Making the HR Outsourcing Decision

Published on Apr 9, 2007in Sloan Management Review
Paul S. Adler41
Estimated H-index: 41
(University of Manchester)
Outsourcing has become increasingly attractive for many organizations. Much attention has focused recently on the outsourcing of staffing. A much less noticed, though growing, business has been that for human-resources business-process outsourcing, or HR-BPO. Some observers see outsourcing as a key trend shaping the future of HR. outsourcing any business activity creates potential risks as well as benefits. This article synthesizes the strongest of the available research and identifies the six key factors that companies should consider when making important outsourcing decisions: 1. dependency risks, 2. spillover risks, 3. trust, 4. relative proficiency, 5. strategic capabilities, and 6. commitment versus flexibility. The six factors of outsourcing were major considerations in a landmark outsourcing deal that BP signed with Exult Inc. in December 1999.
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