HR Outsourcing Analysis
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HR Outsourcing Analysis
Michael Ayala Coba
Westcliff University
ECO500: Managerial Economics
Professor Nezerwe
March 24, 2024
2
Please note:
Abstracts are not
required for student
papers (they do not
take the place of introductions)
Only write an abstract if your professor specifically
requires one
(If it is required, please see these tutorials for
assistance on structure and content: Abstract, Overview
Abstract, Informative
)
3
HR Outsourcing Analysis
This paper analyzes the potential benefits and drawbacks of outsourcing the Human Resources department.
Benefits of Outsourcing HR
Cost Savings: International BPO providers boast significant cost reductions (30-50%), with additional savings (25-30%) through offshore labor (Brickley, Smith, & Zimmerman, 2001).
Specialized Expertise: BPO firms often house HR professionals with specialized skills, leading to greater efficiency and effectiveness in HR tasks (Besanko, 2010).
Focus on Core Business: Outsourcing HR frees up internal resources, allowing the company to concentrate on its core competencies and strategic initiatives (Shugart, Chappell, & Cottle, 1994).
Cons of Outsourcing HR
Loss of Control: Outsourcing may reduce control over sensitive employee data and decision-making processes within HR (Coase, 1937).
Quality Concerns: Language barriers and cultural differences can raise concerns about the quality of service provided by international BPO firms (Douma & Schreuder, 2008).
Employee Morale: Outsourcing HR functions could impact employee morale and trust in the organization, particularly if it involves layoffs (Akerlof, 1970).
Decision
The decision to outsource HR hinges on various factors, including cost reduction needs, the requirement for specialized expertise, and the company's overall strategic goals. While outsourcing offers cost advantages and efficiency gains, it also introduces risks like diminished
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