Human Resource Outsourcing in Times of Economic Turbulence – a Contemporary Review of Practice

Abstract

This article reviews developments in human resource outsourcing (HRO) in recent years, particularly in light of the severe economic recession prevailing since 2007. It establishes that companies are increasingly outsourcing routine HR processes, and in some cases, critical HR processes in view to cut costs. The article takes the view that while such a strategy could be viable in the short term, its long-term strategic effectiveness is questionable. This view is founded on widely accepted assumptions that people are critical assets in organizations, thus, commanding that companies maintain a strong hold on vital employee commitment processes. Outsourcing may not be the only valid framework for the future; companies must consider alternatives.

Key words: Outsourcing; HRO; economic recession; cost saving; globalization; transaction cost.