Outsourcing of Human Resource Functions: An Exploratory Case Study

Abstract

In this era of rapid economic growth, HR department plays an important role in a company. HR function outsourcing is important to help industries to be more efficient and cost effective. Outsourcing is the delegation of the non-core tasks by an industry to the outsourcing company due to the substantial amount of time and resource required by employee management. HR is growing continuously and is transforming from operational nature to strategic function. This research explores the theories, the current issues and challenges of HR management, factors influencing HRO and the benefits of HRO in manufacturing industries. In this qualitative study, data were collected from six manufacturing industries. Purposive sampling and semi-structured interview was used to collect the relevant data. Manpower management and security management are the common tasks that have been outsourced. The common issues and challenges faced by industries are high employee turnover rate and employee’s problems faced. As such, manpower and effectiveness of management are the main themes for adopting the outsourcing. It was found that manufacturing industries that HRO are able to elevate their effectiveness in managing manpower, its focus not purely on cost reduction, but on manpower and its effectiveness in management in enhancing industries performance and to support its growth.