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TheRelationshipBetweentrainingoutsourcing.pdf

The relationship between training outsourcing and employee commitment to organization

Sanghamitra Chaudhuria* and Kenneth R. Bartlettb

aTraining Administration, State of Minnesota, St. Paul, MN, USA; bDepartment of Organizational Leadership, Policy, and Development, University of Minnesota, Minneapolis, MN, USA

(Received 5 March 2013; accepted 30 December 2013)

In many countries, the human resource practice of training outsourcing has emerged as one of the fastest growing segments of the broader business process outsourcing industry. In spite of the growing popularity in professional practice, training outsour- cing continues to be subjected to critical review and ongoing debate with most attention focused on the decision to ‘outsource’ or ‘not to outsource’. However, there exists a shortage of research on training outsourcing as a human resource development (HRD) practice and the potential relationships with desired organizational outcomes including employee commitment. This exploratory international study extends previous research that has examined the relationship between training and organizational commitment by focusing exclusively on outsourced training. Data were collected from information technology firms in two countries: India and the United States. Results showed positive relationships between specific measures of employee perceptions of quality, usefulness and supervisor support for outsourced training with organizational commitment. Recommendations are made for future research as well as for professional practice to guide HRD practitioners involved in the rapidly growing global practice of training outsourcing.

Keywords: human resource development; training outsourcing; organizational com- mitment; employee attitudes; social exchange theory

Over the past two decades a number of global environmental shifts have resulted in the emergence of several new human resource (HR) practices within organizations operating internationally. Numerous previous studies have shown that HR practices and specifically human resource development (HRD) influence organizational performance both directly and indirectly through individual work-related attitudes, such as commitment, motivation and satisfaction (Guest 1997, 1999; Huselid 1995; Joo and Shim 2010; Kooij et al. 2010). In order to remain competitive organizations need to adopt HR practices that continue to foster performance. There is a constant need to develop and implement improved HR practices with a corresponding imperative for research to understand the relationship of these practices on desired organizational outcomes. This is even more pressing for international organizations in the dynamic information technology (IT) industry where the rate and impact of change, pressures for performance and the need for heavy invest- ment in HRD are noted (Kuo et al. 2010; Kuruvilla and Ranganathan 2010). Kooij et al. (2010) suggested that high commitment HR practices, including training and develop- ment, aim to elicit a strong bond of attachment to the organization, leading to improved job performance and other positive outcomes. Training is often singled out as one of the

*Corresponding author. Email: [email protected]

Human Resource Development International, 2014 Vol. 17, No. 2, 145–163, http://dx.doi.org/10.1080/13678868.2014.886444

© 2014 Taylor & Francis

most important investments for enhancing intellectual capital vital for the organization’s competitive sustainability (Bulut and Culha 2010). The benefits of training are not limited to improved performance with other advantages such as empowerment, self-efficacy, effectiveness and profitability confirmed by research (Aguinis and Kraiger 2009).

In more recent years organizations have sought to confirm if desired outcomes result from the adoption of new approaches to the management and development of HRs. One practice drawing a great deal of attention from HR scholars and practitioners is out- sourcing. In simple terms, Perry (1997) defined outsourcing as turning over to another organization’s employees to carry out tasks previously performed by one’s own employ- ees. Feeney, Lacity, and Wilcox (2005) suggested that outsourcing has now become a megatrend in many industries.

Organizations have outsourced core and non-core human resource management (HRM) and HRD activities (Babcock 2004; Greer, Youngblood, and Gray 1999), although this has been more recent compared to the outsourcing of IT, sales and marketing, and facility operation and maintenance. The primary reason stated for this later adoption was that HR was often considered too sensitive to be outsourced (Shen 2005). Cook (1999) defined outsourcing of HR activity as ‘having a third-party service provider or vendor furnish, on an ongoing basis, the administration of an HR activity that would normally be performed in-house’ (4). Research has shown that 93% of HR departments outsourced at least some of their work (Greer, Youngblood, and Gray 1999; Gurchiek 2005). Although more contemporary research has found that many ongoing outsourcing contacts are discontinued with either the selection of a different vendor or bringing the work back- in-house, referred to as back sourcing (Whitten, Chakrabarty, and Wakefield 2010). Training and development is a HR functional area in which outsourcing is prevalent (Anderson 2008; Bassi, Cheney, and Van Buren 1997; Chiang, Chow, and Birtch 2010); yet, there are few studies related to outcomes of HRD outsourcing.

