Deck 13: Outsourcing

Question 1

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.

Answer 1

D

Question 2

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.

Answer 2

A

Question 3

Why do cost overrides with outsourcing occur more frequently than what is 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.

Answer 3

B

Question 4

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 5

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

A) analyze bids
B) apply due diligence
C) choose vendor
D) negotiate contract

Question 6

A core competency can be defined in four different ways. Three of those definitions are: as an activity traditionally performed internally; activities critical to business success; and 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 7

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 8

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 9

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 10

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 11

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

A) reliant on technology
B) routine activity frequently undertaken
C) achieves cost-effectiveness
D) deliverable from remote sites

Question 12

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 13

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 14

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 15

Why is it important to outsource transactional work?

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

Question 16

According to the textbook, why were thirty 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 17

What function does a stay-back team perform?

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

Question 18

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 19

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 20

Which of the following functions was NOT outsourced by TransCanada, a North American energy company?

A) disability management
B) exit interviews
C) pension administration
D) health and safety

Question 21

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

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

Question 22

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

Question 23

Which company reduced its 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 24

An important driver of the outsourcing trend has been technology.

Question 25

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

A) Make sure that there is a termination clause.
B) Check references using the vendor's current clients.
C) Establish benchmarks for current service levels.
D) Project a budget for cost savings.

Question 26

In 2007, GM Service Technical College won an award for the amount of money it saved by downsizing the number of its mechanics.

Question 27

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 to increase productivity.
D) To improve service and to increase automation.

Question 28

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

Question 29

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 30

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

Question 31

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 32

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

Question 33

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 34

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 35

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

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

Question 36

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 37

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 38

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

Question 39

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

Question 40

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

Question 41

Define outsourcing.

Question 42

The City of Toronto endured a three-week strike associated with the outsourcing of day care workers.

Question 43

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

Question 44

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

Question 45

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

Question 46

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

Question 47

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

Question 48

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

Question 49

List and briefly explain THREE risks associated with outsourcing.

Question 50

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

Question 51

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

Question 52

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

Question 53

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

Question 54

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

Question 55

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

Question 56

The two most frequent causes of outsourcing problems include: poor service definition and cost over-runs.

Question 57

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