Academic journal article Human Resource Planning

The Influence of Outsourcing on Job Satisfaction and Turnover Intentions of Technical Managers

Academic journal article Human Resource Planning

The Influence of Outsourcing on Job Satisfaction and Turnover Intentions of Technical Managers

Article excerpt

Questionnaire data were collected from 469 low- to mid-level Air Force engineering managers who performed a support function that was to be outsourced. The survey was designed to explore the participants' reactions to the outsourcing strategy given that their jobs were secure but job changes were expected as the strategy was implemented. Specifically, the questionnaire assessed current job satisfaction, perceptions of outsourcing, and their career intentions. By testing a path model, results indicated that the technical managers' negative view of outsourcing reduced their job satisfaction and subsequently correlated to an increased desire to leave the organization. These findings, and their implications for HR managers, are discussed here.

Dwindling resources and market competitiveness have forced organizations to scrutinize their methods of producing goods and services and make changes in their processes in order to maximize economic returns. Outsourcing, or competitive sourcing, is one fundamental change made by private sector organizations to streamline business processes and bolster organizations' competitive positions. Indeed, many companies have outsourced human resource management functions like recruitment, training, and benefits administration. Outsourcing has migrated, however, from a small-scale tactical improvement strategy to a more pervasive philosophy where organizations are outsourcing almost every function such as engineering, research, development, and facility maintenance operations (Allen & Chandrashekar, 2000). In line with the private sector, public sector organizations have also embraced outsourcing to cut costs and refocus resources. Recently, even organizations with traditional attitudes of self-sustainment, like the mi litary, have outsourced important support activities (e.g., construction of camps for deployed forces in Bosnia was outsourced to a private vendor; Allen & Chandrashekar, 2000).

Essentially, outsourcing is the transfer of services or functions previously performed within the organization to a provider outside the organization (Johnson, 1997). Presumably, organizations benefit from this transfer because they can save money and refocus their resources on the organization's core competencies. Cost savings result because specialists that benefit from economies of scale can accomplish tasks more cheaply than organizational members accomplish the same tasks (Goldfarb & Naasz, 1995). Simultaneously, as functions are outsourced, leaders relieve their employees of mundane, repetitive, and basic tasks, allowing employees to focus their efforts solely on the core, value-adding activities needed for the organization to maintain its competitive advantage.

While these potential benefits of an outsourcing strategy are appealing, the actual success of any outsourcing strategy is predicated on a number of issues. First, in order to get the anticipated cost savings, researchers have argued that the service provider must have firm-specific knowledge, avoid opportunistic behaviors, and provide required services at sufficient levels (Ulrich, 1996). Second, the organization benefits from refocused resources only if it is able to retain its most competent employees and effectively reallocate these employees' efforts toward value-added tasks. If these requirements are not met, the all-too-predictable outcome of an outsourcing strategy will be an organization with a deteriorating financial situation that is missing the human resources necessary to turn it around.

This article investigates one specific aspect of the outsourcing problem: the retention of employees after an outsourcing strategy is initiated. Given the importance of keeping the existing employees in the organization to reap the benefits of outsourcing; this research investigates the influences that outsourcing has on employees' decisions to stay in an organization that is faced with outsourcing. …

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