The impact of HR outsourcing and strategic HR integration on the HR-to-employee ratio

Abstract

PurposeTwo simultaneous trends have arisen in the field of HRM: the development of the human resource (HR) function toward a more strategic, value adding unit and the trend of HR outsourcing (HRO). Opinions are divided in the field of HRM research regarding the interdependences between these two trends and whether the HR function has a positive or negative effect. Therefore, the purpose of this paper is to examine the triangular relationship among strategic HR integration, the HR-to-employee ratio and HRO.Design/methodology/approachThis study analyses data from three large evaluations conducted in 14 European countries and compares the results obtained from the 2000, 2005 and 2010 Cranet survey waves. For the hypotheses, a multilevel regression design was used.FindingsThe results allow concluding that HRO supports the professionalization of the HR function in an effort to make it a strategic asset.Research limitations/implicationsThis study extends prior understandings of the theoretical perspective on HRO and its organizational impact. The sample is nested within 14 European countries and influenced by cultural aspects and institutional factors. These influences could be an exciting avenue for further research.Practical implicationsThis paper includes important implications for HR practitioners. The results support a rather optimistic view of the HR function regarding its relationship with HRO and the latter’s impact on the HR-to-employee ratio and strategic HR integration.Originality/valueThe study answers the question: has HRO downsized internal HR staff over the past decade, and how is it related to the strategic integration of the HR function? In this context, this study analyses Cranet data to contribute to the discussion on the development of strategic HR integration and the impact of HRO on such efforts. Moreover, the study examines the influence of HRO on internal HR staff based on the theoretical framework of the resource-based view.