Human Resources Administration: Outsourcing Andrea West Eastern University Human Resources Managment

Outsourcing Defined as: The process of contracting with an outside party to perform functions that could be performed in-house Outsourcing is a growing trend in Human Resources Management 78% of large American firms outsource some of their operating functions Two thirds of companies worldwide outsource at least one business function

Human Resource Management Outsourcing Current trend is to outsource only part of HR functions Employee assistance programs, flexible spending account administration, background/criminal checks, payroll, health and pension plan administration Certain HR functions should NEVER be outsourced Activities related to strategic decision making, requiring specific management knowledge or require confidentiality

Hierarchy of Outsourcing Management Decision Activities Highly Confidential Specific Organizational Knowledge Specialized Knowledge Economies of Scale Routine Activities Ancillary Activities

Advantages of Outsourcing Expense Reduction Management Time and Effort Conservation Increased Time for Organizational Competencies Greater Professional Expertise Increased Employee Morale Improved Service Quality

Disadvantages of Outsourcing Increased Direct Costs Decreased Morale among Employees Poor Quality of Service Provided Poor Fit with Contracted Company Perceived Loss of Control Confused Responsibilities

Considerations for Outsourcing Careful selection of outsourcing firm for a “good fit” Ability to meet with those who will be performing the work Open communication View it as a long-term arrangement Set clear performance expectations

References Caruth, D. L., Pane Haden, S. S., & Caruth, G. D. (2013). Critical factors in human resource outsourcing. Journal of Management Research, 13(4), DeCenzo, D.A., Robbins, S.P., & Verhulst, S.L. (2013). Fundamentals of human resource management (11th ed.). New Jersey: John Wiley & Sons, Inc