Strategic Human Resource Management

Section Two

Human Resource Outsourcing

One of the most significant forces affecting human resource
management has been the outsourcing of human resource
functions. Human resource outsourcing is commonly
understood as the permanent contracting out of activities that
were previously performed in-house. The trend toward
outsourcing has been extremely widespread, and recent
surveys have found as many as 91 to 93 percent of responding
companies engaging in outsourcing.^55

The trend toward outsourcing has been caused by several
strategic and operational influences. From a strategic
perspective, some human resource departments have
attempted to shift their focus and resources toward a more
strategic role through the use of outsourcing. To accomplish
this, human resource executives have used outsourcing to
relieve their departments of some of the more mundane
aspects of the function, such as those involving routine,
low-value-added transactions. Outsourcing also has been used
to help reduce bureaucracy and to encourage a more
responsive and cost-sensitive culture by introducing external
market forces into the organization through the bidding
process. In addition, outsourcing has been used for political
purposes, such as to reduce or control head count in human
resources.^56