The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0309-0590.htm
JEIT
32,1
4 Colliers CRE, London UK
Received 8 May 2007
Revised 31 July 2007
Accepted 10 October 2007
Journal of European Industrial
Training
Vol. 32 No. 1, 2008
pp. 4-18
q Emerald Group Publishing Limited
0309-0590
DOI 10.1108/03090590810846539
A model for outsourcing HRD
David Simmonds
University of Westminster, London, UK, and
Rebecca Gibson
Abstract
Purpose The purpose of this paper is to provide an overview of approaches to outsourcing HRD in
the UK.
Design/methodology/approach This paper employs semi-structured interviews and case
studies. The research model was developed from a literature review.
Findings There are many problems associated with outsourcing any or all aspects of the HRD
function. Approaches to outsourcing vary between firms, largely because their impetus for taking
training outside is likely to differ. There are certain key issues that need to be considered when trying
to make an outsourced HRD strategy successful in any organization: making the right decision about
what to outsource; engaging the right providers; and putting measures in place to build and maintain a
strong, trusting, effective relationship.
Research limitations/implications The model should be further tested, applied and refined as
necessary.
Practical implications Organizations wishing to outsource HRD could be guided by the model
and findings of this research.
Originality/value A novel and innovative two-part model was developed from a literature review
and tested against two large well-known UK organizations. It will be of value to HRD managers and
researchers.
Keywords Outsourcing, Human resource development, Process planning, Working practices,
United Kingdom
Paper type Research paper
Introduction
A growing trend in HRD in recent years has seen a steady increase in the number of
training tasks being undertaken by external providers (Ardichvili and Gasparishvili,
2001; Woodall et al., 2002). This practice of outsourcing carries benefits such as cost
reduction, increased service quality and increased access to experts in specialized areas
(Csoko, 1995). Others, however, believe that outsourcing exposes organizations to
opportunistic behaviour by contractors, limiting the ability of firms to develop
distinctive competencies within the workforce, and creating inefficiencies because of a
lack of familiarity with the organizations strategy and culture (Ulrich, 1996).
This paper explores the impetus for outsourcing, focusing on elements of cost,
competence and capacity. We outline a few problems with outsourcing, including the
importance of culture and trust. In order to present an overview of the complexities
involved in managing outsourcing of HRD, a published case study of the ceramics
manufacturer Corning is discussed. From our review of the literature and this case
study, we have developed a good practice approach to outsourcing HRD based on
four essential steps. We proceed in the paper to propose a new two-part model for
outsourcing HRD, taking into consideration the interaction between risk elements and
contextual complexity. Part 1 of the model is then tested for validity through case
study analysis of HRD outsourcing at Colliers CRE, a commercial property company, A model for
and Unilever, the international manufacturer of foods and care products. The paper outsourcing HRD
concludes with some recommendations for organizational practice and theoretical
research.
At the operational level, outsourced HR tasks are essentially administrative,
operational, or transactional in nature, thus creating a separation from its main,
transformational, function (Cox et al., 2005; Greer et al., 1999; Woodall et al., 2002). 5
However, even at this strategic level it would appear that increasingly responsibilities
of the HRD function are also being outsourced (Woodall et al., 2002; Wright and Snell,
1998).
This paper will consider the rationale for outsourcing HRD and investigate the
benefits to both the organization and its employees. The potential pitfalls in
outsourcing learning and development will be identified, as well as examples of good
practice. Evidence from two case studies will be offered in order to test the validity of
Part 1 of the new model for outsourcing HRD.

Outsourcing
DeRose and McLaughlin (1995) describe outsourcing as turning over the heart and
soul of the HRD function. This appears to imply that the purpose or raison detre of
the function has been given away or sold off to a third party. They make the distinction
between outsourcing and out-tasking, the latter meaning to simply turn over the
administration of a specific, defined activity to an external firm. Richman and
Trondsen (2004) have developed this further into an outsourcing/out-tasking
continuum. At one extreme we find out-tasking, where specialist firms help with
specific tasks or parts of the learning and development process; at the other extreme
lies comprehensive outsourcing, where an external contractor takes complete
responsibility for an organizations total HRD function. Between these two extremes
lies selective outsourcing, where an external service company takes control of selected
processes or activities (e.g. course delivery, administration, or development). Clearly,
there could be a greater degree of concern when determining the most appropriate
outsourcing approach within larger multinational organizations, and at a national
level, concerns have been raised in relation to an over-dependence upon a foreign
labour force (Al Dosary, 2004; Beausang, 2004; Hall, 2000; Khatri, 1999; Wang and
Wang, 2006).
There are a number of other related terms used in the literature, including
contracting (Hale, 2006) and strategic partnering (Walton, 1999), with differences
between the various approaches. These may reflect either the transactional (working
for) or transformational (working with) nature of the relationship. However, for the
purposes of this paper, the term outsourcing will be used to describe that process of the
HRD function that includes any input from external parties. This leads us to a
discussion of the various drivers that can provide an impetus for outsourcing HRD.

