The dynamics of HRM systems in Indian BPO firms

This paper highlights the context within which business process outsourcing (BPO) has rapidly grown in India and the critical need to investigate the dynam-ics of human resource management (HRM) practices and systems in this sector. Using a mixedmethod approach involving both indepth interviews and self-completing questionnaires, we analyze the nature of HRM systems in BPO orga-nizations operating in India. The analysis is based on a sample of 51 BPO com-panies, a majority of which are located near the capital of New Delhi. The results focus on the nature and structure of work and organization of Indian BPOs, as well as the strategic role played by HRM in such organizations. Fur-thermore, the findings highlight the way specific HRM practices such as recruit-ment, performance appraisal, training and development, and compensations are implemented. Our study suggests the existence of formal, structured, and ratio-nalized HRM systems in Indian BPOs. A number of insights related to HRM poli-cies and practices are shared by the HR managers interviewed shedding more light on the inner workings of the Indian BPO companies and their challenges. The analysis provides original and useful information to both academics and practitioners and opens avenues for future research on the nature of HRM sys-tems and practices in the Indian BPO industry. We thank the managers of the sample firms who agreed to in-depth interviews and provided the data for this research.     

Boeing’s Diffusion of Commercial Aircraft Technology to Japan: Surrendering the U.S. Industry for Foreign Financial Support

Japanese firms have become increasingly important first-tier suppliers to the U.S. commercial aircraft industry (large passenger jets). Over time, this relationship has evolved from a simple “build to print” subcontractor arrangement to a turnkey “design and build” risk-sharing partnership. Using the Boeing 767, 777, and 787 as examples, we argue that the motives for Boeing’s commercial outsourcing to Japan are to access the Japanese market, spread risk, gain access to capital, and lower U.S. spending on research and development (R&D). This has clear implications for U.S. trade and employment, in that Japanese-subcontracting boosts foreign imports and reduces the need for domestic production workers and U.S. suppliers. From a trade perspective, however, a troubling feature of allowing the Japanese to produce large commercial aircraft subassemblies is that major Japanese public financial supports are involved which contravene existing international agreements on production subsidies. We review the types of production contracts that Japanese companies have sought on the Boeing 767, 777, and 787 programs. These contracts have allowed the Japanese to develop new capabilities in terms of production capacity, tooling, design, and final assembly. Ultimately, these capabilities imply that Japan will eventually enter the market as a fully-fledged producer of commercial aircraft. This does not bode well for the U.S. commercial aerospace sector.     

Firm outsourcing decisions: evidence from U.S. foreign trade zones

This article examines the operations of firms located in U.S. foreign trade subzones to study the responsiveness of outsourcing to international cost changes. I find that firms reduce their reliance on foreign inputs when dollar depreciation increases the relative price of imported inputs. The effect is pervasive across industries and is economically significant. In addition, firms that rely more heavily on imported intermediate inputs reduce their overall shipments when dollar depreciation elevates their imported, input costs. However, the magnitude of the shipments effect is economically small, suggesting that firms respond to exchange rate movements by adjusting their operations on other dimensions.     

OUTSOURCING TYPES, RELATIVE WAGES, AND THE DEMAND FOR SKILLED WORKERS: NEW EVIDENCE FROM U.S. MANUFACTURING

Existing studies on the impact of outsourcing on relative wages and the demand for skilled workers mainly focus on aggregate outsourcing, in which imported intermediate inputs are used as a proxy. We depart from the existing studies by focusing on various types of outsourcing based on the six-digit NAICS U.S. manufacturing data. We show that downstream materials and service outsourcing are skill biased, whereas upstream materials outsourcing is not. We also produce other supplementary results pertaining to the impact of technology, different capital inputs on relative wages, and the demand for skilled workers. ( JEL C33, F14, F15)     

Does International Outsourcing Really Lower Workers’ Income?

