ABSTRACT
One of the critical decisions for HR directors is how much HR activity is done in-house and how much by third parties. In Reilly and Tamkin's review of outsourcing, they distinguished between organizations that chose to outsource on the basis of three differing models: the rational strategic; the ad hoc pragmatic; and the ideological purposive. By contrast Shell's argument is different. It has achieved standardization and e-HR through in-house management. Although economies of scale can be obtained through outsourcing, there are potential problems that come in the wake of this decision even for transactional activities. Organizations find that changes in policy or procedures that need technological modification can cost a lot of money. So organizations should be rational and strategic, deciding on a case-by-case cost/benefit basis, conducting the analysis over the long-term as well as the short-term, making sure that non-financial considerations are given as much emphasis as financial ones.
