Outsourcing

When the standards are not meet then IBM can penalize Fidelity and that normally equates to withholding money. When the company itself maintains these operations there are no incentives to create cost savings because they feel safe and comfortable knowing that their job doesn't necessarily rely on productivity. I would equate this to the old Soviet Union and communism, if you take away the incentive to work hard and be productive then you are stuck with a system that may meet your needs but can quickly become stagnate. Not that the employees in the HR department at IBM have given up but it may not always be clear to them that they play a role in the companies profitability. Now that I have briefly looked at cost savings, the second area that I want to look at is improved services.
             You may be thinking how can simply changing who is performing the function improve the service provided? Looking at it from simple terms like that the answer is it can't but outsourcing is a little more in-depth than it may appear on the surface. First lets take a look at IBM and what are they in the business to produce. From what I know about the company they are known for producing business solutions and computers. Why then would anyone feel that they could perform operations like human resource with proficiency? The answer is that they are not experts. They hire individuals with HR degrees or promote from within the company but on more occasions than not they end up with individuals that do not always have the experience necessary to operate an efficient department. Employees in these situations tend to become more of a generalist than a specialist. In other words individuals could be tasked to write position descriptions and track workman's compensation claims. Generalizing like this does not allow them to become an expert in either area. All functions are currently being accomplished at IBM cut question still remains; can it be done better and more efficiently? By outsourcing the human resource function IBM will be turning over the function to a company whose specializes in the facets that make up the human resource function.