HR outsourcing: the impact on HR role, competency development and relationships

The business benefits of an outsourcing strategy are well documented, and HR is encouraged to outsource in order to add value. Yet little is known about how HR outsourcing affects the HR role, competencies and relationships with senior management. These issues are examined through 27 semi-structured interviews with senior HR professionals, comparing HR departments engaged in HR outsourcing with those maintaining full in-house HR provision. The findings indicate that HR outsourcing stymies HR role transformation. HR outsourcers experienced limited skill development and an increased focus on cost reduction at the expense of their strategic position. In contrast, non-HR outsourcers actively engaged in other parts of the business, developing competencies that garnered trust and support of senior managers. The benefits of an external HR community appear limited. The study suggests that an 'internal' HR community is better placed to enhance HR departmental roles.