Successful implementation of outsourcing has helped the organizations to reduce their implementation and operational cost. This paper examines that whether the latest emerging concept of human resources outsourcing is effective for the Multinational companies or not in the face of corporate culture. The procedure used to examine this study is survey method using questionnaires. The findings indicate that the outsourcing of human resource stymies transformation of human resource role. Corporate culture greatly affects human resource functions outsourced by multinational corporations both positively and negatively. The study suggests that outsourcing human resource functions to the service providers to focus on the core business, which will help to increase the profitability of the business.
2.1 Working Title
“Exploring the impact of corporate culture on outsourcing human resource.” In order to explore this, the following questions will focus on:
2.2 Research Questions
• What are some of the factor affecting corporate culture because of outsourced human resource service provider?
• What is the association between outsourcing of human resource and the corporate culture of multinational companies?
2.3 Background of the study
Multinational Companies always outsource their products or services outside the companies. According to Harrison and Kelly (1993) outsourcing is a process of subcontracting described as the practice of the inhouse work performed elsewhere by another company. In recent days, the trend of human resource outsourcing is also increasing day by day. Many multinational companies are practicing outsourcing of human resource to other companies. Handing over some of the human resource functions like recruitment and training or the payroll, compensation benefits is reducing the burden of the senior managers from everyday processing or strategic planning (Gurchiek, 2005).
Some of the companies believe that human resource is an internal function and its performance should be internally where as some believe that outsourcing human resource functions will reduce cost and time. Corporate culture suffers significantly in the face of employees. Since employees matters’ handling is outside the organization, they feel disconnected from provisions of training, management of payroll, and corporate policies on employment as offered by outsource provider. Other negative impact may surface as an increased risk of outsourced human resource service provider leaking confidential data such as employees’ personal data and special training material that create competitive advantages and corporate culture for multinational companies (Berry, 2005). Based on this background, the study attempts to discuss the connections between outsourcing human resource and corporate culture impact on outsourced human resource roles by multinational companies
2.4 Rational of the study
The present study revolves around the importance of corporate culture on outsourcing of human resource in the present era. How it is beneficial for the Multinational companies, corporate culture. The study will be discussing on the benefits of outsourcing to address the skills and enhance the brand of the corporate culture in the rapidly changing business era. The main gain of outsourcing is that the outsourcing providers are more specialized in understanding the human resource functions but there is an need to look at how the affected employees regard their employers over this noble issue of cost saving. Secondly, they invest in technology for this reason. Although much about various benefits is in completed researches, the impact of corporate culture is still not well discussed in academic circles. The human resource outsourcing providers are like family that helps the companies by their expertise to manage the company’s human resource functions and adjusting the workforce with the latest profitable strategies. Multinational companies are focusing on the outsourcing their recruitment process using REPO (Recruitment Outsourcing Process), then they are using the TBO (Talent Based Outsourcing) for bringing the workers from outside to perform specific tasks for limited period on contractual basis (Manpower Group, 2012). multinational companies have been using other companies in obtaining credentials of potential employees for some quite some time now with a high ret of efficiency (Kulkarni, 2008). In a world where there are less resources and loads of work to do by the companies, they are looking for trusted human resource outsourcing partners who can help them to reduce their cost by performing the functions of human resource innovatively and creatively. Since several researchers have put together the trend of multinational companies to outsourcing several operations, there has not a directed study towards the major factors that will compel a multinational company to outsource the entire function of human resource from an offshore company. This study will look at the key factors and benefit derived from relieving of human resources role of multinationals company and the trend in globally.
Hence, this study will investigate the significance of human resource outsourcing and the impact on corporate culture of multinational companies.
2.5 Research Aim and Objectives
2.5.1 Aim of the Research
The researcher aims at exploring the impact of corporate culture on outsourcing human resource by multinational companies.
2.5.2 Objectives of the Research
The objectives of the research are:
• To evaluate impact of outsourcing human resource function on the corporate culture as viewed by multinational companies
• To understand the corporate culture the Multinational Companies have from various points of view in outsourcing the human resource role
• To investigate consequences on the workforce when human resource function is outsourced and its effect on the corporate culture
3 LITERATURE REVIEW OF OUTSOURCING
Human Resource Outsourcing Advantages
Trend of outsourcing in human resource is increasing day by day. This trend is gaining rapid growth from the inception of global recession. According to Eigenhuis and Rob (2008), companies make the decision of outsourcing their human resource functions for many reasons like cost reduction, to avoid technology investments. The main pro of outsourcing is that the outsourcing providers are more specialized in understanding the human resource functions and hence they the service providers of human resource. Secondly they invest in technology for this reason.