We analyze the impact of international outsourcing on income, if the domestic labor market is imperfect, i.e. there is a bilateral bargaining between a firm and a labor union. In our analysis we distinguish between the cases where the parties negotiate over the wage only and where they negotiate over both wage and profit sharing. We find in the first case that outsourcing has an ambiguous effect on the workers’ income, while it increases the workers’ income in the second case. For the optimal amount of international outsourcing, we find that, depending on the wage effect of outsourcing, in a pure wage bargaining system it can be higher or lower than the level where domestic and foreign marginal labor costs are the same. In contrast, in a wage and profit share bargaining system, the amount of outsourcing lies below this level.     

Creating offshore-ready it professionals: A global perspective and strong collaborative skills are needed

Outsourcing of IT functions has become a widespread corporate practice, which has naturally led to concerns among IT works about how this affects their jobs. The issue is complex, and many companies are bringing their IT functions back inhouse. In light of this complexity, what skills do IT workers need to be com-petitive? We address this question first by reviewing the literature and then by examining two corporate case studies that have dealt with outsourcing issues. Based on this view of outsourcing, we discuss the skills that can provide a com-petitive advantage in the current environment.     

OFFSHORE OUTSOURCING DECISION AND CAPITAL INTENSITY: FIRM‐LEVEL RELATIONSHIPS

In offshore sourcing, a firm chooses outsourcing to independent suppliers or in‐sourcing from own foreign direct investment (FDI) subsidiaries. Based on the firm‐level data on offshore make‐or‐buy decision covering all manufacturing industries, this paper compares averages, documents inter‐firm distributions, and estimates multinomial logit models of the firm's sourcing mode choice. As predicted by previous theoretical models, this paper directly confirms at the firm level that outsourcing firms tend to be substantially labor‐intensive compared with firms in‐sourcing from the same region, even after the firm's R&D intensity, firm size, or industry is controlled for. (JEL F23, L23, L24, L14)     

SERVICES OUTSOURCING AND INNOVATION: AN EMPIRICAL INVESTIGATION

We provide a comprehensive empirical analysis of the links between international services outsourcing, domestic outsourcing, profits, and innovation using plant‐level data. We find a positive effect of international outsourcing of services on innovative activity at the plant level. Such a positive effect can also be observed for domestic outsourcing, but the magnitude is smaller. We also find that international services outsourcing has a positive effect on profitability, as predicted by theory, whereas this is not true for domestic sourcing. The results are robust to various specifications and an instrumental variables analysis. (JEL F19, O31)     

Karriereerfolg als Ergebnis des Personalmanagements

Strategic human resource management has avoided to evaluate its efforts in relation to employees’ careers. Recent research has investigated a selection of individual human resource management (HRM) practices (e.?g., training and development, mentoring, career development, talent management, performance appraisal) in relation to objective and subjective career success, but failed to study HRM systems or bundles. This paper argues that HRM systems and career success can be connected via human capital theory because human capital is understood as an organizational resource and as an individual antecedent to careers. Based on extant research that relates individual HRM practices to objective or subjective career success, this paper reviews and discusses the relationship between bundles of HRM practices and the individual practices contained therein and career success. The final conclusion suggests that evaluations of HRM systems should take careers into account because organizations rely on employees’ human capital. Future research should focus more intensely on the role of HRM for the development of careers also across organizations.     

The nexus between OSH and subcontracting

Subcontracting of specialized functions to external companies (e.g. cleaning or maintenance) is actually very common within several industries. These external companies' are called contractors and their contracting is often designated as outsourcing. Frequently contractors involve other companies (the sub-contractors) to assist them in fulfilling the contract, resulting in a complex chain of organizations focused on interchange of work - the contracting chain. Therefore in the same work site can coexist workers form the client-company and workers from the contractors and/or subcontractors. Since contractors perform their job in client's facilities, they can be exposed to hazards that are unknown to them. On other hand, workers of the client company can also be exposed to hazardous situations derived from the work performed by the contractors. The paper discusses how adequate occupational safety and health conditions can be assured when dealing with this kind of dynamic labor networks. Two case-studies and several examples coming from international literature will be presented.     

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.     