Impetus for outsourcing

From our review of the literature, there seem to be three major elements that have
provided an impetus for outsourcing HRD, namely cost, competence and capacity.
Cost. One of the most regularly cited reasons for outsourcing the HRD function is
that of cost reduction. There is a perception that financial savings are likely to be made
JEIT because vendors who supply a similar training program to many different
32,1 customers could offer benefits due to economies of scale (Walker and Weber, 1984).
With advances in technology, some businesses are choosing to move their entire
learning function to large service-centre facilities, which leverage heavy fixed costs
among multiple clients (Harris, 2003; Beausang, 2004). IBM is providing this sort of
business process outsourcing (BPO) service for firms learning functions. It should be
6 noted, however, that Gainey and Klaas (2002) have found that saving money should
only be considered an ancillary outcome of outsourcing in the training area, rather than
as its primary purpose. Both quantitative and qualitative reasons may be significant
for those organizations considering outsourcing. Their study found that only 29
percent of respondents believed they had actually saved money as a result of
outsourcing, whereas 63 percent gave quality-related reasons as their primary
motivation for BPO.
Competence. Outsourcing may also increase an organizations access to a diverse
range of experts and specialists (Csoko, 1995; Woodall et al., 2002). Most firms lack the
internal resources to keep ahead of rapid technological, legal, and other changes
(Hoskisson and Hitt, 1995). The use of outside training suppliers can ensure greater
currency in the area of good employment practice (Buyens et al., 2001; Gainey and
Klaas, 2002). Whilst this is clearly of importance to all organizations, this is
particularly pertinent for small- and medium-sized enterprises (Tyler, 2004), since
external training providers are more likely to be able to offer smaller companies a
range of best practice solutions.
The decision to outsource is often driven by an organizations desire to concentrate
on its core competencies; firms can focus scarce resources on product development
(Tyler, 2004; Woodall et al., 2002). The most likely business areas to be outsourced are
support functions, which, whilst necessary for operational purposes, may be of little
interest to customers (Hale, 2006).
Capacity. A further business case for outsourcing HRD is seen in response to a risk
assessment of demand uncertainty. If a company relies on an internal HRD function, it
will bear the consequences associated with upsizing or downsizing as demand
fluctuates (Tyler, 2004; Woodall et al., 2002). Outsourcing enables organizations to
respond more rapidly to changing market forces.

Problems of outsourcing
Whatever the motivation for outsourcing all or part of the HRD function, if the process
is not handled correctly, the move will be of limited benefit to the company (Nijhof,
2004; Ruona and Gibson, 2004).
Culture. Some firms are better suited to outsourcing than others. Some
organizations requiring large amounts of compliance and industry-generic training
(e.g. financial services or safety training) may be good candidates for outsourcing. On
the other hand, organizations having training that is customized to meet learners
needs may not be good targets for outsourcing. Non-generic programmes require a
substantial investment by the external provider in order to understand the unique
needs of both the organization and the learners, which is likely to lead to higher prices,
making outsourcing less attractive (Klaas et al., 2001). Outside suppliers may never be
able fully to appreciate an organizations culture well enough to perform effective
training in certain areas. Barney (1991) suggests that within a firm, much of the
employees knowledge and experience is tacit in nature and cannot be articulated A model for
effectively to members outside the organization. Should this be the case, briefing outsourcing HRD
external training providers is likely to be less effective than retaining the HRD function
in-house.
Trust. Outsourcing agreements may encourage opportunistic behaviour from
external providers. Gainey and Klaas (2002) warn that leaving suppliers to their own
devices may lead to them carving out a niche, with the consequence that they develop 7
an unhealthy degree of power or control. An organization could become over-reliant
upon just a few key providers. More recently, Gainey and Klaas (2005) found evidence
that trust between an organization and its training provider was lower when either
party was uncertain about the design or delivery of training, and concluded that this
was due to the greater potential for self-serving behaviour. Moreover, Ulrich (1996)
notes that outsourcing may limit the ability of a business to expand its base internal
skills and expertise, leaving the firm vulnerable in its undeveloped state of knowledge
and experience. On the other hand, Gibb (2003) argues that the role of the HRD
professional will become increasingly specialized as line managers take decisions to
outsource aspects of the HRD function.
Organizations should be wary of over-reliance on off-the-shelf training solutions,
which may appear to represent good value but do not actually meet the needs of the
target audience (Kaeter, 1995). Instead, courses should be tailored as far as possible to
fit the requirements of the learners and their organization (Gainey and Klaas, 2003).
However, Walton (1999) states that without internal support, the external developer
will encounter problems in identifying the learning needs of participants. This means
that, for many companies, a move to fully outsource the entire HRD function could
become perilous.

