Outsourcing and Culture

From a strategic HR standpoint, outsourcing should be considered when different company functions exhibit different cultures and assert conflicting cultural expectations. The same holds true when handling different business units that require different business strategy and thereby a distinct HR strategy*.

“One organization created a new company to market a product it developed because the reward systems required sales force effectiveness which was culturally incompatible with the values and beliefs of the rest of the organization. In another organization, the information system function was outsourced because the required culture of supporting continuous and dramatic innovation did not fit the rather pedestrian needs of the rest of the organization.”

Nevertheless, business leaders can still agree that cultural differences are acceptable or manageable across an organization. As an example, The Four Seasons organizational culture strongly advocates and supports a business strategy of customer intimacy to deliver world-class experiences for guests; whatever it takes! But, the organization’s billing and procurement function adheres to adding value through efficiency and cost-reduction.

When companies deliberate outsourcing decisions, they should seek out HR contribution. HR needs to analyze the subcultures in an organization in addition to the more traditional outsourcing assessment which concentrates on strategic importance, cost, and quality** for sourcing capabilities.


* Greene, Robert J. (1995). Culturally Compatible HR Strategies. HR Magazine. Vol. 40, June 1, pp. 115-122.
** Gottfredson, Mark; Puryear, Rudy, & Phillips, Stephen (2005). ”Strategic Sourcing: From Periphery to the Core”. Harvard Business Review. Vol. 83, No. 2, March. pp.132-9.