Outsourcing — The benefits and the risks

Outsourcing is promoted as one of the most powerful trends in human resources management. The rationale for outsourcing HR functions includes financial savings, an increased ability to focus on strategic issues, access to technology and specialized expertise, and an ability to demand measurable and improved service levels. However, there are some indications that these benefits are not being realized. Furthermore, there may be a serious impact on employee morale and a risk of transferring expertise and insider knowledge to vendors. Managing the outsourcing arrangement is critical.