Managing outsourcing
Prioritize. Hale (2006) suggests that the strengths and weaknesses of the internal
training department should first be identified to establish which parts of the function
would benefit from moving to an outside company. She goes on to point out, however,
that the overall leadership of the function should never be outsourced. Rather, as
Nilson (2003) suggests, an analysis of employee needs, and effective methods for
transferring their knowledge for the benefit of the company, should be undertaken in
the first instance.
DeRose and McLaughlin (1995) describe how the ceramics manufacturer Corning
determined those aspects of its HRD function that should be outsourced (Belcourt,
2006). The company decided to focus internal resources on the strategic activities
required for desired organizational change (Kuchinke, 2003), and to give responsibility
for other activities (e.g. generic skills training) to an external provider.
Cornings approach was acknowledged to be prudent, since it focused on the
advantages of retaining in-house those aspects of training related to its core
competencies. Walton (1999) states that a company should not lose those learning
processes that impart key knowledge to the organization and are likely to add
sustainable competitive advantage and overall intellectual capital. The perception is
that outsiders will struggle to gain the tacit knowledge required to develop truly
bespoke courses (Barney, 1991; Connor and Prahalad, 1996). Moreover, obtaining such
JEIT services from vendors will require an asset-specific investment (i.e. an investment that
32,1 adds value only if the firm continues with its relationship).
It should be noted, however, that recent research undertaken by Gainey and Klaas
(2005) has suggested that managers should not immediately disregard outsourcing
when dealing with specialized training needs. It was found that, because vendors have
to increase their efforts to provide tailored training, the quality of provision might
8 actually be enhanced by their efforts to ensure sustainability in the relationship.
Select. Second, after determining which aspects of the HRD function will be
outsourced, the organization must carefully select its provider(s). One method is to
utilize a course broker who will introduce the outsourcing company to potential
vendors. The danger of this approach is that since many training providers have dual
roles as broker and provider, vested and conflicting interests could result. A formal
Request for Proposal (RFP) document sent to potential vendors could assist at this
stage (Nilson, 2003). The advantage of this approach is to require greater specificity
concerning the requirements of the host organization. Hale (2006) points out that it is
important to manage expectations and clearly delineate aspects of the working
relationship from the outset. A Service Level Agreement (SLA) should prove beneficial
in this regard. For example, the HRD function may be looking not only to buy
expertise, goods and services but may also want to build its internal capability and
eventually reduce its long-term dependence on the outsourcing firm.
At Corning, the training management team developed a set of criteria, which
ensured that the practices and people of the external provider would be compatible
with the companys working environment and training philosophy. These included
Shared values, Experience, Financial stability and Documentation. Managers
at Corning were very clear in their assessment that the external provider would have to
play a leadership role and yet not harbour an agenda that conflicted with that of the
HRD function.
Trust. Once the vendor has been selected, it is essential that the organization
manages the relationship in a manner that facilitates a close, trusting partnership. This
is especially important when designing programmes for the development of core
competencies (Klaas et al., 2001). In a survey by Gainey and Klaas (2002), respondents
who indicated high levels of trust between themselves and their training providers also
reported higher levels of performance; more effective design and delivery of training;
and higher levels of overall satisfaction. A further study (Gainey and Klaas, 2005)
found that, in the absence of a trusting relationship, suppliers might be more inclined
to engage in opportunistic behaviours that prove detrimental to the host organization,
including disclosing private details to other clients.
Trust can be built in a number of ways. Commentators (Gainey and Klaas, 2005;
Hale, 2006) have identified that accurate and frequent communication between the
organization and the training provider results in a clearer understanding of each
others needs and capabilities, as well as a greater sense of loyalty. This will in turn
lead to increased levels of trust. On the other hand, others argue that increased
contractual detail may harm the development of a productive outsourcing relationship.
However, the benefits associated with contractual specificity tend to offset any
negative effects (Gainey and Klaas, 2005). Finally, committing to a long-term
relationship is seen as important to building trust since this is likely to evolve over time
as customer and supplier become more attuned to each others behaviours and desires.
 At Corning, a detailed contract was drawn up at the start of the outsourcing A model for
relationship and included clauses dealing with liability, evaluation timeframes, and a outsourcing HRD
termination policy. Multiple communication channels were established, including a
project team that met monthly. Over time, contact details of the training providers were
even added to the internal telephone and voicemail systems, to enable employees to
contact the trainers directly. The relationship turned into a highly successful,
long-term partnership built on mutual trust and shared values. 9
However, in such a non-competitive situation, it is even more important for the
organization to ensure that its training provider maintains high-quality performance.
DeRose and McLaughlin (1995) suggest the need to review the partnership regularly
and possibly introduce a certification system for providers as a method of
benchmarking. It is imperative to constantly check that the outsourcing arrangements
continue to be aligned to the firms strategic plans.
Monitor. In terms of evaluation, Corning sought critical reports on the outsourced
HRD function from a number of departments in the company (Heraty and Morley,
2000). It used various critical measures to check that the outsourced HRD function was
performing effectively. These included a flat budget; the development of new courses; a
low rate of course cancellations; and thorough and prompt course evaluations (Wang
and Spitzer, 2005).

