The mining industry in Australia has gone through tremendous developments despite its slowdown in 2009 as a result of the global economic recession. It is now characterized by global leading firms such as BHP Biliton. In particular, BHP is the world’s largest diversified natural resource company with over 100 locations in 25 countries.
This success is attributed to the corporate strategy which focuses on broadening the firm’s business and products as the opportunities arise. To achieve this strategy, BHP has engaged in outsourcing activities which facilitate functions across its geographical segments as well as increasing its technological capabilities. The motivation to outsource infrastructure in the Latin America was growth opportunities, though the firm has continually faced social, environmental and economic challenges.
Therefore, it is important for the top management to include local activists in the decision making process. Similar challenges face the firm in Canada, hence the need to take proactive measure when outsourcing. For Pakistan, the exploitation of the many growth opportunities can be achieved by enhancing skills and expertise of the workers. Information technology outsourcing requires the firm to prepare the stakeholders for the change.
Recommendation for Canada
Canada is a country that promises future prosperity of BHP due to its large diamond reserves and the enormous investment the firm has put on its mining activities. However, this prosperity is influenced by a number of factors that stretch out beyond the operational strategies, thus calling for more proactive measures. The best solution for the issues that hinder the success of the company in the country is to make the outsourcing strategy to be more realistic.
By outsourcing infrastructure from Canadian firms, the company could make a better use of the investment. This is because, Canadian firms are in a better position to understand and respond to the social, environmental and economic challenges. De Cieri, Fenwick and Hutchings (2005) confirm that the major reason of outsourcing is to overcome drawbacks associated with diversity in the international market arena.
Recommendation for Pakistan
The Pakistan market carries great investment opportunities for mining firms with global reach and reputation like BHP. The vast oil reserves and minerals only suggest a part of the benefits the firm would reap from the country. Nonetheless, BHP outsourcing should focus on human resources in order to have a profitable investment in the country. It is explained that the major drawbacks faced by the mining companies in Pakistan are lack of skilled labor and technology.
BHP can learn from the Chinese firms with a long history of success in the country that outsourcing human resources is paramount. Indeed, enhancing skills and expertise is the core strategy rooted in outsourcing (Siddiqi, Masud & Sabri, 2006). In addition to responding to RekoDig failure, this recommendation also aligns with the government endeavor to make Pakistan an industrious nation.
While the optimization model developed by ADA was adopted by BHP to allow web-enabled planning of its seven mines, CoPs were adopted to respond to the diversity issues associated with the company. These IT functions are apparently important considering the size of the firm and the scope of its functions, yet they have shown slight consequences. It seems that the outsourcing of IT is a strange phenomenon to the BHP community.
Therefore, it will be very strategic for the company to allow IT knowledge to perforate throughout the organization as a way of increasing its acceptance. As Frederiksen and Glaser (1990, p.326) observe, training can be an effective method of enhancing technological knowhow of the stakeholders.
De Cieri, H, Fenwick, M & Hutchings, K 2005, ‘The challenge of international human resource management: balancing duality of strategy and practice.’ International Journal of Human resource Management, vol.16 no.4, pp.584-598.
Frederiksen, N & Glaser, R 1990, Diagnostic Monitoring of Skill and Knowledge Acquisition. Routledge, London.
Siddiqi, S, Masud, T & Sabri, B 2006, Contracting but not without caution: experience with outsourcing of health services in countries of the Eastern Mediterranean region, viewed 14 May 2012, <http://www.who.int/bulletin/volumes/84/11/06-033027.pdf>.