The intangible costs of human‐resource outsourcing

Abstract

Purpose

Describes some of the dangers in outsourcing some human‐resource management tasks while keeping others in‐house.

Design/methodology/approach

Explains why some organizations have decided to outsource aspects of their HR. Shows that the measure, usually designed to cut financial costs, can entail intangible costs.

Findings

Argues that major organizational change can be more difficult to achieve if part of the HR function is outsourced; that the recruitment process could be compromised; that outsourcing transactional aspects of HR can make it more difficult for HR people to get training in these areas; and that HR outsourcing can make an organization less flexible.

Practical implications

Contends that a shared service center could be a better option, in some cases, as it can keep human‐resource functions in‐house while simultaneously contributing to cost saving by consolidating transaction‐based activities in one place within the organization.

Social implications

Advances the view that measures that can seem, on the surface, to cut costs, can end up being more expensive.

Originality/value

Concentrates on the non‐financial aspects of HR outsourcing.

Citation

Sim, M. (2010), "The intangible costs of human‐resource outsourcing", Human Resource Management International Digest, Vol. 18 No. 6, pp. 3-4. https://doi.org/10.1108/09670731011071656