The Human Side of Outsourcing: Psychological Theory and Management Practice, Edited by Stephanie Morgan, West Sussex, England: Wiley-Blackwell, 2009, 295 pp., ISBN 978-0-470-71870-4.

This edited collection focuses on the human aspects of outsourcing and the crucial role that people play in the success or failure of outsourcing decisions. The book incorporates the perspectives of different stakeholders on the importance of human resources to the outsourcing process. Structurally, the book divides into two main parts: in the first part, the contributions of outsourcing practitioners provide the “practice” of outsourcing and in the second part, academic researchers provide the “theory” and some additional empirical evidence. In the introduction, the editor, Stephanie Morgan defines “outsourcing”; which immediately draws the reader’s attention to the complexities of the outsourcing decision; the multiple stakeholders involved, the various outsourcing methods and the alternatives. This contextual overview is expanded by examining some of the people-related issues that derive from outsourcing arrangements, both internal and external to the outsourcing firm.

In the first of the practitioner chapters, Irvine Caplan provides an overview of the lifecycle of an outsourcing decision and draws attention to the difficulties associated with determining which employees will be retained within the organization, and which will go; either to the external service provider, or out the door. With its focus on process, this chapter provides the context for the remaining chapters by highlighting how legal contracts fail to capture the full extent of the process and require continual renegotiation and governance. This chapter stresses the necessity for people to manage the process within the client firm and to maintain the client and service provider relationship. The third chapter by Simone Hemingway also centres on the processes around outsourcing, but from the provider’s perspective. Again, the legal contractual aspects are at the forefront and the differences between the provision of services to the public and private sectors are delineated. In the fourth chapter, Yvonne Williams shifts the focus to recruiting the right people, by position title and skill set, for each stage in the outsourcing process. This highlights the different skills required to make informed outsourcing decisions, establish the contract terms, manage the bid process, develop and maintain the contractual relationship, and exit the relationship. In doing so, Williams illuminates the complexity of the process in terms of human skill requirements. In chapter five, Ian Pogson, describes his lived experience of outsourcing, after moving to China as the international support person for an outsourcing deal. This light hearted and often humorous chapter provides details of the cultural differences experienced by an Englishman in China, as well as some very sage practical advice.

The second part of the collection provides a series of theoretical frameworks and additional empirical evidence of the complexities associated with the decision to outsource. In the first of these chapters, Morgan provides a broad overview of relevant bodies of literature and key theoretical constructs: downsizing and mergers; work transitions; organizational socialization; organizational commitment; organizational identification; psychological contract and organizational justice. In chapter seven, Royston Morgan examines the narratives and discourse surrounding the various stages of the outsourcing life cycle. This chapter critically analyses both the rhetoric and the reality of outsourcing and argues that while cost benefits are achievable in the short-term by outsourcing tasks and labour, the long-term benefits are more difficult to achieve and require significant engagement with the people affected by the process. Brigitte Cobb views outsourcing through the lens of culture in chapter eight. The chapter commences with an examination of the theories around culture and followed by numerous empirical examples of cultural differences affecting outsourcing relationships. She concludes by providing her own cultural impact model. In chapter nine, Alex Watts examines how to build trust and rapport across virtual teams and builds on his experiences in the outsourcing industry with an empirical study. This research highlights the value of actively building relationships and of meeting face-to-face and being open and transparent in order to gain trust. The research also shows that partners in an outsourced relationship start with an assumption of trust, which is continually re-evaluated in the light of experiences within the relationship. Legal contracts, and the coercive enforcement of contracts, however, act to undermine trust between the parties. In chapter ten, Richard Blakeley and Stephanie Morgan review the literature and argue that knowledge is lost to an organization when functions are outsourced. In response, they assert that steps should be taken to ensure knowledge transfer and sharing. In chapter eleven, Royston Morgan provides a critical examination of the type of outsourcing relationship whereby people are transferred across organizations along with the technical and process resources. This chapter examines the effects on the people resources at all stages of the outsourcing life cycle, including what happens when the contract ends and people are “backsourced” to their original organization.

While all the preceding chapters provide the British perspective, in chapter twelve Jan Aylsworth contributes an international view. In the US, the human effects of outsourcing are more pronounced, since legislative protections against job loss are largely non-existent. Aylsworth analyses the individual health effects of the stressors associated with downsizing and suggests interventions that may minimize the adverse effects. In chapter thirteen, Stephanie Morgan considers outsourcing in relation to the psychological contract and aligned issues of organizational justice. She finds that overwhelmingly, research participants felt that their psychological contract had been violated by their old employer and they were focussed on developing a new psychological contract with their new employer. This research describes participants’ feelings of anger and resentment, as well as uncertainty about their expected futures in the new organization. This uncertainty between old and new employers is carried through to the final concluding chapter, where Stephanie Morgan makes a case for further research into the psychological issues associated with having two employers, or for those transitioning between employers. In concluding, Morgan highlights the problems with existing staged transition and organizational identification models.

Given the international growth of outsourcing as a means of reducing labour costs, this book makes an important contribution by bringing together scholarship from a range of theoretical approaches and a range of stakeholders. At the same time, given that much outsourcing occurs across national borders, the dominance of UK researchers, with the exception of one US contribution, provides a particularly Anglo-centric perspective on the subject. This does make for a fairly one sided debate. The Human Side of Outsourcing remains, however, an important contribution to a complex subject and one worthy of further investigation.