HR outsourcing: The impact on HR's strategic role and remaining in-house HR function

Abstract

Past research on HR outsourcing (HRO) has offered conflicting views about its impact on HR’s strategic position. This study highlights the processes by which decisions to outsource HR are made, followed by the processes implemented post such decisions and their effect on the HR function. Using a case study approach and semi-structured interviews (N=35) within a German subsidiary of a US MNC, we provide a framework of HR processes seeking to achieve standardization in terms of harmonization of HR activities across the subsidiary. The findings reveal that the effects of outsourcing on in-house HR showed a decrease in flexibility of the HR function, a slowdown in processing time of transactional HR as well as a decrease in satisfaction and work intensification for HR managers. Further, it remains questionable as to whether the function of HR was able to enhance its strategic position through outsourcing.