Every organization has limits on the resources available to it, and outsourcing career services will permit IBM to redirect its resources toward activities which serve the customer. IBM will be able to redirect the people that previously worked in the career services area to different value adding activities. For example, employees whose energies are currently focused internally can now be focused externally on the customer. IBM's company focus can be improved through Fidelity's handling of its' career services. Fidelity is much more experienced in the career services area, and IBM will stand to benefit in this area by having operational functions assumed by an outside expert. Furthermore, more quality employees can be employed or promoted through Fidelity's expertise in career services.
IBM will also be able to invest funds previously spent on career services in other necessary or lacking areas. Tremendous risks are associated with the investments an organization makes. Markets, competition, government regulations, financial conditions and technologies all change extremely quickly. Keeping up with these changes, especially those in which the next generation requires a significant investment, is very risky. The use of Fidelity for such operations will spread the risk born by IBM on its own. Through an outsourced career services, IBM will be able to hire better employees through a company that has expert experience in this area. Overall, an outsourced career services program will result in improved employee hire and retention plan, thus resulting in an improved company.
Finally, IBM stands to benefit from outsourcing its pension administration to Fidelity as well. Research in this area indicates that pension administration is one of the most complex functions that human resources manages. Pension administration may require maintaining employment and salary records for 40 years or more, and all the plan...
In general, companies outsource this function because they do not have access to the required resources within the company. The research indicates that outsourcing is a viable alternative to building the needed capability from the ground. The benefits of having Fidelity perform IBM's pension administration are that this will reduce administration, management time, the complexity of legislation, and access to specialist staff. As a result, IBM will save money and become more profitable, benefiting shareholders and increasing returns on investment. This type of outsourcing thus enhances the competitiveness of IBM's service sector.
As employers and the financial services industry have focused more on retirement planning and investment education, participants expect to get more information about the benefits due them from employer-provided plans. Additionally, shortcomings and problems in 401(k) plan benefits make pension plans more valuable and more visible. Participants expect to be able to access this information using the same tools available to them for their defined contribution and other benefit programs. Self-service applications have become a necessity, and a company such as Fidelity will be able to meet these types of expectations in administering pension plans. In conclusion, outsourcing in the human resources area, specifically health plan administration, career services, and pension administration will no doubt benefit IBM.
Bibliography
Johannes, L. & Armstrong, D. (2002). Fidelity wins deal to manage employee services for IBM. Wall Street Journal (July 3, 2002).
Margolis, J. (2003). The Health Plan of Tomorrow. Retrieved June 5, 2005 from the Managed Care Website: http://www.healthmgttech.com/cgi- bin/arttop.asp?Page=0104/h0104/h0104hpit.htm