Outsourcing and union power

The outsourcing of union work and jobs either diffuses or diminishes union membership, depending on perspective and situation. The correlation of trends in union membership to trends in union power, while less than perfect, has until recently been relatively strong over the past sixteen years. The fact that as diverse a sample of unions as AFSCME, SEIU, and UAW have chosen to make outsourcing a prominent labor/public relations issue suggests that the correlation continues to be perceived by the union movement to be significant, notwithstanding the efforts of the “new” leadership of the AFL-CIO to break that link with respect to union political power by “taxing” member unions and their members to contribute both money and militancy to the 1996 election cycle. Although outsourcing may lead only to the diffusion of union membership either within or between unions, as opposed to the diminution of union membership, this fact has not received a great deal of attention. The net effect on total union membership of outsourcing from one union employer to another union employer is unclear, although the effect on the membership of the union at the outsourcing employer is not. The redistribution of membership within a union as a result of outsourcing is likely to have little immediate impact on union power. However, as even the best case scenario presented above suggests, it may have significant long-run deleterious effects on union bargaining power by taking labor out of a sheltered market and putting it into potentially competitive market. This is particularly likely to be the case when outsourcing (1) places the outsourced work into a different industry or wage contour and (2) creates the possibility of moving from sole-source to multiplesource supplier arrangements. The redistribution of membership between unions as a result of outsourcing is unlikely to have a major impact on union power broadly defined. It can have, however, serious deleterious effects in terms of the power of an individual union, as suggested in my “competitive case” scenario. The fact that one union’s losses due to outsourcing may be another union’s gain is of little consolation to the losing union. That act, in and of itself, may make the threat of outsourcing a potential union “Achilles heel” at the bargaining table by placing it into competition with some other, perhaps unknown, union as well as possibly nonunion competition. The most obvious threat to union power comes from outsourcing that diminishes union membership overall by transferring jobs from union to nonunion employers. The willingness and ability of employers to move work/jobs entirely out of the orbit of union control constitutes, in terms of power and particularly union bargaining power, a revisitation of the phenomenon of the “runaway shop.” It may also be viewed as a proactive form of hiring permanent replacements for (potentially) striking workers. The union options in dealing with such a challenge are to endeavor to preclude outsourcing through legislation or collective bargaining or to chase the work by organizing the unorganized, hopefully with the help of the unionized outsourcing employer. Neither option may be easy, but as the 1996 auto industry negotiations suggest, the former may be less difficult than the latter. The possibility that outsourcing from union to nonunion employer may provide unions with the power to organize from the top (outsourcer) down (outsourcee) cannot be entirely ignored as the issue of supplier “neutrality” reportedly was raised in the 1996 auto negotiations. The adverse effects of outsourcing on union political and financial power, by virtue of its impact on the level or distribution of union membership, can and may well be offset by an increase in union activism—as measured by dues levels, merger activity, organizing commitment, and political action. The adverse effects of outsourcing on union bargaining power are more problematical from the union standpoint. The effect of outsourcing, whatever its rationale or scenario, appears to be to put union labor back into competition. Thus, outsourcing constitutes yet another challenge to the labor movement in its ongoing and seemingly increasingly unsuccessful battle to take and keep U.S. union labor out of competition by proving itself able and willing to organize to the extent of the market and standardizing wages in that market.     

Emerging,attracting and challenging: how some of the world's largest media companies perceive their challenges and opportunities in China

China's emerging media market, despite having heavy entry regulations, attracts foreign companies that suffer from saturation and stagnation in their home markets. This paper seeks to provide an understanding of how some of the world's largest media companies perceive their opportunities and challenges in China by discussing research interviews with company managers. It analyzes the findings of the interviews in the light of existing conceptualizations, which suggest that in emerging and opening media markets, cultural barriers to the success of imported media increase with the waning interest in foreign media and the increasing strength of the domestic media industry. The article suggests that Chinese audiences will become more inwardly oriented in their media tastes and that if the Chinese media market opens further in the future, the existing advantages that the Western media companies appear to have over their Chinese counterparts will have diminished by that time.     

