to other countries—has received considerable attention and raised a number of
issues for how companies structure their HR architecture. In many ways, the
increased use of international employment subsystems is a natural extension of
the HR architecture. Pressures for the continued pursuit of lower costs, increased
expertise, andXexibility have encouraged many managers to think beyond country
boundaries for the most eYcient and/or eVective source of labor.
In the context of the HR architecture, one could imagine an extension of employ-
ment subsystems to include short-term outsourcing arrangements as well as more
long-term oVshoring arrangements and alliance partnerships. If a task or service that
is of low strategic value and limited uniqueness may be performed at a lower cost in
another country, and there is a viable organization in that country to deliver that task
or service, there is a strong incentive for companies to consider outsourcing this
work. By doing so, the company may be able to recoup those costs, access greater
eYciencies and/or expertise in the performance of the tasks by the outsourcing
provider, and divert their investments to more value-added core employees. In these
scenarios, international outsourcing is a logical extension of more traditional
domestic-based outsourcing or contractual arrangements.
Investments in oVshoring are intended to gain cost advantages from maintain-
ing operations in another country with internal employees (rather than another
company’s employees) as part of a broader global sourcing strategy. On the one
hand, oVshoring may be pursued to achieve similar beneWts to those derived from
outsourcing; namely cost advantages. Ultimately, however, the costs advantages
may go away as wages inevitably increase in developing countries such as China,
India, and Hungary that are frequent centers of oVshoring activities (Aron and
Singh 2005 ). So the challenge is to oVshore initially for cost andXexibility, but then
focus on increasing productivity/expertise faster than wages increase. On the other
hand, oVshoring is a logical extension of more long-term partnerships, although
for perhaps diVerent reasons. In China, for example, companies typically enter via
joint ventures that involve alliances (rather than, say, subsidiaries). The govern-
ment requires it. And while costs may certainly be a consideration, it may also be
the case that the labor force in another country excels in certain areas of expertise
such as science or medicine or simply has a greater supply of labor for a particular
expertise (Purcell et al. 2004 ).
Although international partnerships present a challenge in terms of distance,
they present an opportunity for ‘ 24 / 7 ’ or ‘follow the sun’ workforce arrangements
that allow for work to be continuously performed around the world without any
downtime. A partner of a USWrm in India, for example, may conceivably start their
work day just as the employees in the USA are completing their work day. By doing
so, companies may be able to decrease the time to completion of new products or
services while dramatically increasing their labor pool. Given the continual pres-
sures for innovation and/or cost considerations, it is logical that companies are
exploring these work arrangements. However, the long-term performance beneWts
(or costs) are not well known.
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