Outsourcing decision : do strategy and structure really matter?

Purpose: Although there is a growing body of literature on human resource (HR) outsourcing, there are still unresolved issues regarding the level of outsourcing HR activities initiated in firms having different strategies and structures. This is relevant to examine because firms with different orientations (strategy and structure) cannot do HR outsourcing at the same level. The paper aims to discuss these issues. Design/methodology/approach: A theoretical framework is developed and empirically validated using survey data from 184 manufacturing firms in India. The analysis involved testing a number of hypotheses through statistical techniques using the confirmatory factor analysis and structural equation modeling. Findings: The results indicate that firms having prospector orientation are more likely to outsource non-core HR activities as compared to firms having analyzer and defender orientation strategies, in that order. However, in comparison to non-core HR activities, core HR activities are less likely to be outsourced by firms with different strategic orientations (prospector, analyser, and defender). Originality/value: This research study underscores the linkage between HR outsourcing and strategy and structure of a firm by developing a theoretical framework.