HR outsourcing: threat or opportunity?

Abstract

Purpose -The debate on human resource (HR) outsourcing is polarised. HR outsourcing is seen as an opportunity for the HR function by some and as a threat by others. The first view suggests that HR outsourcing is an instrument creating time for HR to become a strategic partner. The second view considers HR outsourcing as a cost-cutting instrument gradually reducing HR staff. The purpose of this study is to examine whether HR outsourcing is a manifestation of a strategic HR focus, a cost-cutting HR focus or both. Design/methodology/approach -The sample is obtained from an economy-wide, cross-sectional survey. The data cover 1,264 organisations with ten employees or more. Findings -Results indicate that organisations with a strong focus on HR cost-cutting do not outsource more than organisations with a weaker focus on HR cost-cutting. The analyses show a positive relationship between a strong focus on strategic human resource management (HRM) and the level of HR outsourcing. Research limitations/implications -First, this study examines the breadth of HR outsourcing. Further research might consider the depth of HR outsourcing. Second, as results are based on cross-sectional data we cannot draw causal inferences. Finally, future research might focus on the impact of HR outsourcing on the organisation of the HR function and internal HR customer satisfaction. Practical implications -HR outsourcing empowers the HR department. It frees up HR professionals to focus on strategic HRM. Originality/value -HR outsourcing has been heavily debated. Yet, empirical research into the impact on the HR function is extremely limited. This study helps to fill this gap.

An Empirical Investigation of Accounting Outsourcing in Iranian SMEs: Transaction Cost Economics and Resource-Based Views

“…In this context, RBV argues as competitive pressures intensify, smaller firms are forced to obtain external resource for survival and development (Gooderham et al, 2004). In fact, intensifying competitive pressures have forced smaller firms to cut costs, and outsourcing is the best method for achieving those goals (Quinn, 1992;Jiang and Qureshi, 2006;Delmotte and Sels, 2008). In this context, SMEs rely on their external accountant to achieve competitive advantage while they face with vulnerable competition (Gooderham et al, 2004).…”

“…Evidently, outsourcing practices is the best way to reduce costs and create opportunity for growth (Jayabalan et al, 2009). Outsourcing not only looks at overall business improvement and competitive advantages but also it will cut costs (Gilley et al, 2004;Delmotte and Sels, 2008;Mahmoodzadeh et al, 2009). Furthermore, outsourcing can add value through the higher quality available from external sources (Gilley and Rasheed, 2000;Gilley et al, 2004;Jiang and Qureshi, 2006).…”

Motives of Human Resource Management Outsourcing: A Case Study From Lithuania

“…The latter ones much more invest to this competence development than companies' managers so they can professionally perform human resource management function. Delmotte and Sels (2007) as well support existence of exclusive competence which human resource management specialists have. They also emphasize that saving of expenses should not be one of the most analyzed motive.…”

Factors Influencing Accounting Outsourcing Practices among SMEs in Pakistan Context: Transaction Cost Economics (TCE) and Resource-Based Views (RBV) Prospective

“…Therefore, in such a competitive pressure situation firms with small size are required to outsource external services for firm future growth and development (Gooderham et al, 2004). Furthermore, the competitive pressure intensity forced SMEs rely on external accountants to cut costs for achieving sustainable competitive advantages (Delmotte & Sels, 2008;Jiang & Qureshi, 2006). Accordingly, based on the discussion above, the hypothesis is proposed as follows:…”