8/4/2016

HRM411

TERM PAPER ON CASE STUDIES ON

DOWNSIZING RESTRUCTURING
AND OUTSOURCING

Human Resource Planning | Submitted To; Tamanna Parvin Eva

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Case Study Interpretation and Paper

writing
On

" A Downsizing Decision at the Department of Public

Works"
"Outsourcing at Texas Instruments, Canada"

Submitted to;

Tamanna Parvin Eva

Senior Lecturer
Department of Business Administration
East West University

Submitted by;
Md. Shibly Noman Bappy
Id # 2012-1-10-057
Ahmed Rabbi Al Hasan
Id# 2010-2-10-367
Md shariful islam
Id # 2010-3-10-226
Tabassum Iftekhar
Id # 2012-2-30-061
Muhammad Nazmul Hossain
Id # 2013-1-10-112
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3rd August, 2016

Tamanna Parvin Eva
Senior Lecturer
Department of Business Administration
East West University
Dhaka-1212

Subject: Submission of report on Two cases; which relate to Downsizing and

Restructuring and Outsourcing

Dear Mam;
This is to inform you that we have completed the report on two cases "A downsizing decision
at the department of public works" and "Outsourcing at Texas instruments, Canada". This
report contains a brief and puzzle out of both cases.
In writing this paper, we have followed your instructions for report writing to present our
views and understanding in the easiest way. However, we will be glad to clarify any
divergence that may arise.

Sincerely yours,

Md. Shibly Noman Bappy

Id # 2012-1-10-057
Ahmed Rabbi Al Hasan
Id# 2010-2-10-367
Md shariful islam
Id # 2010-3-10-226
Tabassum Iftekhar
Id # 2012-2-30-061
Muhammad Nazmul Hossain
Id # 2013-1-10-112
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Acknowledgement
We are greatly thankful to Almighty Allah for enabling us to get successfully through our
responsibilities though we had to face some problems during the completion of the term
paper .
We would like to extend our sincere thanks to course instructor Tamanna Parvin Eva for
providing us with continuous support and guidance which was vital for the successful
completion of the report. We thank your ability of extracting of very best out of us, for your
patience and perseverance, and most importantly for the tremendous source of
encouragement and inspiration you have bestowed on us throughout the semester.
Last but not the least, we, the group members who are doing this report as a team it is
thanked to each other for being extremely co-operative and for sharing ideas with one
another.

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Contents
Executive Summary ................................................................................................................................. 6
1.0 Introduction ...................................................................................................................................... 7
1.1 Problem Statement ....................................................................................................................... 8
1.2 Objectives of the Study ................................................................................................................. 9
1.3 Methodology ................................................................................................................................. 9
1.4 Scope of the Study ...................................................................................................................... 10
1.5 Limitation of the Study................................................................................................................ 10
2.0 Literature Review ............................................................................................................................ 11
2.1 Downsizing Decision and Restructuring ...................................................................................... 11
2.2 Outsourcing an External Provider or People............................................................................... 13
3.0 Summary of Cases ........................................................................................................................... 15
3.1 A downsizing decision at the department of public works ......................................................... 15
3.2 Outsourcing at Texas Instruments, Canada ................................................................................ 16
4.0 Finding and Analysis ........................................................................................................................ 17
4.1 Findings from Case; 01 ................................................................................................................ 17
4.2 Findings from Case; 02 ................................................................................................................ 22
5.0 Conclusion ....................................................................................................................................... 24
6.0 References ...................................................................................................................................... 25

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Executive Summary
Authorities throughout the developing world are turning to downsizing and outsourcing in an
effort to reduce budget deficits and address the inefficiencies engendered by state-led
development strategies. Many governments face the difficult task of reducing the size and
improving the efficiency of an overstaffed public sector as part of a general endeavor to
increase economic growth and cut fiscal deficits. These retrenchment efforts often face
massive issues. The paper provides the distinct problem which can be happened and solution
of the problem through restructuring the whole organizational culture to motivate the
employee.
Outsourcing in facilities management involves turning over the complete management and
decision-making authority of an operation to somebody outside organization .It may help
businesses to maximize returns on investment and establish long term competitive advantages
in the marketplace. The purpose of this paper is to overview how outsourcing could effect on
a organizational goal and what could be the possible solution.