A two-part model for outsourcing

From our review of the literature, we acknowledge the dearth of empirical research into
the reasons for, and methods of, outsourcing HRD (Woodall et al., 2002). However, we
propose a four-stage good practice approach to managing the outsourcing of HRD, to
form Part 1 of our model:
(1) Prioritize: Decide what should be outsourced, ensuring that areas of strength
and core competencies are kept in-house.
(2) Select: Determine clear criteria for selection when choosing providers, and pay
special attention to the match between values and philosophies.
(3) Trust: Build trust through communication, clarity and commitment on both
sides of the relationship.
(4) Monitor: Ensure evaluation measures are in place to monitor the success of the
outsourced function.
In the context of assessing uncertainty in HRD, Chermack et al. (2003) undertook an
analysis of current trends affecting the function. Their analytical framework resulted
in the formation of a matrix of the driving forces ranked by their uncertainty and
potential impact. In other words, areas of relative risk were juxtaposed against items of
comparative complexity. We will use this helpful framework to propose Part 2 of our
model to assist managers of the HRD function in their decision-making role. When
faced with the decision concerning which aspects of HRD to outsource, it is helpful to
plot solutions against these two axes: Specificity/complexity of training needs; and
risk/value of assets:
(1) When the training needs are highly specific or complex, but there is low
sensitivity to the organizational assets, then the solution will be found in
tailor-made outsourcing.
JEIT (2) If the training needs are simple or generic, and the value of the organizational
32,1 assets is low, then it is wise to purchase off-the-shelf training programmes.
(3) When there is greater sensitivity to the organizations value-base and assets, but
there are relatively simple training needs, then it seems that a blended approach
to in-sourcing and out-sourcing should be adopted.
(4) However, if the training needs are complex and specific, and if there is a great
10 risk to both the organizations assets and value base, then the training must be
retained in-house.

These four orientations are depicted in Figure 1. Having developed the two-part model,
we sought to test the validity of Part 1 by way of case study analysis of two
organizations.

Methodology
We determined to undertake qualitative research to assess the face validity (Patton,
2001; Anderson, 2007) of Part 1 of the model. Qualitative research involves an indepth
understanding of human behaviour and the reasons that govern human behaviour.
Unlike quantitative research, qualitative research relies on the reasons behind various
aspects of behaviour. Simply put, it investigates the why and how of decision making,
as compared to what, where, and when of quantitative research (Oppenheim, 2000).
Qualitative research is largely exploratory, while quantitative research tends to be
conclusive. Hence, the need is for smaller but focused samples rather than large
random samples. Qualitative research categorizes data into patterns as the primary
basis for organizing and reporting results. It was decided to use semi-structured
interviews with senior HRD managers in two different well-known organizations
Colliers CCRE and Unilever as the means to gather data. Since semi-structured
interviews are flexible, and new questions can be brought up during the interview as a

Figure 1.
Outsourcing HRD
result of the interviewees responses, then the interview flows more like a conversation A model for
than a structured interview which has set questions. On this occasion, the interviewer outsourcing HRD
had a framework of themes that they wished to explore, based upon Part 1 of the model
that we had developed This approach is more appropriate and congruent to the nature
and function of research in HRD (Swanson and Holton, 1997). Notes from the
interviews were subjected to content analysis. Content analysis (sometimes called
textual analysis when dealing exclusively with text) is a standard methodology in 11
management reseach for studying the content of communication. Holsti (1969) offers a
broad definition of content analysis as any technique for making inferences by
objectively and systematically identifying specified characteristics of messages. The
investigation was limited in its scope to Part 1 of the model alone. Managers in the two
organizations were interviewed in relation to aspects of their HRD outsourcing policy
and strategy. The procedures they each adopted were documented. These data were
then analyzed against the Part 1 four-stage approach. The research has also been
limited to empirical case study analysis of only two organizations, and clearly further
research needs to be undertaken. Part 2 of the model the matrix framework will
need investigation in the future.

