The intention of the study was to examining the impact of outsourcing Human Resources (HR) functions on performance of private companies by focusing on Tanzania Cigarette Company (TCC) as a case study. The study posed four investigative questions in order to attain its objectives. The questions were: How effective are HR outsourcing practices at TCC? What are pros and cons of HR outsourcing at TCC? What are the factors hindering and enabling effectiveness of HR outsourcing at TCC? And lastly what are the performance implications of Outsourcing. The results obtain in the study to answer the above question can be summarized as follow.
5.2.1 Effectiveness of HR outsourcing practices at TCC
In consistent with the first study objective, it has been revealed that specifically the study reported that in terms of ensuring tangibility of the service HR provider was effective. But HR provider was somehow effective in term of guaranteeing conformation, assurance, reliability, flexibility and responsiveness. Generally effectiveness of human resource practice on performance of Tanzania Cigarette
Company (TCC) was just moderate neither high nor low. This is to say that Erolink is providing service at the medium level. The study also noted that assurance was the factor which was prediction/determines effectiveness of HR provider at TCC.
Therefore Erolink has to put more consideration on the assurance of its HR services providing at TCC.
5.2.2 Pros and Cons of HR Outsourcing at TCC
From the results of the descriptive analysis the study revealed that human resource outsourcing has both advantage and disadvantage on Tanzania Cigarette Company.
According to respondents’point of view it was identified that HR outsourcing program have shown high advantage to TCC in term of operating costs control and correcting poor financial performance of the organization.
However, according to the order of importance, it was found that HR outsourcing has brought moderate advantage in TCC in term of improvement of company focus, improvement of efficiency and establish competitive advantages, improvement of service levels, improvement of customer service, minimize operating risks, provide resources not available internally, achievement of world class capabilities, establishment of new skills and ideas in organization, reduces possibility of favoritism, improvement of employee morale and stay competitive, access to technology that would be too expensive to duplicate internally, replace outdated system, eliminate inventory risk as well as centralize and increase on timely delivery of the products. But in general term the study concluded that human resource outsourcing have brought moderate advantage. Further results of t-test revealed that significant advantage of HR outsource in TCC was in control of operating costs and elimination of inventory risk.
Concerning disadvantage of HR outsourcing the study found the following, according to the order of priority, are the moderate disadvantages: staff dissatisfaction and demoralization, leakage of confidentiality and loss of intellectual property right, information leakage, reduction of in-house technique and expertise, unexpected costs of operation and loss of strategic flexibility and innovativeness.
Factors which were noted to be also disadvantages of HR outsourcing were poor quality of service provided by HR provider, loss of internal coherence, long training and induction periods needed to train outsourced employees about the company culture, loss of core activities and critical knowledge and lack of HR supplier responsiveness. In generally disadvantages of human resource outsourcing in TCC was noted to be also moderate but after conduct thorough analysis using t-test the study noted that all these disadvantages were not significant. So, the study concluded that disadvantages of HR outsourcing at TCC were powerless and they are just normal business weaknesses.
5.2.3 Factors Hindering and Enabling Effectiveness of HR Outsourcing at TCC
With respect to the results of the study it was revealed that factors which were supporting effectiveness of HR provider at TCC were availability of the required resources such as physical facilitates/equipment and personnel, standardization of the HR functions, automation of the HR functions and sharing of information between Erolink and TCC. Meanwhile factors which could debase ability of HR provider from providing effective HR services were lack of integration of TCC and Erolink management systems, lack of regular meeting between Erolink and TCC managers, and lack of co-operation between TCC and Erolink in business process improvement
and innovation. Moreover, analysis indicated that the strength of enabling factors was higher than that of hindering factors and therefore the study concluded that outsourced employees at TCC have been provided with conducive environment/conditions for them to work better.
5.2.4 Performance implications of HR Outsourcing at TCC
The aim was to test if HR outsourcing associate with the increase of the company growth. Therefore, profitability of TCC for the six year period just before outsource HR from Erolink and six year period just after starting outsourcing HR services were analysed. The results shown that profitability of TCC had grown by 3.7% over the six years period before outsourcing HR from the Erolink while percentage growth was 16.7% over the six years period after starting outsourcing HR from the Erolink.
With these results the study concluded that there is positive implication of HR outsourcing in TCC.