Outsourcing human resource functions in Hong Kong and Malaysia

Many governments today use outsourcing as a key tool in the privatization of public service delivery. Outsourcing (contracting out) is based on contractual agreements that transfer responsibility for delivering a public service from a public sector principal or ‘purchaser’ to a private sector agent or ‘provider’. The provider, in exchange for a negotiated price, contracts to deliver services that meet predetermined levels and performance criteria set by the purchaser. Faced with fiscal constraints, many governments are outsourcing various human resource management (HRM) functions previously provided by in-house staff. The presumed benefits include: improved accountability, labour costs, organizational performance and the promotion of competition in the public sector. Employee morale, loyalty, and work stability, as well as service level and quality may be enhanced. However, depending on social-political and economic climates, negative consequences also may arise. These can include increasing unemployment, short-term profiteering or failures by providers to invest adequately in maintenance or service development, resulting in deteriorating service capabilities an standards overtime. Although an extensive literature on HR outsourcing has emerged, most academic studies have been western-centric with little attention given to Asian jurisdictions. This study examines the emergence of HRM outsourcing in the public sector of East Asia with particular reference to three jurisdictions: Hong Kong, and Malaysia. This study will analyze the shifting political, economic, social and technological environments in which the outsourcing of human resources (HR) activities in these locations has emerged. The scope and scale to which the chosen governments have adopted HRM outsourcing will be examined with the aid of surveys and interviews with key informants. Rationales and drivers for outsourcing is identified and subsequent effects on the employers, employees, and HR outsourcing providers assessed to determine whether greater economy, efficiency and effectiveness actually result. In undertaking the analysis, we adopt a framework that utilizes the Resource-based View (RBV) on organization capability and competitive advantage. The study to identifies the outsourcing-related problems and challenges faced by stakeholders engaged in public sector HR outsourcing in East Asia and to compare and analyze these with established western theories and models