Thesis On Outsourcing

Thesis On Outsourcing-39
However, Huselid (1995) argues that outsourcing some HR functions may reduce competitive advantage.

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A study conducted by Klass (1999) uses transaction-cost economies theory to explain the outsourcing benefits received by the firms and its transaction cost is varying to different organisations.

The study indicates that transaction costs could be increased by opportunistic behavior by service providers to which the firm has grown dependent.

Therefore, it was found that arguments are raised in many strategic HR literatures.

In this paper, we will examine a prescriptive article “Beyond Benefits: The Changing Face of HR Outsourcing” and discuss different perspectives on the related issues which are provided by other authors in other SHRM literatures.

In addition, outside agencies also could provide specialists and legal advices for such firms in which internal expertise unlikely could be employed due to the high cost.

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As a result, firms can improve compliance with governmental regulations and minimized penalties (The 2002; Mobley and Maurer 1998).

In today global business environment, firms are facing the increasing of the competitiveness, new technology and corporate restructuring, such factors force firms to seek and sustain competitive advantages by emphasizing on profitability and productivity of each department.

For this reason, today some firms embrace outsourcing concept through outsourcing all or part of HR functions could reduce cost and increase the effectiveness of HR department.

Many surveys and academic researches were conducted in the past decade and shows that the use of HR outsourcing is growing and continuing to increase.

More firms have started to outsource their HR functions for a variety of reasons.

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