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1.0 Introduction
What Is Employee Downsizing?
Employment downsizing has become a fact of working life as companies struggle to cut costs
and adapt to changing market demands. Companies that simply reduce headcounts, without
making other changes, rarely achieve the long-term success they desire. Employment
downsizing is often implemented during economic downturns as a reactive, tactical action.
The most successful organizations, however, use downsizing more strategically as part of an
overall workforce strategy.
Due to the globalization of business, organizations are able to develop a number of
approaches by which to employ human resources, technology, and capital to implement
innovative projects in different parts of the world. They are able to derive maximum
advantage due to these possibilities. While the larger goals appear justifiable and in the
interest of most stakeholders, they lead to frequent changes at the organizational, functional,
and individual levels.
At the organizational level, such changes can lead to closure of businesses, off-shoring,
merging with another organization, outsourcing, restructuring, etc. At the functional level, it
can imply changes in the availability of resources, changes in the scope of activities, etc. As a
sequel to these developments, employees can be redeployed, transferred, rendered redundant,
or let go within a very short span, without adequate preparation for these changes.
The fundamental reason to resize the organization is to improve organizational performance
and to reduce costs of operation. While these changes are expected to fetch significant gains
for the companies in the long run, an analysis of corporate experiences of downsizing shows
that such measures are not always implemented with careful consideration of all the
implications.

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What Is Outsourcing?
Outsourcing is a practice used by different companies to reduce costs by transferring portions
of work to outside suppliers rather than completing it internally. Outsourcing is an effective
cost-saving strategy when used properly. It is sometimes more affordable to purchase a good
from companies with than it is to produce the good internally.
In addition to cost savings, companies can employ an outsourcing strategy to focus on core
aspects of a business. Outsourcing noncore activities can improve efficiency, streamlining
and productivity because another entity performs these smaller tasks better than the firm
itself. This strategy may also lead to faster turnaround times, increased competitiveness
within an industry and the cutting of overall operational costs. Businesses can reduce labor
costs significantly by outsourcing certain tasks, while companies may simultaneously have
access to technology without investing large amounts of money to own the technology.
Many businesses find outsourcing the functions of human resources, such as payroll and
health insurance, saves enormous amounts of time, effort and energy. HR is one of the
noncore functions of a firm; other companies may have experts to help with this aspect of
human capital.
Outsourcing also has several disadvantages. Signing contracts with other companies may take
time and extra effort from a firm's legal team. Security threats occur if another party has
access to a company's confidential information and then the party suffers a data breach. A
lack of communication between the company and the outsourced provider may occur, which
could delay the completion of projects.

1.1 Problem Statement

To complete this paper we have read out two case studies; one case is related to downsizing
and its effect on organizational structure and restructure the framework to overcome the
effects and another case is related to hire (outsourced) an external company to complete a
specific task and the effect of this changes.
In both studies, the manager came up with short term solution to meet the target but both of
the case suffered to meet the long term achievement. So, we have to came up with the
solutions which can meet short-term target as well as long term target.
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1.2 Objectives of the Study

The main purpose of writing this paper is to learn the process of solving cases and to relate
with the terms we have acknowledged from Human Resource Planning course.
The objective of the study is:-

From the first case;

To make a conceptual study of Employee Downsizing.
To study as to what cause this Employee Downsizing.
To study the impact of Employee Downsizing on the employees morale.
To study as to how Employee Downsizing, employee retention and employee
commitment are inter related.

From the second case;

To make a conceptual study of Outsourced (Hire an external provider).
To study as to what cause this Outsourced.
To study the impact of Outsourced on the organizational overview and employee's
attitude.

