Vol: 1, Issue: 1 2011

Page: 007-013

Study on Outsourcing Human Resource Activities: Measuring the Costs and Benefits

Mili Soni, Dr. Ramesh Agarwal

“Outsourcing involves the sourcing of goods and services previously produced internally within the sourcing organization from external suppliers.” The key point worth noting is that this definition excludes processes never performed internally. Linder writes that outsourcing is “purchasing ongoing services from an outside company that a company currently provides, or most organizations normally provide, for themselves.” This view limits McIvor’s definition by adding the qualification that most organizations normally provide some services for themselves. Lee and Hitt (1995, p. 836) provide a much broader definition for outsourcing, as “the reliance on external sources for the manufacturing of components and other value-adding activities.” This definition could include nearly any activity so long as it is value-adding. This paper adopts the broader definition, though it excludes activities such as advertising and independent auditing as these are nearly universally outsourced by companies, that are not directly selling these services to other companies.