Training and development outsourcing has been viewed as an effective management strategy, especially in organizations operating in highly competitive international business environments. Although evidence has suggested that the amount of training and develop- ment outsourcing may be increasing (Babcock 2004), there is considerable variation in how firms have utilized this HR practice (Csoko 1995). While some firms have achieved positive outcomes from outsourcing training, others report that they failed miserably (Baker 1996). Shih and Chiang (2011) recently concluded that scholars appear to hold differing opinions of the effects of training outsourcing.

Two competing perspectives dominate existing studies on training outsourcing. The first view considers training outsourcing as a value-creating activity that may bring cost savings and operational flexibility (Cooke, Shen, and McBride 2005; Klass, Mc Clendon, and Gainey 2001), whereas the second perspective believes that some training activities should not be outsourced as it leads to declining innovation (Kotabe 1992) and reduced performance (Gilley and Rasheed 2000). Ongoing debate over the most appropriate perspective to explain training outsourcing and inconclusive research findings may result in ineffective outsourced HRD practices.

Research has focused on making the right outsourcing decisions (Sanders et al. 2007) in order for the relationship between the organization and the vendor to continue. Simmonds and Gibson (2008) provided a four-step outsourcing framework to ensure success by making the right decision in terms of what to outsource (prioritize), engaging the right providers (select) and putting measures in place to build (trust) and maintain a strong, trusting, effective relationship (monitor). The importance of trust has specifically gained much attention for maintaining and managing relationship between the suppliers

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and the parent organization (Gainey and Klass 2005; Leimbach 2005) in order for the relationship to continue.

An additional and often overlooked area of debate in the literature relates to percep- tions towards outsourced training. Employers appear to have diverse and perhaps con- flicting opinions regarding the benefits of in-house and outsourced training. There is evidence that employers increasingly perceive that the use of outside service providers is more efficient and less expensive than maintaining a full-service in-house training and development facility and programme (Galanaki and Papalexandris 2007). Furthermore, some employers believe that outsourced training providers have knowledge and compe- tencies that may not exist in-house (Galanaki and Papalexandris 2007). However, the perception of employees towards outsourced training has received little research.

From the employee perspective, training outsourcing may be viewed as a change in strategy and process for learning and development activities that may lead to considerable shifts in work processes, control and organizational design (Lever 2002), which in turn can potentially impact employee attitudes. Stroh and Treehuboff (2003) suggested that outsourcing, regardless if considered successful or failed, can have a considerable influ- ence on employee morale. Some have argued that outsourcing does not nurture employee engagement with reduced feelings of belongingness towards the organization often the result (Punia and Sharma 2008). Therefore, if organizations want to utilize training outsourcing effectively, a greater understanding is needed on the potential influence it may have on employee attitudes. Previous research has highlighted that individual work- related outcomes are impacted by employee perceptions of HR practices, and these may differ significantly from managerial perceptions (Guest 1999; Huselid 1995). This study investigated the outcomes of training outsourcing as perceived by employees, and more specifically how training outsourcing may be related to employee attitudes, particularly organizational commitment.

Research on organizational commitment has attracted significant attention in the past five decades. International interest in organizational commitment has increased as a result of globalization, greater cultural diversity in the workplace, and as more is understood of the relationship with various measures of performance (Kamarul and Raida 2003; Meyer et al. 2012; Riketta 2002). A paradox unfolding within today’s global workforce has been noted in that organizations increasingly rely on committed employees while they simulta- neously introduce many changes that have the potential to reduce commitment levels (Meyer and Parfyonova 2010). Examples of organizational change strategies are often related to reduced commitment, including downsizing, restructuring, mergers and acquisi- tions and outsourcing (Dierendonck and Jacobs 2012; Sverke, Hellgren, and Näswall 2002).

The study of commitment aims to understand the multiple forms of psychological attachments or bonds that individuals develop in the workplace (Klein, Molloy, and Brinsfield 2012). Organizational commitment describes the various types of attachment or psychological links that a worker may feel towards their employing organization (van Knippenberg and Sleebos 2006). Perhaps the most significant advancement in the definition and conceptualization of organizational commitment resulted from the work of Meyer and Allen (1991). They viewed commitment as a ‘psychological state that characterizes the employee’s relationship with the organization, and its implications for the decision to continue membership with the organization’ (67). They delineated the construct into three dimensions of commitment: affective, continuance and normative; although several have raised questions with the theoretical uniqueness of continuance commitment resulting in numerous studies selecting only the affective and normative

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dimension as the prime indicators of organizational commitment (Kuvaas 2006; Solinger, van Olffen, and Roe 2008).