1.3 Methodology
To conduct the term paper we have readout the both cases several times in order to find out
the issues.
The source of our information was mainly based on this two cases and our text book (which
is used as primary source) as well as to conduct the literature review we have read out several
cases, reports, journal, articles, visual recording, online documents and portal (which are used
as secondary source).

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1.4 Scope of the Study

This study focuses on few HR terms which are downsizing and restructuring, outsourced or
hire an external provider. We have encountered with two real situation or case of
organizations which help us to acknowledge about the fact of employee engagement,
employer-employee relation, employee motivation, effect of several HR decision on both
employee and organization.

1.5 Limitation of the Study

The resources were very limited as we had to mainly focus on case study. Even while we
were conducting literature review we find out limited numbers of similar cases regarding
second case as well as the first case.
The paper was only centered with the two cases, which didn't give us the opportunity to
conduct a field work. Limitation of time to conduct the paper.

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2.0 Literature Review

2.1 Downsizing Decision and Restructuring
Downsizing began as the strategy of sickly corporations shedding workers in the face of weak
demand, but soon strong firms looking to boost shareholder value even further adopted the
policy. Downsizing will be examined as a strategic option that management can exercise in
order to boost equity value. Downsizing will be presented as a macro-economic phenomenon,
having an impact on inflation, and therefore the rate at which stock prices are discounted and
valued.
Downsizing or layoff is a widespread strategic decision and change practice since 1970's and
during the economic downturn in the year 2007 it became a more common phenomenon. In
2001 alone fortune 500 companies reportedly cut a total of 1040466 jobs and one predicts
that by 2015 a further 3.3 million jobs will be outsourced. Changing patterns in reasons cited
for job loss support this impression of the rising importance of restructurings. Differences in
factors such as the state of the economy and the signal sent by job loss could make the
process of downsizing and the effects of job loss differ between restructurings of healthy
organizations and downsizing due to financial distress. Recent companies to pursue
downsizing include American Express, Alcoa, Motorola, HP, Dell, Lucent to name a few.
[Downsizing as a corporate restructuring, 2015]
Kalyan Chakravarti in the article, "Downsizing and Outsourcing: An Indian Perspective",
explains the economic situation of India since Independence (post-1947) and in the aftermath
of the economic liberalization (post-1991). Against this backdrop, the author analyses the
performance of the Indian Public Sector Undertakings. He outlines the causes that resulted in
surplus manpower among PSUs. However, after India opened up its economy, most PSUs
were compelled to streamline their operations to increase their efficiency. One of the major
steps taken to achieve this goal was to shed the excess staff on their payrolls through the
"golden handshake," by floating Voluntary Retirement Schemes (VRS) and Compulsory
Retirement Scheme (CRS). The other major step was to outsource non-core activities and
focus on their core competencies. The article provides a snapshot of the Indian experience of
downsizing and also discusses the social implications of these drastic measures. [C. Kalyan,
2005]

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During the 1980s and 1990s, public sector downsizing and retrenchment operations were
implemented around the world, particularly in Africa, Latin America, and the transition
economies. These operations targeted government agencies, state-owned enterprises, and the
military. Some of the options governments used to downsize overstaffed civil services and
state-owned enterprises are as follows: Voluntary departure schemes, Involuntary
retrenchment scheme, Involuntary retrenchment scheme, Employee ownership. [Edard, n.d]
The rationale for downsizing the public sector is to reduce the size (workforce) of public
agencies and state-owned enterprises in an attempt to improve efficiency, while reallocating
workers where they might be more productive. It may be part of an effort to move toward a
more market oriented economy. The operations are usually part of an overall effort to
increase economic growth and cut nancial decits in the public sector. In most developing
countries, the public sector is characterized by public agencies and state-owned enterprises
that are overstaffed, bureaucracies that are bloated, and public services that are inefficient.
[Diaz J.J., n.d]
During downsizing, the losses due to decreased employee loyalty, morale and lost
productivity are compounded by the complexity of the layoff process. For example, the
rumor mill that develops, or intensifies, during the preliminary planning stages results in
employees spending significant amounts of time gossiping and worrying about what may
happen. Unfortunately, many managers in the position of being "in the know" are guided by a
policy in which they are to avoid talking about rumors with employees. While this policy
may seem appropriate, the associated costs, in terms of lost productivity and employee
loyalty, may be significant. Communication will help to curb the worry and re-direct
employee energies to the job at hand [Fisher, 1988].

