Kennedy Licuanan

2009-30401

IE 31-WFV

Outsourcing, based on the keyword out and sourcing, is a company tactic where they will buy out services or products from other entity instead of producing services on your own. Outsourcing is actually an ongoing trend in human resource management, where they vie out services of products that are costly to produce on their own. Firms usually outsource those services that are not within their expertise, not in their focus, or that are too costly to produce by themselves, for example; payrolls for a particular construction firm, Procter and Gambles case of hiring a company to make Tide here in the Philippines, or in this case, Philippine Airlines case of outsourcing its ground crew, catering services, and call center services, which is within the case of being expensive to produce, not their focus and expertise, and for their reason, to improve the overall quality of the company. Philippine Airlines plan of expansion was hindered due to being downgraded in ratings the US Federal Aviation Authority, EUs ban on airline companies from the Philippines to have flights directed to their territory, soaring fuel price, shrinking passenger demands, and stiff competitions, thus incurring huge losses. And by that, PAL had resorted to cutting off jobs and restructuring their whole system. Based on their findings, lowering the retirement age to 40 will give opportunities to other people and outsourcing their non-core services, namely ground crew, catering services and call center services will be less costly for the airline company. But the Philippine Airlines Employees Association or PALEA, which will be gravely affected by this plan, is strongly against PALs move, with the fact that many of their members will lose their job. PALEA thus threatens to hold a massive strike to paralyze PALs operation. PALs decision on outsourcing these three units could be profitable for the company itself. But if we look on the downturn of this decision, almost half of the total workforce will be forced to leave their job, which most of them are in service for years; and let third party companies handle this number, meaning contractual jobs. PAL also allotted funds and job security for the affected employees, than can be insufficient in the case of some employees and since it is the winning company that will have the final say about employment, which could mean temporary jobs. With these facts, Philippine Airlines decision about outsourcing is limitedly correct, because of the tough competition that the flagship airlines is currently experiencing, although they may require the company assigned to train them according to PALs manual, they cannot assure the quality and safety that these service companies render to them, that any mishaps could result in bigger losses, and a bad name. In any case, they may one or two, but not all of these three. In this case, we can see various issues with regard to human resource management, a thing PAL relies on. Downsizing in fact is the key issue on PAL today, how can they control human resource cost, and of course the issue with regard to outsourcing some of their units. But hidden beneath this outsourcing thing, they violate the employees rights regarding benefits and tenure, which companies that are related to assigning contractual employees are notorious about.