Outsourcing

1. Introduction

This report aspires to critically analyse the concept, benefits and negative consequences of the outsourcing of HRM functions.

Cook (1999) defines HRM outsourcing as "having a third-party service provider or vendor furnish, on an ongoing basis, the administration of an HRM activity that would normally be performed in-house".

HRM outsourcing started growing in popularity in early 90's in Western Europe and especially in United States where up to 90% of companies outsource some HR function. However, HRM outsourcing was an established practice for a considerable time before that given that companies used to obtain the service of outside parties for training purposes due to the inability of most to employ fulltime service of specialized trainers (Kakabadse and Kakabadse, 2002). As human resource management became increasingly considered as part of the strategic planning process outsourcing of functions increased alongside (Kochan and Dyer, 1994). Evaluation of latest literature and research on company practices suggests that there is an increase of the outsourcing of HRM (Barnes, 2004), particularly in HRM consulting & the design of HRM tools (Banham, 2003; Cook, 1999; Mercer and Cranfield School of Management, 2000). This trend has resulted in the greater use of contractors and