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2.2 Outsourcing an External Provider or People

There are a number of reasons, at both the strategic and operational level, why firms want to
outsource for a specific task or for HR activities. Many share similarities with the outsourcing
of other organizational functions. In particular, demands for increased productivity,
profitability, and growth have forced organizations to examine their internal HR processes,
resulting in a move toward strategic outsourcing services and away from discrete services.
Because of resource limitation, few firms have the ability to apply world-class resources to
all areas of competition. Thus, in order to gain competitive advantage they must select areas
in which they will concentrate their resources [Hamel and Prahalad, 1994]. By outsourcing to
specialist organizations services not generated by core competences, companies can see an
improvement in their organizational performance [Kotabe, 1993].
The most significant advantages of outsourcing are focus on core activities, cost savings,
access to experience, improving performance, and flexibility. First, many researchers agree
on the fact that by handing over noncore activities to a trusted third party, a company can
concentrate on activities central to its value proposition and increase its competitive
positioning. Second, outsourcing in general is held toward one of the main goals as cost
savings. The special necessity arises when a certain resource, either human or equipment
resources, is not needed full time, or the efforts to obtain the resource cannot be justified.
[Fan, 2006] For example, for a medium-size business keeping technical expertise and
maintenance is needed occasionally. Since the cost of hiring and training an engineer who is
competent in computer support is too high, it will be beneficial for the organization to
outsource this task. Third, by outsourcing companies have the possibility to access to highly
qualified personnel, who may not be available to the client organization and fully exploit the
suppliers investments, innovations, and specialist capabilities. Fourth, an important reason
for outsourcing consideration is achievement of an improvement in performance that the
outsourcer company might offer due to economies of scale. Large scale can provide a variety
of functions and opportunities which will help to save the best available worker, who might
not want to work in a less stimulating consumer environment. [Liao, 2002] Additionally, with
service providers the level of operational experience is expected to be higher, because of the
greater concentration of staff on tasks as compared to internal operations.

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Main disadvantages of outsourcing are loss of managerial control over outsourced operations,
threat to security and confidentiality, quality problems, hidden costs and reallocation of
existing teams. First, disadvantage related to the loss of control over the outsourced
operations stems from the reason that managing external resources requires special skills
which is a combination of the skills of people and process management, contract
management, and power negotiation. Second, almost every outsourcing contract has terms of
security and confidentiality spelled out, but the execution and audit are always difficult.
[Lacity, 1998] In financial services, requirements keep information known to investment
bankers away from traders, brokers, and other individuals who might attempt to use such
insider information improperly. Third, one reason to outsource is the expectation of receiving
better service from the outsourcer than from internal staff. Outsourcer has to be chosen in that
particular way to ensure that there is no bad influence on the quality of goods and services
produced. Otherwise, company may lose its position on the market. Fourth, company will
sign a contract with the outsourcing company that will cover the details of the service that
they will be providing. Anything not covered in the contract will be the basis for the company
to pay additional charges. For example, an analyst may intentionally exclude costs to favor
one decision, such as selecting one provider versus another, choosing in-sourcing over
outsourcing, or staying in a particular business or not. Fifth, the outsourcing is often related to
the firing in employees minds. It is also a problem for the organizations top management
team to decide how to reallocate the existing employees.

