Human resource management outsourcing: The make or buy decision

TLDR

HR outsourcing takes many forms, including just‑in‑time, sell‑and‑lease‑back, and do‑it‑yourself programs, reflecting how firms manage HR functions. The study aims to uncover the rationales behind and consequences of HR outsourcing by interviewing senior HR executives and professionals in 25 organizations. The authors conducted semi‑structured interviews with senior HR executives and professionals across 25 organizations. The study finds that firms use HR outsourcing for both operational and strategic purposes, that it can strengthen the HR value chain and position HR as a strategic partner, and proposes guidelines for vendor selection, transition management, vendor relations, and performance monitoring.

Abstract

Executive Overview Just-in-time human resource (HR) management, sell and lease-back human resource programs, and do-it-yourself HR—all of these phrases characterize how companies manage outsourced HR functions. This article reports results of interviews conducted with senior HR executives and professionals in 25 organizations to identify outsourcing rationales and consequences. Companies were found to use HR outsourcing for both operational and strategic reasons. Based on these findings, we present guidelines for selecting vendors, managing the outsourcing transition, managing vendor relations, and monitoring vendor performance. HR outsourcing is not a fad, and it can enhance the HR value chain as well as support the development of HR as a business partner and strategic contributor to the organization's goals.