Vol: 1, Issue: 1 2011

Page: 7-13

Study on Outsourcing Human Resource Activities: Measuring the Costs and Benefits

Mili Soni, Dr. Ramesh Agarwal

Received Date: 2010-11-10

Accepted Date: 2010-12-03

Published Date: 2011-04-04

“Outsourcing involves the sourcing of goods and services previously produced internally within the sourcing organization from external suppliers.” The key point worth noting is that this definition excludes processes never performed internally. Linder writes that outsourcing is “purchasing ongoing services from an outside company that a company currently provides, or most organizations normally provide, for themselves.” This view limits McIvor’s definition by adding the qualification that most organizations normally provide some services for themselves. Lee and Hitt (1995, p. 836) provide a much broader definition for outsourcing, as “the reliance on external sources for the manufacturing of components and other value-adding activities.” This definition could include nearly any activity so long as it is value-adding. This paper adopts the broader definition, though it excludes activities such as advertising and independent auditing as these are nearly universally outsourced by companies, that are not directly selling these services to other companies.

References

• Angle, H. & Perry, J. (1981). An empirical assessment of organizational commitment and organizational effectiveness. Administrative Science Quarterly, 26, 1-14.
• Alchian, A. A., Demsetz, H. (1972). Production, information costs, and economic organization. American Economic Review, 62, (5). 777-795.
• Arthur, J. B. (1992). The link between business strategy and industrial relations systems in American steel minimills. Industrial and Labor Relations Review, 45, 488-506.
• Arthur, J. B. (1994). Effects of human resource systems on manufacturing performance and turnover. Academy of Management Journal, 37, 670-687.
• Azar, B. (2000). A web of research, Monitor of Psychology, 31 (42), 42-43. Babbar, S. & Koufteros, X. (2008). The human element in airline service quality: contact personnel and the customer, International Journal of Operations and Production Management, 28 (9), 804-830.
• Bajari, P. & Tadelis, S. (2001). Incentives versus transaction costs: A theory of procurement contracts. Rand Journal of Economics, 32 (3), 387-407. Baker, G. Gibbons, R. & Murphy, K. J. (2002). Relational contracts and the theory of the firm, Quarterly Journal of Economics, 117, 39-83.
• Banham, R. (2004, May). Divide and conquer HRO Today. Retrieved March 29, 2007 from http://www.hrotoday.com/Magazine.asp?artID=756.
• Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99-120.
• Baron, J. N., Davis-Blake, A., & Bielby, W. T. (1986). The structure of opportunity: How promotion ladders vary within and among organizations. Administrative Science Quarterly, 31, 248-273.
• Beamon, K. V. (ed.) (2004). Out of Site: An Inside Look at HR Outsourcing. Austin, TX: IHRM Press Book.
• Becker, B. & Gerhart, B. (1996). The impact of human resource management on organizational performance: Progress and prospects. Academy of Management Journal, 39, 779-801.
• Benson, J. & Littler, C. (2002). Outsourcing and workforce reductions: an empirical study of Australian organizations, Asia Pacific Business Review, 8 (3), 16-30.
• B�ckerman, P. & Ilmakunnas, P. (2009). Job disamenities, job satisfaction, quit intentions, and actual separation: Putting the pieces together, Industrial Relations, 48 (1), 73-96.
• Bourdieu, P. (1977). Trans. Nice. R. original edition published by Switzerland: Librarie Droz. (1972) Outline of a Theory of Practice Cambridge: Cambridge University Press.
• Bragg, S. M. (2006). Outsourcing: A Guide to . . . Selecting the Correct Business Unit . . . Negotiating the Contract . . . Maintaining Control of the Process. 2nd ed. Hoboken, NJ: John Wiley and Sons.
• Brown, D. & Wilson, S. (2005). The Black Book of Outsourcing How to Manage the Changes, Challenges and Opportunities. New York: John Wiley & Sons, Inc.
• Brown, R. H. (2007, March/April). Beware of Cost Savings that add up to less than percent HRO Today. Retrieved March 29, 2007 from http://www.hrotoday.com/Magazine.asp?artID=1632.
• Brown, R. H. & Hale, K. (2007, November, 30). Business Process Outsourcing Worldwide Forecast Database. Gartner, Inc.