The purpose of this paper is to explore the antecedents of the decision of whether to outsource human resources (HR). Two moderators are considered: the lack of in-house HR expertise and positive HR outcome.
This study uses data collected from 85 Vietnamese firms of different sizes. Regression analysis is used to examine the research hypotheses.
The strategic involvement of HR management is positively related to the decision to outsource HR. As expected, a positive significant relationship exists between cost reduction and the decision to outsource HR for non-core HR activities. For core HR activities, demand uncertainty relates positively to the decision to outsource HR, and the lack of HR expertise moderates the process of HR outsourcing (HRO).
Although the focus on firms in Vietnam may help to control for cultural factors, it may also limit generalizability. Because of the limited number of samples, this study cannot compare results across different industries. Future research should focus on the cross-cultural aspects of this issue or compare differences across industries.
This study provides HR managers with guidelines for making appropriate decisions regarding HRO. Vendors can exploit aspects of core vs non-core activities to provide professional services that satisfy the demands of firms.
Based on a theoretical approach, this work analyzes the decision to outsource HR in developing countries, an area that heretofore has received scant research attention.
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