Offshore Outsourcing: As a Contemporary and Future Challenge in Human Resource Management

Topics: Outsourcing, Business process outsourcing, Offshoring Pages: 13 (3586 words) Published: August 23, 2010


Explanatory Essay on “Offshore outsourcing” as a Contemporary and Future Challenge in Human Resource Management

Course: - 7410MGT Strategy and Human Resource Management

Submitted By:-Chandan Bhatwadekar S2632604 Word Count:-3000




the premises of this explanatory essay is an evaluation of “offshore outsourcing” as a contemporary challenge of Strategic human resource management. To start off with, first there will be review of literature for “offshore outsourcing” and definitions given by various academicians. Followed to that, will be having a conceptual theoretical framework where impetus of “offshore outsourcing” will be traced and explained with the help of literature and relevant example. After that, a close look on some important industry data in terms of what is being outsourced with various research and survey paper which will be followed by risks and concern (business and ethical) of “offshore outsourcing” leading to conclusion and recommendation. The field of Strategic human resource management is being developed to endorse the fact that human resource needs to be managed strategically so that organization can enjoy sustainable competitive advantage over fierce competition which is occurred due to present uncertain economic climate and global market orientation (Appelbaum et al.1999). According to Gaucher (1997), companies are experiencing a “paradigm shift” where their focus is shifted from size, specialization and job description to speed, integration, job flexibility and value. This has triggered enormous new trends. One of the most prominent trends adopted by many companies is reposition themselves in market to gain a competitive advantage many companies are striving to increase efficiency and minimize cost (Leatt et al. 1997) and “offshore outsourcing” has emerged as strategic weapon for many companies to achieve this objective. However as side effect of the process loss of IT jobs and intellectual capital are main HR concerns. To understand the nature of challenge posed by offshore outsourcing, it is essential to understand the definition and meaning of term. According to Gilley and Rasheed (2000), definition of outsourcing is much debated in research. One of the prime defines outsourcing as “reliance on external sources for manufacturing component s and other value adding activities” (Lei and Hitt, 1995). On the same line different researcher has given different definition on the base of various focus of outsourcing. Perry (1997) has defined outsourcing with keeping a view of employment focus, where it is defined as, “another firm’s employee carrying out the tasks




previously performed by one’s own employee.” As per perspective of HRD by DeRose and McLaughin (1995), “outsourcing is turning over the heart and soul of the HRD function”. Sharpe (1997) defines outsourcing from competency perspective where outsourcing is defined as turning over to supplier those activities which are organization’s core competency. In order to clarify the confusion of definition of outsourcing Gilley and Rasheed (2000), defines outsourcing as “vertical disintegration” (where procuring something that was initially sourced internally) or “make or buy” where could have been sourced internally by avoiding the decision to go outside. On the same line, literature also highlights and indicates different terminologies and concepts which is described by the help of following table Internal Vs external outsourcing Strategic make or outsource decision Contracting out Subcontracting /Purchasing/Privatization Strategic Partnering Scheuing (1989) Virolainen (1998) Gustafsson (1995) Seidenstat (1996) Walton (1999)

Offshoring is a term which is developed in the emerging global market, where it symbolized for work that is not constrained by need for actual customer contact or local knowledge and...
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