How Human Resource Outsourcing Affects Organizational Learning in the Knowledge Economy

Adaptability and knowledge management, key elements of organizational learning, 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 context. The problem is compounded if outsourcing is introduced for cost control rather than strategic re-focusing reasons. We suggest that managers can positively influence the relationship between outsourcing and organizational learning through internal marketing tactics and enriched psychological contracts.