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3.0 Summary of Cases

3.1 A downsizing decision at the department of public works
A human resource officer, Kathleen Pool, of Dept. of Public Work in a small town has been
given the responsibility of managing the restricting of the jobs in the department. A wellknown consulting firm, in cooperation with senior government officials, recently completed a
detailed audit of government operation. As a result of the audit, they targeted several
government departments (including department of Public Work) to be restructured.
The audit revealed that the Dept. of Public Work had an adequate amount of budget and
recommended a further 2 percent increase in the funding for the department for the next two
year. But the operating costs of the department are expected to rise at 4 percent rate annually.
Rather than downsizing and cutting jobs, Kathleen has been asked to develop a restructuring
strategy that will meet the towns mission of providing service to its customer in effective
manner. The Dept. of Public Works has three subunits: garbage collection, parks and
recreation or city maintenance. There is one director for all subunits and one manger for each
of the subunits. To reach her objective, Kathleen is reviewing the operating policies at the
Dept. of Public Works.

Employees may ask for transfer from one subunit to others but the finals decision
rests in the hand of the director. Unless there is vacancy in one of the subunits, it is
rare such transfer request will be approved.

Students are hired over the summer to help with special project and to cover vacation
time periods for full-time employees. However, due to budgetary concern, this
program was cut from 2006 to 2009. It was resumed again in 2010.

Employees with a tenure of lest than ten year are not allowed to take vacation during
July or August. Employees with tenure longer than ten years can take vacation during
this time but only a maximum of one week.

Under the collective agreement, management has the right to determine the vacation
schedule of unionized employees.

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3.2 Outsourcing at Texas Instruments, Canada

In this case study: Outsourcing at Texas Instruments Canada, the HR manager of Dawn
McWhirter is presented with a case where the organization TI Canada is outsourcing its
payroll function to an outside national provider. However, the large number of transaction
errors by the national provider has TI Canada in dilemma whether outsourcing is worth it or
would it better to do perform the payroll function internally.
The current external provider provides services such as biweekly payroll input/output
changes, additions/terminations, ad hoc payments (such as commission and bonuses), car
allowances, mileage reimbursement and so on and is being reportedly paid $30,000 annually
for it. But to fix the large number of errors created by the provider, TI Canada also has to pay
its administrator an additional $37,440 annually. Furthermore, employees at Dallas
headquarter are also remaining busy correcting these errors and being paid additional $12,000
annually. Auditing the payroll function quarterly and annually also costs TI Canada extra
$3,400.
Dawn estimates that if IT Canada were to cut its outsourcing program, it would save $30,000
annually that its current external provider is being paid. Hiring a new national provider would
cost $4,000 thousand annually and would only perform partial payroll function. The new
provider will create biweekly payroll changes/additions using input from an on-site secure
web portal provided by the carrier. Thus the new provider would only be responsible for
printing pay slips, remitting taxes to government agencies, and preparing year end fillings
such as T4 remittances. Only other additional costs include paying $37,440 to administrator
and $3,400 for annual auditing services.

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4.0 Finding and Analysis

4.1 Findings from Case; 01
Question- 01

Outline the issues that Kathleen should consider prior to designing a restructuring strategy.
Restructuring is the corporate management term for the act of reorganizing the legal,
ownership, operational, or other structures of a company for the purpose of making it more
profitable, or better organized for its present needs. Other reasons for restructuring include a
change of ownership or ownership structure, demerger, or a response to a crisis or major
change in the business such as bankruptcy, repositioning, or buyout. Restructuring may also
be described as corporate restructuring, debt restructuring and financial restructuring.
Before restructuring into the Department of Public Works the following issues should
consider to design restructuring strategy:

I)

Asking for suggestion from the auditors since they have confirmed that the budget
is sufficient for the Public Works Department. With the help of their findings it
will easy for Kathleen to get the initial concept of how to do the restructuring.

II)

Keep an eye on the provided funding since the Department is not getting their
desired increment of annual funding.

III)

Design the payroll in such manner that do not decrease the motivation in such a
level which the decreases the put a great impact on the employees morale and
performance. From the conducted survey in case study we saw that when the
employee feel demotivated it put an impact on their performance, morale,
commitment, job satisfaction, turnover rate.

IV)

Providing sufficient of annual leave. Its a non-economic motivation to the

employee.

