In search of organizational strategic competitiveness? A systematic review of human resource outsourcing literature (1999–2022)

Abstract

Human resource outsourcing (HRO) has been an important development in the HRM function since the 1990s as organizations seek cost reduction and competitive advantages. Does HRO enhance organizational competitiveness and strategic capability? Based on a systematic review of 97 journal articles published between 1999 and 2022, we identify several key patterns of existing research on HRO, such as a heavy reliance on quantitative methods, the dominance of traditional economic theories, and a focus mainly on the perspective of client organizations. However, whether HRO services can accomplish organizational strategic capability remains equivocal. To unpack the relationship between HRO and organizational performance, we establish an HRO process model which includes several blocks: HRO decision, HRO implementation, HRO perception, HRO evaluation, and HRO maintenance. Among these blocks, there is a dynamic interplay between multiple stakeholders across fields. We call for future HRO research and practice to pay attention to employee perception to enhance HRO’s effect and value as part of strategic human resource management, thus extending HR system strength theory. We also call for future research to clarify the contextual role of emerging technology in promoting HRO, given the increasing use of digital technology and HR data analytics.

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