Case studies
Prioritize. Colliers CRE (CCRE) is a commercial property consultancy with 900
employees working in a variety of offices throughout the UK. In terms of IT training,
the company has, since 2004, employed two full-time trainers, although some specialist
IT training is still undertaken by external providers. With regards to all other learning
and development activities, a dedicated internal resource has only been in place for 18
months. Various external providers are utilized to provide different types of training
(e.g. soft skills, senior management development, team coaching etc.). From this it is
clear that uniform outsourcing is not the aim at CCRE. An out-tasking/selective
outsourcing approach has been adopted, whereby training delivery (with the exception
of IT training and to a certain extent training design) are undertaken by external
specialists, whilst the administration is largely managed in-house.
One of the main motivators for the use of external providers at CCRE is reported as
a lack of internal expertise. Flexibility is also seen as important due to an uncertainty
surrounding the companys growth. Cost is not cited as a principle reason for
outsourcing. This will enable the achievement of other aims, according to
commentators (e.g. DeRose and McLaughlin, 1995; Gainey and Klaas, 2002). The
company has only recently started to see training as important and has focused on
building a learning culture. Budgetary constraints are likely to be emphasized in the
future however, at which point it will be essential not to make this the main driver in
decision-making, since it could lead to a limiting, short-term focus (DeRose and
McLaughlin, 1995).
Select. A formal RPF process has not been used at CCRE. Instead, vendors were
selected on an ad hoc basis. The literature suggests that it would have been beneficial
to undertake a needs analysis and establish which competencies were best suited to
outsourcing before launching into relationships in this haphazard way (Nilson, 2003).
The administration and leadership elements of the HRD function have been retained
internally, mainly due to the requirement to centrally coordinate various external
providers. According to Hale (2006), keeping the leadership of training in-house is an
JEIT essential element when outsourcing. CCRE has therefore ensured that the organization
32,1 retains overall responsibility and accountability for training and development.
Potential damage to the effectiveness of the outsourced function at the initial stage
has been addressed to some extent through efforts to build up strong, effective links
between providers and the internal function. Communication between internal and
external parties is frequent and regular meetings are arranged to ensure both sides of
12 the relationship are kept up-to-date. Any new trainer who joins the outsourced function
is asked to attend the companys induction programme so that they can begin to
understand the culture and infrastructure of the business. Communication is facilitated
still further by the principle trainers being given internal email addresses. This also
increases the perception of a seamless link between internal and external L&D
components. Tyler (2004) has proposed that one success indicator for outsourcing can
be found when employees do not realize that training has been moved externally. At
CCRE, there is still a distance to go before this is achieved, but the constant visibility of
the outsourced providers, together with the consistency of information received from
internal and external training sources, goes a long way towards presenting a unified
service. It can be argued that there needs to be a degree of perceived separation
between providers, since many people value the input of external trainers more than
they would internal input. Therefore, CCRE may have already achieved an appropriate
balance.
Trust. Trust has been further built through mutual commitment to the relationship
(Klein, 2001). The internal function is keen to capitalize on efforts to integrate the
external providers into the business; it is widely recognized by employees that with
successive courses, the trainers are demonstrating a clearer understanding of the
business i.e. they are enabling tacit knowledge to be made explicit. The problem at
CCRE is that clarity is somewhat lacking. Very little by way of detailed contracts or
SLAs have been put in place. This could leave the organization vulnerable to
self-serving behaviour on the part of the vendors (Gainey and Klaas, 2002, 2005).
Monitor. The potential for opportunistic behaviour is further increased by a distinct
lack of structured evaluation. Insufficient internal resource has been made available to
monitor the activities of the external providers effectively. Participant evaluation is
largely left to the outsourced providers, with summaries being presented to the internal
function on request. Hale (2006) insists that the evaluation process should remain
in-house. However, in terms of benchmarking the quality of courses, one positive
process in place is an understanding that the vendors will aim to achieve accreditation
from the Institute of Leadership and Management for all courses developed for CCRE.
This is a good method of quality assurance where only a small number of providers are
operating in an essentially non-competitive environment (DeRose and McLaughlin,
1995).
It is possible to recommend a number of actions that should maximize the success of
CCREs current outsourcing strategy.
It is essential that clear procedures are established to outline the expectations of the
outsourcing relationship (Hale, 2006). These should incorporate a formal training needs
analysis, which was lacking when the various outsourced relationships were
inaugurated. Time should be taken to consider priorities for outsourcing in the future.
The model would suggest that core competencies should remain in-house. At CCRE,
one particular core competency is making proposals to attract new business. Some
would argue that, since attracting new business is a key competency in gaining A model for
competitive advantage, development of this skill should remain an internal training outsourcing HRD
activity (Barney, 1991). However, we suggest that sales and marketing are generic
transferable skills and it could be beneficial to allow external providers to remain
closely involved, since the trainers have been able to gain considerable organizational
knowledge through excellent channels of communication and considerable
commitment. Where vendors are integrated in this way, outsourced training has a 13
greater chance of making a higher return on investment (Woodall et al., 2002).
Part of the contract should refer to the external providers obligation to assist in
developing the skills of the internal function, since the whole outsourcing strategy is
essentially driven by a lack of expertise in-house. If this vital need fails to be addressed,
an over-reliance on the outsourced function may be created (Ulrich, 1996). Walton
(1999) predicts that as companies increase in size, they may want to in-source the
function, as has happened elsewhere, in organizations such as Marks and Spencer and
Thomson Publishing. It is, therefore, essential that the internal infrastructure is
established by formal agreement with the external vendors.
In terms of evaluation, it is recommended that there are regular reviews of the
provision by the vendors (DeRose and McLaughlin, 1995). In the first instance, this will
address the question of whether providers meet the needs of the organization. Going
forward, it will ensure that external trainers do not take advantage of the benefit they
enjoy. Continuing to insist that providers aim to accredit courses with recognized
institutions is also advisable as a benchmarking mechanism.
Evaluation of training at CCRE needs to have a greater degree of internal ownership
(Hale, 2006). Currently, it is hard to measure the effectiveness of training because of a
lack of critical measures of success. These should be formalized as part of the contract
(Nilson, 2003). A sensible suggestion, given the limited internal resources, might be for
levels 1 and 2 of Kirkpatricks model of evaluation to be administered by the
outsourced function, with responsibility for the more strategic levels 3 and 4 being
retained internally.
With these measures in place, CCRE will be better placed to emulate the success of
the outsourced relationship at Corning.

