Embarking on HR Outsourcing – Do Organizational Size and Maturity Level Matter?

This paper examines whether, in the context of a fast emerging economy like Malaysia, firm size and maturity influence the decision to outsource Human Resource (HR) functions. Towards this end, a survey was conducted among the heads of HR Departments of manufacturing organizations in Malaysia. Based on the statistical tests conducted on their inputs, it appears that HR outsourcing preference is influenced by the firm’s size, whereas the impact of its years of operation is inconclusive. Of the functions outsourced, recruitment and training appear to be most prevalent as compared to other functions like HR information systems and payroll.