OUTSOURCING AND UNIONIZATION: A TALE OF MISALLOCATED (RESISTANCE) RESOURCES

While many believe the growth in outsourcing contributed to the decline in U.S. unionization up to the 1990s, this argument has never been investigated systematically. In this article, we analyze the effect of outsourcing on unionization between 1973 and 1993. Instrumental variables estimation shows outsourcing contributes to higher quasirents and industry productivity. We find the union wage premium increases with the extent of outsourcing—both for workers that are substitutable by outsourcing services and workers in jobs that are not substitutes of the tasks being outsourced. Finally, we find no support for the claim that outsourcing reduces unionization. (JEL J5, L2, L6)     

THE NATURE OF OUTSOURCING RELATIONSHIPS: EVIDENCE FROM OAP PRICES

This paper studies the extent and variation in production cost pass‐through for U.S. outsourcing imports. Data from 4,676 products imported through the U.S. overseas assembly program show that outsourcing imports were characterized by incomplete pass‐through of production and trade costs to import prices. Notably, pass‐through was higher for products assembled in high education countries while the response of outsourcing import prices to competing suppliers' prices was largest for products sold by firms in capital‐intense industries. The reasons for these cross‐country and cross‐industry differences, as they relate to theories of outsourcing and trade, are explored. (JEL F1, F2)     

Outsourcing within the Nordic context: Care services for older people in Finland

The early 1990s economic setback brought significant reforms favoring the outsourcing of care in Finnish municipalities. Here, outsourcing refers to the practice of municipalities employing private organizations through different means (e.g., open tendering) to deliver public care services. In this context, this study examines the growth in the outsourcing of service housing and home-help services in 311 municipalities from 2001 to 2015 and investigates the municipal factors associated with outsourcing using four dimensions: care needs, population size, economic situation, and political ideology of the municipality. The findings reveal a steep increase in the outsourcing of home-help and service housing. Care needs of older people are the most influential factor for outsourcing, particularly for service housing. Overall, the findings show a growing trend in private care provision in Finnish municipalities.     

The Importance of Foreign Capital for the Economic Stability of Serbia

For Serbia diminishing of current account deficit is a prerequisite for the regular repayment of external debt. It is necessary to attract a bigger amount of foreign direct investment when the process of privatization is finished. Motivation for investing in Serbia has to be intensified by the creation of attractive and stimulating environments. Until now, FDI was mostly directed to purchase of Serbian companies. Economic and institutional factors should be directed to create a framework, which is important for FDI inflow. Every measure contributing to reduce dollarization and strengthen the local currency is a step in the right direction. The success in attracting foreign investments will depend primarily on objective factors, such as the size of national markets, the availability of appropriate inputs, infrastructure and manpower skills.     

Outsourcing and the Contracting of Responsibility*

Outsourcing is becoming an increasingly prevalent phenomenon not only in business life, but also in the affairs of governments and in the lives of individuals and families. But what exactly is outsourcing and what are its consequences? I will argue that outsourcing offers entities a set of freedoms (i.e., possibilities of action and non‐action) that are not considered possible in this practice’s absence. However, many of these freedoms are precarious in that they involve a multitude of risks and dangers both for those outsourcing their affairs and for those who take them on. Although there are multiple freedoms of this sort, one is focused upon here; how outsourcing allows entities to contract, in the sense of limiting, their responsibilities. Three specific ways in which outsourcing allows entities to do this are detailed. Recognizing this precarious aspect of the freedoms associated with outsourcing is important because it highlights the social risks involved in this practice.     

Managing human resource shortages in a unionized setting: Best practices in air traffic control

Human resource shortages require effective human resource management (HRM). Findings from research about ongoing labor shortages in air traffic control (ATC) are used to build a preliminary theory of appropriate HRM responses. Our international sample of major ATC agencies generally developed a set of best HRM practices to attract, motivate, and retain human assets. Key factors included (1) cultural and institutional norms, (2) technological change, (3) union responses, and (4) organizational form and structure (e.g., civil service versus commercial firms). While ATC’s rare human aptitudes, lengthy training to develop firm-specific human capital, and lifelong employment may limit the preliminary theory’s general applicability, crucial lessons emerge about human resource planning. This research was conducted with the support of the Social Sciences and Humanities Research Council, the Rice Fellowship, the Ziegler Fellowship, and the Center for International Business Studies at the University of Alberta. We are indebted to the individuals interviewed.