Unilever
Prioritize. The second case study organization, Unilever, is an international
manufacturer of leading brands of foods, home care and personal care products. It
employs 234,000 people worldwide, although this study focuses on the UK function.
Learning is currently centralized with a core group of external providers delivering
general, professional and leadership training to employees in factories and head offices.
A total of eight dedicated staff undertook training administration activities in-house. It
would seem that a selective outsourcing/out-tasking approach is currently in operation.
Select. However, Unilever has recently taken the step of relying even more heavily
on an external party, by handing over responsibility for practically the entire function
to the BPO provider Accenture from early 2007.
One of the motivators for outsourcing is to make cost savings. This is interesting,
since it could be argued that a company of the size of Unilever should be able to create
its own economies of scale within an internal HRD function. It seems then, that the
principle driver behind the BPO strategy is the need to take out non value-adding
JEIT activity (e.g. administration) from the business and ensure the company focuses on its
32,1 core competencies namely marketing and selling its brands.
In deciding what should be outsourced, it was decided that transactional activities
and delivery should be taken outside, with transformational and strategic activities
remaining in Unilevers remit. In practice, this means that administration, supplier
management, the majority of training delivery, and most training design will be
14 undertaken by Accenture, whilst learning needs analysis, professional skills training
and most leadership and team development remain the responsibility of the internal
HRD function. The literature is in agreement that Unilevers approach is a sensible one.
For example, Walton (1999) proposes that training related to key competitive
differentiators should be undertaken in-house, whilst other researchers voice concerns
about the ability of outsiders to build up the depth of implicit knowledge of the
business required to deliver such training (Barney, 1991; Connor and Prahalad, 1996).
Trust. Unilever recognizes that close interaction between the internal and external
HRD functions will be required to make the arrangement work. The partnership
between Unilever and Accenture has been set up at all levels to liaise on such issues as
training needs and volume of programmes. Joint staff meetings take place regularly.
These measures should go some way to developing the trust required as the
cornerstone of a successfully outsourced training relationship.
Monitor. In terms of evaluation measures, there is a comprehensive structure put in
place to regulate the service provision from Accenture at local, regional and global
levels. However, it is not the intention that Accenture will be perceived as the training
department. The aim is that there will still be a clear separation between the internal
and external functions. This approach counters Tylers (2004) assertion that
outsourced HRD functions are most successful when they cannot be differentiated
from the in-house resource. However, it could be argued that since core competency
training is remaining in-house, there is less of a requirement to ensure full integration
of the external provider. The tacit knowledge of the business, so vital when unique
programmes relating to competitive advantage are being developed (Klaas et al., 2001),
is perhaps not imperative in this case.
Although much of Unilevers outsourcing strategy seems to be sound, there are still
some points for consideration to ensure the success of its recent outsourcing venture.
The first of these considerations relates to how the company will assess the benefits of
training. It should be noted that the effectiveness of the outsourced function could only
be measured if the criteria for success were established at an early stage (Hale, 2006;
Nilson, 2003). Surface-level evaluation could easily be undertaken by the outside
function, whilst the internal team took responsibility for more strategic measurements,
such as return on investment and contribution to organizational change (Torraco,
2005).
Second, some thought should be given to maximizing the efficacy of the training
activities delivered by Accenture staff. Core competency training has been retained
within the internal function, reducing the requirement for the vendor to create an
in-depth understanding of the business, and of its core values and infrastructure.
However, closer integration into the business would increase the relevance of all L&D
activities. Moreover, with an increased investment of resources to enable knowledge
transfer by both parties, the partnership would gain from greater commitment and
increasing levels of trust.
Conclusion A model for
The purpose of this paper was to outline the problems associated with outsourcing outsourcing HRD
HRD and to propose a new two-part model for its effective management. A published
case study of the ceramics manufacturer Corning was discussed. From our review of
the literature and this case study, we have developed a good practice approach to
outsourcing HRD based on four essential steps. This four-stage approach forms Part 1
of our model and seems to have been valid for analyzing the two case studies. Part 2 of 15
the model takes into consideration the interaction between risk elements and
contextual complexity. Owing to the scope of the investigation, we were unable to
apply Part 2 of the model, and this should be investigated in the future. We have
included some recommendations for organizational practice.
Approaches to outsourcing training vary between firms, largely because their
impetus for taking training outside is likely to differ. However, this paper has
attempted to demonstrate that there are certain key issues that need to be considered
when trying to make an outsourced training strategy successful in any business. These
are essentially related to making the right decision about what to outsource; engaging
the right providers; and then putting measures in place to build and maintain a strong,
trusting, effective relationship.

