an organization should outsource?

A) reliance on technology
B) routine activity frequently undertaken
C) cost-effectiveness
D) accessibility from remote sites

Question 41

According to the textbook,why did CIBC make the decision to outsource major portions of its HR functions?

A) to downsize employees and increase efficiency
B) to avoid capital expenses and increase cultural fit
C) to cut costs and increase productivity
D) to improve service and increase automation

Question 42

What were two HR functions that Avenor Inc.of Montreal outsourced?

A) preliminary interviews and training needs analysis
B) pensions and payroll administration
C) program delivery and executive salary negotiations
D) wellness programs and strategic HR planning

Question 43

Which of the following HR functions is NOT likely to be outsourced by organizations?

A) training and development
B) strategic planning
C) benefits administration
D) recruitment

Question 44

Which company reduced the headcount in its head office from 40 employees in 1994 to 12 employees today due to outsourcing?

A) TransCanada
B) Gow Corp.
C) Avenor
D) Pratt & Whitney

Question 45

Nike focuses on its competencies in product design and outsources other competencies.What is this competency product design called?

A) non-core competencies
B) worker competencies
C) core competencies
D) transactional competencies

Question 46

According to the textbook,why were 30 percent of outsourcing arrangements NOT renewed?

A) because of an incompetent outsourcer
B) because cost savings were not achieved
C) because employees resisted change
D) because productivity suffered

Question 47

Why have many western nations outsourced activities to India?

A) increasing pool of outsourcing companies
B) large English-speaking population
C) relatively stable legal system
D) committed and loyal workforce

Question 48

What function does a stay-back team perform?

A) It negotiates the outsourcing contract.
B) It conducts a cost-benefit analysis.
C) It monitors the outsourcing arrangement.
D) It selects the outsourcing vendor.

Question 49

Once an organization has negotiated the outsourcing contract,what would be the next step in managing outsourcing?

A) cost-benefit analysis
B) selecting the vendor
C) reviewing policies
D) monitoring the arrangement

Question 50

What can a company do to reduce the risk of an outsourcing company entering the market and becoming a competitor?

A) outsource non-core work
B) erect strategic blocks
C) establish trust
D) monitor the outsource arrangement

Question 51

In an outsourcing arrangement,what typically happens to the employees who currently do the outsourced function in-house?

A) They are fired.
B) They quit or retire.
C) They move to another company.
D) They transfer to other functions.

Question 52

When rumours of potential outsourcing plans surface in an organization,what might managers expect next?

A) productivity losses
B) customer service disruptions
C) media attention
D) more formal communication

Question 53

What are two primary reasons why organizations outsource?

A) strategic and transactional focus
B) access to specialized expertise and advanced technology
C) access to specialized expertise and ability to service remote locations
D) organizational politics and restructuring

Question 54

Why do cost overrides with outsourcing occur more frequently than projected?

A) Information technology is deemed a compatible system.
B) Client demands are outside of the standard vendor package.
C) Organizations are inexperienced with vendor selection.
D) Vendors will make contracts that are biased in their favour.

Question 55

Which of the following health and safety activities are most likely outsourced?

A) employee assistance and wellness programs
B) hazard recognition and risk assessment
C) health and safety policies and procedures
D) workplace hazard controls

Question 56

Which of the following outsourcing functions carries a potential risk of information being leaked?

A) payroll and benefits
B) software development
C) recruitment
D) pension administration

Question 57

What are the two most frequent causes of outsourcing problems?

A) reduction of costs,vendor incompetence
B) excessive time,lack of technology
C) organizational politics,reduced employee morale
D) poor service definition,weak management processes

Question 58

Which of the following is a key reason why an organization would outsource?

A) to produce deliverables
B) to undertake complex business activities
C) to improved service levels
D) to improve organizational knowledge activities

Question 59

A core competency can be defined in four different ways.Three of those definitions are: (1)activities traditionally performed internally; (2)activities critical to business success; (3)activities creating current or potential competitive advantage.What is the fourth way that core competency can be defined?

A) activities that will influence future growth
B) activities that will increase profitability
C) activities that will result in innovation
D) activities that will reduce debt load

Question 60

Which core competency does Nike retain in-house while outsourcing nearly everything else?

A) product design
B) financial analysis
C) customer service
D) employee recruitment

Question 61

What is an essential first step that an organization must undertake with its outsourcing vendor when negotiating the contract?

A) making sure that there is a termination clause
B) checking references using the vendor's current clients
C) establishing benchmarks for current service levels
D) projecting a budget for cost savings

Question 62

List and briefly explain three risks associated with outsourcing.

Question 63

What are some considerations in managing an outsourced service or program? Describe two in detail.

Question 64

Describe three advantages for small businesses to outsource their HR functions.

Question 65

Why do organizations outsource? List three of the six primary reasons.

Question 66

Why are specialized outsource vendors more efficient in their offering of training than many organizations?

A) Outsourcers can achieve economies of scale.
B) Outsourcers can charge for every transaction.
C) Outsourcers can maximize their capital.
D) Outsourcers can provide uninterrupted service.

Question 67

Comment on the quote "not a single company can afford to even try and be the first in everything." Define and give an example of core work and non-core work.

Question 68

Why is it important to outsource transactional work?

A) It adds value to non-core activities.
B) It frees up management's time.
C) It reduces transaction time.
D) It is repetitive,predictable,and easily duplicated.

Question 69

What is one service risk to an organization in having a company provide outsourcing arrangements?

A) The vendor might have a less personal relationship with employees.
B) The outsourcer might allow changes to the contract.
C) The vendor might limit certain proprietary technology.
D) The outsourcer might have a disruption of service.

Question 70

Define outsourcing.

Question 71

Describe three activities that organizations are most likely to outsource.