Thirdly, this allows them to operate at higher competitive costs. Lastly, the risks associated with the company regarding the human resource functions are handled by a third party (Eigenhius, & Rob, 2008).
According to the survey of Hewlett Associates, (Gurchiek, 2005) it is studied that around two millions of employees are satisfied with the outsourcing of human resource The activities, which were outsourced mostly, were placement services which was 91%, employee assistance programs, 89% etc.
To change their traditional human resource functions into outsourcing process around 62% of companies restricted their human resource policies, 70% defined it again from the being, and 43 % had given training to their employee on the new role (Gurchiek, 2005). The Global outsourcing of human resource is predicted to grow by US$ 200 billons in the year 2017 (Subramanyam, 2013). The companies are motivated by the fact that outsourcing of human resource is to use employees who are experts in those areas. Considering outsourcing, process has helped the companies to access to the latest technology, reduce the investment in capital, operational cost reduction and manage the employees and the managers with the improved services (Abi/Trade and Industry, 2004).
Previous researches have focused on showing the trend in outsourcing process by multinationals companies without emphasis on the factors that leads to outsourcing the human resources function specifically. This study will focus on adding some fresh perceptive on the human resources functions being outsourced by multinational companies and the benefits that are derived from it.
Human Resource Outsourcing Disadvantages
Human resources outsourcing has its share of disadvantages just like any other outsourced company function. Corporate culture suffers significantly in the face of employees. Since employees matters, handling is outside the organization, they feel disconnected from provisions of training, management of payroll, and corporate policies on employment as offered by outsource provider (Berry, 2005). They are prone to be sentimental over the lack of best interest at heart by the outside human resource provider (Berry, 2005). Some fell that there is no sense of security for their jobs provided by outsourced human resource team since they are not involved in daily running of operations of the multinational company (Berry, 2005)
There is lack of proper centralised pool of experts that uniquely blend with company operation on daily processes and employee training (Berry, 2005). Outsourced human resource team will not have a proper understanding of the effects that are caused by changes in processes to employees (Berry, 2005). Therefore, outsourced human resource company may fault in providing an exact match for a specialised position.
There is an increased risk of outsourced human resource service provider leaking confidential data such as employees’ personal data and special training material that create competitive advantages and corporate culture for multinational companies (Berry, 2005). The outsourced human resource service provider is an independent entity with its own policies and employees, and it is difficult to for multinational companies to control it beyond the contract agreements.
Therefore, it is important to examine the importance of corporate culture on outsourcing of human resource services in the multinational companies.
4 RESEARCH DESIGN AND METHODOLOGY
4.1 Research Design
The Research Design supports the research study by establishing a framework of the entire research study. The researcher adopts the quantitative research design for the present study. The study decides to use the Survey method as an instrument to relate the findings of the research study with its aim and objectives (Smith & Albaum, 2005). A sample of 30 human resource professionals from different industry is randomly selected for the survey.
4.2 Method for Data Collection
According to the aim and objectives of the present research study, the researcher here deals with only primary data (Burns, 2005). Primary Data collection revolves around the quantitative method of data analysis. The primary data will be collected with the help of questionnaire. The reason for questionnaire is informed by the desire to get accurate answer to research questions by respondents, which is expected to save them time. Questionnaires are straightforward in getting only relevant data required for this research. The open-ended questions like “What are the reasons of outsourcing your human resource functions?” will be suitable for this study. The questionnaire will help the researcher to understand the perceptions about multinational organizations’ corporate culture on outsourcing of human resource activities and help to connect the answers with the aim and objectives.
Following this procedure will help the research to collect the precise data and provide a valid and reliable result of the research study.
4.3 Sampling Method
According to the aim and objectives of the present research study, the researcher decides to conduct the research using the probability sampling type, simple random where questionnaires will be distributed among different employees from the companies chosen. Thirty questionnaires sampling five companies will be distribute randomly to employees in different department of the organization. Random sampling comes because of a limited budget of this research and time constraint associate with the quantitative nature of research. Five multinational companies drawn from five different industries will fill out questioners for data collection. The reason for adopting simple random sampling method for conducting the present research study is that, it will evidence no biasness, as the respondents are chosen in a random order through this technique (Wiid & Diggines, 2010).
Additionally, in random sampling method, every member of the population has an equal chance of being selected for the survey, during the conduction of the research study (Lund Research (2012).
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