Implications for research

In terms of further research, clearly both Part 1 and Part 2 of the model need to be
further tested, both theoretically and practically. Researchers are invited to engage
with the model in a much wider range of organizational settings before any
generalizable conclusions can be drawn. The four steps of Part 1 of the model
prioritize; select; trust; and monitor need to be validated further using rigorous
quantitative and qualitative methodologies, perhaps including factorial and regression
analyses. This should then be used in a number of public, private and voluntary sector
organizations, of different sizes, at various stages of growth, and having a variety of
organizational cultures. Moreover, the application of the model should be tested in
diverse countries, and in organizations working under dissimilar legislative
frameworks. The two parts of the model should be submitted to a process of
adaptive transformation in a range of settings and over a period of time. Its reliability
in the three organizations forming the case studies should also be assessed on separate
occasions.
The four orientations and the two axes of Part 2 of the model remain at the
conceptual stage. It should now be validated using a case study approach in varied
organizations, including firstly Corning, Colliers CRE and Unilever. Only then should
this part be applied in a range of situations as for Part 1.

Implications for practice

Since organizations appear to be outsourcing aspects of their HRD function to a greater
extent than in the past, an appropriate model for the effective management of the
process should be adopted. The two-part model for outsourcing HRD is proposed as a
way for senior executives and HRD managers to engage in meaningful discourse of the
learning agenda. Its application in a range of situations and in a variety of
organizational backgrounds would assist its credibility, application, relevance and
purpose. Optimum utilization of finite resources and effective deployment of
JEIT professional expertise would result, with consequentially greater value accruing to not
32,1 only the host HRD function but also to the outsourced training service provider.

