How human resource outsourcing affects organizational learning in the knowledge economy

Adaptability and knowledge management, key elements of organizational learn-ing, are critical to organizational success as a result of a fundamental shift towards a knowledge economy. HR outsourcing and the growth in contingent work can result in a significant loss in learning capital through a breakdown in the psychological contract. We explore how to preserve HR's strategic role in facilitating organizational learning in the new outsourcing and offshoring con-text. The problem is compounded if outsourcing is introduced for cost control rather than strategic refocusing reasons. We suggest that managers can posi-tively influence the relationship between outsourcing and organizational learn-ing through internal marketing tactics and enriched psychological contracts. A previous version of this paper was presented at the Administrative Sciences Association of Canada (ASAC) Annual Meeting, Toronto, Canada, June 2005.