HR outsourcing among Malaysian manufacturing companies

Abstract

PurposeThe purpose of this paper is to investigate the trend of human resource (HR) outsourcing among manufacturing companies in Malaysia.Design/methodology/approachThe data for the study were obtained from survey responses from 232 manufacturing companies in Malaysia, of which were engaged in HR outsourcing. Descriptive analyses were performed to obtain the information on the practices of HR outsourcing among these companies. The practices to be explored include the types of HR functions outsourced, and the reasons for and for not engaging HR outsourcing.FindingsThe findings suggest that only 49 percent of manufacturing companies engage HR outsourcing. This implies that the trend of HR outsourcing is still a relatively new practice, but is increasing considerably. Many companies tend to outsource recruitment functions because they want to get access to expert services. However, many companies also refuse to outsource HR functions because it is not appropriate for their business operations.Research limitations/implicationsThis study is merely descriptive. Therefore, it does not test the relationship on the factors that induce the companies to engage HR outsourcing. In fact, it would be interesting for future studies to analyze the antecedents and consequences of HR outsourcing.Practical implicationsManufacturing companies are aware of which HR functions are frequently outsourced. It guides them on the conditions in which HR outsourcing is most desired, such as the reasons for engaging with HR outsourcing and the reasons for not outsourcing HR functions. From this information, companies should be attentive to the potential HR functions to be outsourced.Originality/valueAs HR outsourcing is expected to boom in Malaysia in the next few years, this study provides an input for manufacturing companies to determine their HR deliveries in future.