V)

Objective of reducing the operational cost.

VI)

Implementation of KPI (Key Performance Indicator) system for the improvement

of the performance.

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According to the situation in case these are the main issues that should consider prior to
restructuring.

Question 02

Design a strategy to restructure the department of Public Works. Be sure to provide support
for the decision/recommendations you propose.
Restructuring can come for many reasons. It can involve the sale or purchase of a
business or the closure of some or all of a facility because of a downturn in business.
Whatever the reason and circumstances, human resources professionals must deal with
certain issues that arise from these events and actions by management. Human resources
professionals can aid management by providing information on the options for restructuring,
the methodology for the selection of employees in the restructuring process, costs and
payments that can be expected in restructuring, the timing of restructuring, potential litigation
and claims assessments, obtaining effective releases, and the retention and motivation of the
remaining workforce
Before developing a restructuring strategy the managers should create a list of agendas where
they want to implement the strategy. There are several types of restructuring strategy. They
are:

Downsizing

Starburst

Verticalization

De-layering

Business Process Reengineering

Outsourcing

Virtualization

In our case the following issues have to be focused at the time of making restructuring
strategy:

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i.

Reducing the Operation cost: Since the Department of Public Works is not getting
their desired amount of funding and thats why they have to reduce their operation
cost. And to do this :

Kathleen can combine the subunits that are being operated in 3 separate building can
be transferred into 1 building that will reduce a large amount of cost.

Rather than Using separate machine by each units they can use common machines
together.

Reducing salary demotivate the employees. So rather than decreasing the salary
Kathleen can divide the salary into basic and performance bonus. It will encourage the
employee to perform well and some money will be saved from the salary of poor
performer.

ii.

Restructuring the annual leave: From the survey we can see that the annual leave is
making great impact on the employees morale, performance and turnover rate. So
giving some more annual leave. It will help to motivate the employee without any
increment or cash reward.

Also management can arrange 2 types of leave like

Payment leave and Non-payment leave.

iii.

Flexibility: Flexibility reminds the freedom to the human being and they always love
freedom. So management of the Public Works Department can give the flexibility to
their employees of switching their jobs. It will help them to increase their skills as
well own them flexibility.

iv.

Outsourcing and Voluntary participation: Hiring part time employee/worker is less

costly than recruiting fulltime employee

because like full time employee

management dont have to pay bonus to the part time employee. And Public Works
Department works for the society they can arrange various events to inspire common
people and recruit volunteers to work the society.

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If the PWD implies those strategy it will help them to restructure the strategy. And also help
them to Run the organization smoothly.

Question 03

A recent newspaper editorial suggested that the town contract out the collection of garbage.
What are the advantages/disadvantages of contracting out services that had been provided by
government?
Working for the outside of the organization is called outsourcing. Or in details we can
say that Outsourcing is a business strategy that moves some of an organizations functions,
processes, activities and decision responsibility from within an organization to outside
providers.
This is done through negotiating contract agreements with a vendor who takes on the
responsibility for the production process, people management, quality, customer service and
key asset management of the function.
Outsourcing allows organizations to focus on their core business and can create a competitive
advantage by reducing operational costs.
The advantages of contracting out service are:
I)

Cost Savings: There can be significant cost savings when a business function is
outsourced. Employee compensation costs, office space expenses and other costs
associated with providing a work space or manufacturing setup are eliminated and
free up resources for other purposes.

II)

Focus on core responsibilities: Outsourcing allows organization to focus on their

expertise and core business. When organizations go outside their expertise, they get
into business functions and processes that they may not be as knowledgeable about
and could potentially take away from their main focus.

III) Improved quality: Improved quality can be achieved by using vendors with more

expertise and more specialized processes.

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IV) Satisfaction of the beneficiary: The advantage of having a vendor contract is they

are bound to certain levels of service and quality.

V)

Operational efficiency: Outsourcing gives an organization exposure to vendor

specialized systems. Specialization provides more efficiency that allows for a quicker
turnaround time and higher levels of quality.

The disadvantages of contracting out service are:

I)

Quality risk: Outsourcing can expose an organization to potential risks and legal
exposure.

II) Quality service: Unless a contract specifically identifies a measurable process for

quality service reporting, there could be a poor service quality experience. Some
contracts are written to intentionally leave service levels out to save on costs

III) Employee or consumer opinion: There can be negative perceptions with

outsourcing and the sympathy of lost jobs. This needs to be managed with sensitivity
and grace.

IV) Less effect towards the organization: An outsourced employee may not have the

same understanding and passion for an organization as a regular employee. There is

the potential that an outsourced employee will come in contact with customers and
not be as knowledgeable of the organization, resulting in a negative customer
experience.

V)

Employee layoffs: Outsourcing commonly results in the need to reduce staffing

levels. Unless it can be planned through attrition, layoffs are inevitable. This is
difficult at best and if not managed appropriately, can have a negative impact on
remaining employees.

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However there are both advantages and disadvantages present in out servicing but it depends
on the situation also on the organization that whether giving a work to the outsourcing vendor
or not.

4.2 Findings from Case; 02

Question 01

If you were Dawn, what decision would you make and why?
If I consider myself in place of Dawn McWhirter I would terminate the contract of
that existing company. Because :
I)

I have to pay 26000 extra for their wrong calculation. And also 12000 extra to find
out their errors that they have done in their calculation.

II) I am getting a savings of extra 38000.

III) Though the errors are being rectified after spending some money but on the other

hand it also creating a negative impression on my organization's payroll and

payments.
IV) I have to take risks of exposure of the payroll information to those who are making

mistakes day by day.

So after considering all those reasons I will terminate the contract of that company.

Question 02

What are the advantages and disadvantages of the decision that you made?
Just like every decision in the business there are also advantages and disadvantages
present in the decision.
The advantages are :
I)

Savings of almost 38000$

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II) As the internal employees getting the opportunity of more earnings and new

recruitments they are also being motivated towards the organization

III) Demolishing the chances of information exposure
IV) Gaining the confidence on the payroll system of the organization
V) Tension of having error in the payroll system

And the disadvantages are

I)

Have to worry about the other payments that were being done by that company

II) Have to focus on the responsibility than the core business.

III) Exposure of being previous information that were done by the existing vendor as the

revenge of contract termination.

After having all those disadvantages still I will terminate the contract. Because paying for
wrong calculation seems to me is paying for nothing.

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5.0 Conclusion
The both case studies are kind of related as the main target was to reduce the cost. In first
case, to reduce the cost and improve financial , the manager choose downsizing option and on
the other side of the coin (second case), the manager choose to outsource to complete the
payroll task for the same reason. In both cases, we have seen, the manager and organization
had face negative output of the decision. In case one, the employee morale has affected and
so, the overall performance turned low although, they came up with the solution by recruiting
contractual employees. Where in case two, outsourcer made a numerous error and for which
the manager and company had to count extra cost.
From the case we have learned that downsizing and outsourcing can effect badly on
organizational culture and most importantly on employee's morale. So, while outsourcing or
downsizing, a company need to take few strategic decision. As, from Kalyan's view; a
company can go for downsizing through VRS option or with some other strategic plan. On
the other hand while recruiting outsourcer, the manager need to ensure the capability of
outsourcer and to compare the expected output regarding internal and external sources.

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6.0 References

Bhattacharyya, D. K. (2006). Human Resource Planning, Second Edition. Excel Books.

Chakravarti, K. (December, 2004). Downsizing and Outsourcing: An Indian Perspective. IUP
Journal.
CW, A. (2004). Outsourcing information security.
Diaz, J. J. (n.d.). Public Sector Downsizing.
Fan LL, R. S. (2006). Outsourcing in business.
Fisher, A. B. (May, 1988). The downside of downsizing. FORTUNE Magazine.
Kaufman, K. (2015, Feb 6). Sioux City discusses downsizing Public Works Department.
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