Outsourcing in Human Resource Management

External providers allow organizations to concentrate on their core business activities, utilizing external expertise and reducing costs (Jones Finlayson, 1999). Their change role is expected to bring about innovation, quality enhancement, and cost-reduction.HRM has gone through a number of stages and towards the end of the last century its role became strategic, and the concept of strategic human resource management was born (Roos, Fernstrom, Pike, 2004). (Davis (2006) foresees structural and cultural change as the central strategic task for human resource managers. Emphasis on cultural issues to encourage autonomy and devolve decision making, on personal/organizational development and learning and to be responsive to changing customer needs, has given rise to the concept of outsourcing the HR functions. The rise in outsourcing is confirmed by the Workplace Employee Relations survey that revealed that more than 90 percent of all workplaces subcontracted one or more services (Walsh Deery, 2006).Outsourcing of HR functions has consistently been increasing and this requires that HRM professionals look more closely at employees’ perspectives on outsourcing, says Richbell (2001). During downsizing hiring of outplacement specialists takes place. Recruitment is increasingly done over websites. Counseling takes place through telephone helpline sans emails. At times transfer of human resources takes place from the outsourcing company to the vendor but these in the UK have to be governed by various Employment Regulations and Rights Acts. The existing terms of service have to be guaranteed by the vendor (Lee, 2000).Organizations segregate non-core activities from core ones and thus activities that are not central and revenue-producing are outsourced (Cardy, Gove, DeMatteo, 2000) but Conklin (2005) contends that this core/non-core dichotomy is not sufficient. Outsourcing of certain HR activities has a positive impact on overall innovation within the company, hence uniqueness is another criterion on which the decision to outsource should be based. At the same time, distinctive or idiosyncratic practices requiring tacit knowledge may suffer if outsourced.