Challenges of control in functional organization structures:Example of outsourcing sector

Outsourcing sector is dynamically developing in Poland. The growth of investments in outsourcing sector has become significant with the entrance of Poland to the European Union. Nowadays, average increase of employment in this sector in Poland reaches 20% year over year. Poland is a leader in modem business services sector in Eastern and Central Europe [www 1]. As the international business services are still relatively new and the phenomenon in Poland remains not fully explored, the literature and research related to this type of operational restructuring are not extensive. The author is trying to assess challenges of internal control in international outsourcing companies during restructuring phase. Usually, the companies apply functional organization structure [Kroon 2004, p. 223] with managers located abroad or employees working remotely. There are many factors related to control, starting by the change of organization structure that should be taken under consideration in the decision processes.The literature treats widely the aspects of challenges related to implementation of outsourcing strategies. Many authors underline the need of control and its importance in implementation of outsourcing. Possible risks are described on general level as potential cons of outsourcing. The studies on how to adapt the control systems to new reality and what experiences related to control managers may have in transforming businesses are missing and have been identified as a research problem by the author. The goal of the paper is to show the challenges the company may face in the area of control while taking a decision of outsourcing selected part of the business. This kind of operational restructuring entails significant changes in the organizational structure of the company. The author refers to functional organization structure which is most commonly applied. The aspect of globalization has been taken into consideration as well.The article consists of three chapters and conclusions section. The first chapter presents review of literature in the field of outsourcing and control. This chapter presents control as a key management function with focus on control in outsourcing and describes the transformations in organizational structures of the company while applying outsourcing strategy. The next chapter describes the research methodology and phases of studies conducted. The third chapter relates to research findings and summarizes the challenges a company may face while taking decision to outsource selected activities with distinction of outsourcing to external partner and creation of shared service center within a capital group.1.Literature review1.1. Control as a key management functionThe research concept is based on literature studies as well as empirical analysis of selected companies from business service centers sector. The term control has broad meaning and is one of the most important ones in the management sciences. In its results, a company can see its past and rough the future out [Kuc 2009, p. 18]. Cambridge dictionary presents verb to control as "to order, limit or rule something, or someone's actions or behavior" [www 2]. The word control, coming from British and French tradition, was primarily used to assess legislation pieces. Currently, internal control is a key element of any organization [Wojciechowska 2015]. There are multiple definitions, but interpretation of Koontz and O'Donnell is valid despite the time, the object and the subject of control. According to the authors the process of control consists of three steps:- set up norms,- compare results to norms,- correct deviations.To ensure efficiency of control, it is crucial to correct deviations timely and apply appropriate tools to avoid these deviations in the future [Fayol 1926, p. 6]. Nowadays, many authors (i.e. Webber, Goetz, Kurnal) underline the need of anticipation in the process of control to ensure corrections can still be made. …