References
Al Dosary, A. (2004), HRD or manpower policy? Options for government intervention in the
local labour market that depends upon a foreign labour force: the Saudi Arabian
16 perspective, Human Resource Development International, Vol. 7 No. 1, pp. 123-35.
Anderson, V. (2007), Research Methods in Human Resource Management, CIPD, London.
Ardichvili, A. and Gasparishvili, A. (2001), Human resource development in an industry in
transition: the case of the Russian banking sector, Human Resource Development
International, Vol. 4 No. 1, pp. 47-63.
Barney, J. (1991), Firm resources and sustained competitive advantage, Journal of
Management, Vol. 17, pp. 105-7.
Beausang, F. (2004), Outsourcing and the internationalisation of innovation, Working Paper
No. 18 presented at the American University of Paris, 24 November 2004.
Belcourt, M. (2006), Outsourcing the benefits and risks, Human Resource Management
Review, Vol. 16, pp. 269-79.
Buyens, D., Wouters, K. and Dewettinck, K. (2001), Future challenges for human resource
development professionals in European learning-oriented organizations, Journal of
European Industrial Training, Vol. 25 No. 9, pp. 442-53.
Chermack, T.J., Lynham, S.A. and Ruona, W.E.A. (2003), Critical uncertainties confronting
human resource development, Advances in Developing Human Resources, Vol. 5 No. 3,
pp. 257-71.
Connor, K.R. and Prahalad, C.K. (1996), A resource-based theory of the firm: knowledge versus
opportunism, Organizational Science, Vol. 7, pp. 477-501.
Cox, J., Estrada, S., Lynham, S. and Motti, N. (2005), Defining human resource development in
Morocco: an exploratory enquiry, Human Resource Development International, Vol. 8
No. 4, pp. 435-47.
Csoko, L.S. (1995), Rethinking human resources: a research report, The Conference Board,
Report No: 1124-95-RR.
DeRose, G.J. and McLaughlin, J. (1995), Outsourcing through partnership, Training and
Development, Vol. 49 No. 10, pp. 51-5.
Gainey, T.W. and Klaas, B.S. (2002), Outsourcing the HRD function: results from the field,
Human Resource Planning, Vol. 25 No. 1, pp. 16-22.
Gainey, T.W. and Klaas, B.S. (2005), Outsourcing relationships between firms and their training
providers: the role of trust, Human Resource Development Quarterly, Vol. 16 No. 1,
pp. 7-25.
Gibb, S. (2003), Line manager involvement in learning and development: small beer or big
deal?, Employee Relations, Vol. 25 No. 3, pp. 281-93.
Greer, C., Youngblood, S.A. and Gray, D.A. (1999), Human resource management outsourcing:
the make or buy decision, Academy of Management Executive, Vol. 13, pp. 85-96.
Hale, J. (2006), Outsourcing Training and Development: Factors for Success, Pfeiffer,
San Francisco, CA.
Hall, R. (2000), Outsourcing, contracting-out and labour hire: implications for human resource
development in Australian organizations, Asia Pacific Journal of Human Resources,
Vol. 38 No. 2, pp. 23-41.
Harris, P. (2003), Outsourced learning: a new market emerges, Training and Development, A model for
Vol. 57 No. 9, pp. 30-8.
outsourcing HRD
Heraty, N. and Morley, M. (2000), Human resource development in Ireland: organizational level
evidence, Journal of European Industrial Training, Vol. 24 No. 1, pp. 21-33.
Holsti, O. (1969), Content Analysis for the Social Sciences and Humanities, Addison-Wesley
Publishing Company, Reading, MA.
Hoskisson, R. and Hitt, M. (1995), Downscoping: How to Tame the Diversified Firm, OUP, Oxford. 17
Kaeter, M. (1995), An outsourcing primer, Training and Development, Vol. 49 No. 11, pp. 20-6.
Khatri, N. (1999), Emerging issues in strategic HRM in Singapore, International Journal of
Manpower, Vol. 20 No. 8, pp. 516-29.
Klaas, B., McClendon, J.A., Gainey, T.W. and Outsourcing, H.R. (2001), Outsourcing HR: the
impact of organizational characteristics, Human Resource Management, Vol. 40 No. 2,
pp. 125-38.
Klein, H. (2001), Invited reaction: the relationship between training and organizational
commitment a case study in the health care field, Human Resource Development
Quarterly, Vol. 12 No. 4, pp. 353-61.
Kuchinke, K. (2003), Contingent HRD: toward a theory of variation and differentiation in formal
human resource development, Human Resource Development Review, Vol. 2 No. 3,
pp. 294-309.
Nijhof, W. (2004), Is the HRD profession in the Netherlands changing?, Human Resource
Development International, Vol. 7 No. 1, pp. 57-72.
Nilson, C.D. (2003), How to Manage Training: A Guide to Design and Delivery for High
Performance, Amacom, New York, NY.
Oppenheim, A. (2000), Questionnaire Design, Interviewing and Attitude Measurement,
Continuum International, London.
Patton, M. (2001), Qualitative Research and Evaluation Methods, Sage, London.
Richman, H. and Trondsen, E. (2004), Outsourcing: what it can do to your job, Training and
Development, Vol. 58 No. 10, pp. 68-73.
Ruona, W. and Gibson, S. (2004), The making of twenty-first century HR: an analysis of the
convergence of HRM, HRD, and OD, Human Resource Management, Vol. 43 No. 1,
pp. 49-66.
Swanson, R. and Holton, E. (1997), Human Resource Development Research Handbook: Linking
Research and Practice, Berrett-Koehler, San Francisco, CA.
Torraco, R. (2005), Work design theory: a review and critique with implications for human
resource development, Human Resource Development Quarterly, Vol. 16 No. 1, pp. 85-109.
Tyler, K. (2004), Carve out training?, HR Magazine, Vol. 49 No. 2, pp. 53-7.
Ulrich, D. (1996), Human Resource Champions, Harvard University Press, Boston, MA.
Walker, G. and Weber, D. (1984), A transaction cost approach to make or buy decisions,
Administrative Science Quarterly, Vol. 29, pp. 373-91.
Walton, J. (1999), Strategic Human Resource Development, Prentice Hall, London.
Wang, G. and Spitzer, D. (2005), Human resource development, Advances in Developing Human
Resources, Vol. 7 No. 1, pp. 5-15.
Wang, J. and Wang, G. (2006), Exploring national human resource development: a case of China
management development in a transitioning context, Human Resource Development
Review, Vol. 5 No. 2, pp. 176-201.
JEIT Woodall, J., Gourlay, S.N. and Short, D. (2002), Trends in outsourcing HRD in the UK: the
implications for strategic HRD, International Journal of Human Resource Development
32,1 and Management, Vol. 2 Nos 1-2, pp. 50-63.
Wright, P.M. and Snell, S. (1998), Toward a unifying framework for exploring fit and flexibility
in strategic human resource management, Academy of Management Review, Vol. 23,
pp. 756-72.
18
Further reading
Fernando, D. (2006), Outsourcing, unpublished MA dissertation; University of Westminster,
London.
Klaas, B., McClendon, J. and Gainey, T.W. (1999), HR outsourcing and its impact: the role of
transaction costs, Personnel Psychology, Vol. 52, pp. 113-36.

Corresponding author
David Simmonds can be contacted at: simmond@wmin.ac.uk

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints