Topics: Outsourcing, Management, Business process outsourcing Pages: 33 (8056 words) Published: January 7, 2013
International Journal of Innovation, Management and Technology, Vol. 2, No. 2, April 2011

Human Resource Outsourcing: Analysis Based On
Literature Review
Dr. Manisha Seth and Dr. Deepa Sethi

Abstract—Purpos:The present paper focuses on different
types of HR outsourcing and the factors which need to be
considered before a company goes for outsourcing of Human
resource Functions.
Design/methodology/approach:A review of available
literature was done in order to understand how today’s HR
firms offer a wide variety of services to companies that need to focus on their core business activities and still establish and maintain good HR policies and to explore the factors that affect the HR outsourcing decision with special emphasis on a proper cost benefit analysis of HR outsourcing.

Findings:The findings of the paper implicitly point out that the decision of HR outsourcing is contingent upon factors like flexibility, availability of adequate resources, affordability, and acceptability (openness to information-sharing) etc. The paper also suggests a systematic process and certain pre-requisites to successfully execute HR outsourcing.

Originality/value:Based on literature review, the paper
makes specific recommendations with regard to the process of HR outsourcing and its pre-requisites; and is an attempt to
highlight the fact that HR outsourcing is a double-edged sword; and should be viewed in totality keeping in mind the pros and cons it has.
Index Terms—Cost-benefit, HR Outsourcing, Need, Strategic

Outsourcing has been defined as work done for a company
by people other than the company’s full-time employees. In the modern setting, outsourcing turns out to be highly
complex and organizations use outsourcing vendors for a
variety of reasons. According to analysts, companies usually cite cost reduction as the most crucial reason for HR
outsourcing. As companies were discussing how to cut costs
in the face of an economic downturn, many look at
outsourcing for some of their HR processes. As the
Managing Director of Capita HR Solutions, Wayne Story,
rightly puts it, “HR outsourcing is on every HR director's list of things to do. It has to be driven by the business case though – the right partner at the right time, for the right reasons.” However, some analysts argue that by outsourcing major HR

activities, the number of HR jobs is decreasing, others feel that on the contrary by outsourcing these kinds of repetitive

Manuscript received January 8, 2011
First Author - Manisha Seth is working as Assistant Professor with Jaipuria Institute of Management, Vineet Khand, Gomti Nagar, Lucknow (Phone: 919415764002; e-mail:
Second Author - Deepa Sethi is working as Senior Lecturer with Jaipuria Institute of Management, Vineet Khand, Gomti Nagar, Lucknow (Phone: 919889297279; e-mail:

and administrative jobs, higher-level HR professionals get
the time they need to tackle strategic workforce challenges. With more and more companies looking to rationalize
employees on their payroll, manpower outsourcing is slowly
becoming the new buzz in India. And the trend seems to have
hit not just big multinational companies but the public sector and government undertakings as well, though on a very low
key yet in the latter.
HR services are among the key elements in the enlarging
outsourcing game. Recognizing the fact that senior
management needs to get out of mundane day-to-day
processing work and focus instead on strategic planning, core competencies, customer satisfaction and decision making, a
number of large companies, across globe have begun opting
for outsourcing of their HR services. Some of the functions
most commonly handed over to outside providers include
payroll, benefits administration, background checks, drug
testing, recruiting and training. Even small companies that
might not get noticed much in big studies of outsourcing
trends, turn to...
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