Previous research has shown that several aspects of training activity including access to training, perceived benefits of training and organizational support for learning are related to organizational commitment (Ahmed and Bakar 2003; Bartlett 2001; Bartlett and Kang 2004; Bulut and Culha 2010; Ehrhardt et al. 2011). Perceived organizational support towards training has also been found to be correlated positively with organiza- tional commitment (Eisenberger, Fasolo, and Davis-LaMastro 1990; Shore and Wayne 1993). Furthermore, employees who received greater amounts of training relevant and useful to their jobs perceived the work environment to be more supportive (Narayan and Steele-Johnson 2007). Research conducted in international context has also supported a relationship with HRD and organizational commitment. Joo and Shim (2010) reported in their study on Korean employees that organizational learning culture has a significant influence on employee commitment and their turnover intentions. Given a growing concern on the desire for higher levels of employee commitment, a greater understanding is also needed on employees’ perceptions of training outsourcing and the potential relationship to organizational commitment that may exist between the frequency of participation in outsourced training, quality of outsourced training, usefulness and rele- vance of outsourced training, customization of outsourced training and supervisory sup- port towards outsourced training.

Problem statement

In the academic literature, training outsourcing has received little research attention with most previous studies primarily concentrated on broadly examining the organizational benefits and risks of HR outsourcing in general. The few studies on training outsourcing have tended to focus on the relationship between firms and vendors (Gainey and Klass 2003, 2005). Since employees are always at the receiving end of outsourced training, it is noteworthy that the employee perspective on the impact of outsourcing on employment relations has usually been overlooked in existing studies (Kessler, Coyle-Shapiro, and Purcell 1999).

While there is much rhetoric on the possible impact of training outsourcing on workplace attitudes (Shih and Chiang 2011), there is a lack of research that explores possible relationships between outsourced training and employee attitudes. Some who advocate for training outsourcing highlight reduced costs, improved effectiveness and efficiency in training delivery and corresponding benefits to employee satisfaction and loyalty (Galanaki, Bourantas, and Papalexandris 2008). Conversely, others warn that training outsourcing undermines core values and control of HRD, resulting in reduced employee morale (Belcourt 2006; Cooke, Shen, and McBride 2005). This overall shortage of research and conflicting conclusion on the nature of the relationship of outsourcing training and workplace attitudes is problematic as organizations are confronted by diver- gent opinions and unsubstantiated claims on how employees perceive outsourcing of training activities. Additionally, there is a very limited body of literature that looks into the organizational commitment of software professionals (Paul and Anantharaman 2004). This is concerning as the IT services sector is noted for high rates of turnover (Gupta 2001; Kuruvilla and Ranganathan 2010; Kuo et al. 2010). At the same time outsourcing of training services within the IT sector is an organizational learning strategy often consid- ered to provide employees with opportunities to upgrade their skills on a continuous basis in order to adapt and adopt new technology (Paul and Anantharaman 2004). The IT

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industry and international firms that operate in this sector were therefore selected as an appropriate context to examine the possible relationship between outsourced training and employee commitment. The knowledge gained from this exploratory study could prove useful for firms considering outsourcing of training functions and more specifically for those organizations already engaged in outsourcing training to better understand how employees perceive this practice.

Theoretical framework

Transaction cost economics (Williamson 1996) and the resource-based view of the firm (Barney 1991) have traditionally been used as underlying theoretical perspectives to explain outsourcing (e.g. Klass 2003; Klass, Mc Clendon, and Gainey 2001; Lever 2002). These theories have been most frequently used in prior research to explore the initial outsourcing decision (Klass, Mc Clendon, and Gainey 1999, 2001; Lepak, Bartol, and Gardner 2004). Transaction cost economics (Williamson 1996) conveys the idea whether services or goods should be made internally or procured from outside based on the relative costs of production and transaction, whereas resource-based view of the firm (Barney 1991) offers the perspective that in order to remain competitive, resources should be developed in-house. However, given the focus of this research on the post- decision implantation and the relationship between perceptions of training outsourcing and organizational commitment, an alternative theoretical perspective was selected. Social exchange theory (Blau 1964) and psychological contract theory (Rousseau 1990) are potentially more appropriate for examining employee attitudes in the context of a changed employment contract resulting from the implementation of an outsourcing HR strategy.

Many researchers have suggested that positive and beneficial actions by employers result in the establishment of high-quality mutual exchange relationships, which, in turn, obligate employees to reciprocate (Konovsky and Pugh 1994; Shore and Wayne 1993). Conversely, a shift in the terms of the employment relationship by the employer is likely to result in changed employee perceptions that may lead to a breach in the perceived reciprocal relationship (Robinson 1996). In the most general terms, training outsourcing means that an employer is hiring a third-party service provider or a vendor to deliver training activities that would normally be provided in-house (Cook 1999). If the training vendor provides excellent service, the employee may see this as an investment or improvement in the quality of the employment relationship. Applying the lens of social exchange theory suggests that outsourced training may increase employees’ level of commitment towards an organization. By contrast, if the vendor fails in meeting employee training expectations, the quality of the employment relationship may decline with associated levels of lower commitment.

One additional aspect of social exchange that might theoretically relate to employee commitment following training outsourcing occurs when the exchange relationship is perceived to no longer be balanced. Tsui et al. (1997) identified this situation occurring when high performance expectations are held by employers while they make minimal investments in their employees. This may happen when firms hire specialized external trainers from outside organizations to provide quality and relevant training which employ- ees perceive as an investment in their development with subsequent reciprocated higher levels of commitment. In contrast, when firms use outside vendors for all types of training and fail to monitor the quality and relevance of outsourced training, employees may feel a reduced level of commitment towards their organization. Moreover, the fact that training

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is outsourced may result in increased or decreased frequency of training events which may also influence levels of employee commitment.

Research questions and hypotheses

The purpose of this study was to gain a better understanding of employee perceptions regarding outsourced training and the possible relationship with organizational commit- ment. The focus of this study was on the employees who participated in outsourced training during the last one year. The overarching research question was: ‘is there a relationship between outsourced training and employee organizational commitment?’ This was further refined into five research hypotheses.

Hypothesis development

For the purpose of this study it was necessary to consider key aspects of HRD participa- tion that were most likely related to employee organizational commitment. The first variable was frequency of participation in outsourced training. Participation in training events is only possible when employees perceive that adequate opportunities for training are available. Previous studies have shown that higher levels of HRD participation have a strong to moderate relationship with different forms of commitment (Ahmed and Bakar 2003; Bartlett 2001; Newman, Thanacoody, and Hui 2011).

Applying the lens of social exchange theory, it can be argued that availability of training can have considerable impact on employee commitment as it supports an organizational climate of development. Higher levels of availability and participation in training are likely to produce higher levels of organizational commitment from employ- ees. Prior studies have measured availability of training by frequency of participation or number of training programmes attended (Bartlett 2001; Tharenou 1997). Companies provide or support participation in training to ensure that employees have the needed skills and knowledge to perform. Previous research has consistently shown that employees view firm-sponsored learning as an investment (Backes-Gellner and Tuor 2010 ) with a range of workplace attitudes linked to the overall perceptions of organiza- tional awareness, support and provision of needed training and development for the employees to perform their current job and enhance future career opportunities (Chambel and Sobral 2011).

Based on existing literature and application of the reciprocal investment perspective embedded in social exchange theory, it was thought that positive relationships between outsourced training and affective and normative commitment would exist. Consequently the following hypotheses were developed.

Hypothesis 1: There is a positive relationship between frequency of participation in outsourced training and affective and normative commitment.

A wide variety of constructs related to training and development have been examined in studies that have explored links between HRD and organizational commitment (Ahmed and Bakar 2003; Bartlett 2001; Ehrhardt et al. 2011; Newman, Thanacoody, and Hui 2011). Since the key construct of interest for this study was outsourced training, only those aspects of training most relevant to HRD provided by external vendors were examined. Perceptions that employees may hold towards outsourced training were divided into four operational measures including perceptions of the quality of outsourced training,

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usefulness and relevance of outsourced training, customization of outsourced training and supervisory support towards outsourced training.

Galanaki, Bourantas, and Papalexandris (2008) found that the quality of outsourced training was most affected by the overall availability of training services in the external market. Shaw and Fairhurst (1997) reported that maintaining service quality in outsourced training was one of the greatest problems encountered by client firms. Recent research found that the relationship between training and organizational commitment can be strengthened if employees perceive specific training activity as relevant and high quality in nature (Ehrhardt et al. 2011). From an employee’s perspective, if the quality of training provided by the outsourced vendor is high, the employee could perceive this as an investment by the employer in securing the right vendor and, therefore, the employee could be more committed to the organization. This leads to the following hypothesis:

Hypothesis 2: There is a positive relationship between employee perceptions towards the quality of outsourced training and affective and normative commitment.

Previous studies have suggested that employees may have opposing views on the per- ceived usefulness and relevance of outsourced training (Cooke, Shen, and McBride 2005). One possible scenario that could result is when employees perceive training to be less relevant or useful if their organization is purchasing off-the-shelf training from external vendors as compared to in-house-designed and delivered training. Alternatively, employ- ees may perceive an external vendor as being able to provide the latest training materials and delivery options that exceed the perceived usefulness and relevance of in-house training. Therefore, if the outsourced training is highly relevant and useful, employees may perceive this as an investment by the employer, and as a result they could be more committed to the organization. This leads to the following hypothesis:

Hypothesis 3: There is a positive relationship between employee perceptions towards usefulness and relevance of outsourced training and affective and normative commitment.

The third aspect of training examined in this study was employees’ perceptions towards customization of outsourced training. Customization of training reflects the degree to which an external vendor makes an investment in time and money to deliver training to meet the unique needs of each individual firm (Gainey and Klass 2003). If training is adapted and individually tailored to meet the organization’s strategic learning needs and culture, employees may feel greater commitment and have more motivation to participate in training. In contrast, organizations should be cautious of overrelying on ‘off-the-shelf’ training solutions that may offer cost advantages but could fail to meet the specific learning needs of the intended audience (Kaeter 1995; Sanders et al. 2007). Paul and Anantharaman (2004) found that when customized learning and training opportunities were made available for employees, it created a sense of attachment towards the organiza- tion. This leads to the following hypothesis:

Hypothesis 4: There is a positive relationship between employee perceptions towards customization of outsourced training and affective and normative commitment.

The final aspect of training examined considered perceptions towards supervisory support for outsourced training. Tracey and Tews (2005) defined supervisory support as the extent

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to which supervisors encouraged training participation, knowledge acquisition and at the same time provided ample recognition to employees involved in these activities. Previous studies have shown supervisory support to be instrumental in fostering the transfer of newly acquired knowledge and learned skills to workplace (Kozlowski and Huts 1987; Nijman et al. 2004). Supervisory support towards training has also been found to have significant relationships to a range of outcome variables (Noe and Wilk 1993) including employee satisfaction with supervisors, improved commitment and reduced turnover (Dawley, Andrews, and Bucklew 2008; Eisenberger, Fasolo, and Davis-LaMastro 1990). Outsourced training could be expensive for high-performing work environments in dynamic industries and jobs, such as those in IT where external training may offer access to cutting-edge knowledge on latest technologies and state-of-the-art HRD delivery options. If the supervisor is invested and believes that outsourced training would enhance job performance and career advancement, they may actively encourage employees to attend training from external training providers. This could enhance the commitment of employees who attend the training because of strong supportive supervisor and recogni- tion that the best training may not be offered in-house. This suggests that supervisory support could be an important feature for employee participation in outsourced training. Therefore, the following hypothesis was examined.

Hypothesis 5: There is a positive relationship between employee perceptions towards supervisory support for outsourced training and affective and normative commitment.

Method and procedure

This section provides a description of the research methods for this study with details on the sample, instrumentation and procedures for data analysis.

As training outsourcing was a key construct of interest in this study, the target population only included those organizations engaged in outsourcing at least some of their HRD training activities. Previous research has identified that outsourced training activity occurs at higher levels in global firms, with the IT industry often noted as a heavy user of external training vendors (Lacity, Khan, and Willcocks 2009; Niosi and Tschang 2009). Therefore, the decision was made to limit this study to global IT firms actively engaged in training outsourcing. Personal contacts were used to identify firms meeting the selection criteria and two organizations agreed to participate.

The first organization was a well-established firm and market leader in software consulting based in the United States, and the second organization was a relatively newer-established firm headquartered and operating primarily in India. The US-based organization employed around 120,000 people worldwide, operated in 145 countries and had over 370,000 customers, including all 100 firms listed on the Fortune 100. The second organization was a software consulting firm based in India with approximately 1000 employees. Established in 1998, the organization was well-known for core compe- tencies in the areas of e-governance and energy sector IT systems integration. Their major customers include the multinational and local firms, government agencies in both India and other nations, and non-governmental organizations operating throughout India and other developing nations.

Both firms reported a variety of experiences with outsourcing training. Each firm encouraged supervisors to use appropriate training options, including active participation in learning provided by external training vendors for their direct reports. The US organi- zation in our sample heavily utilized training provided by international outsourced

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training service firms, including many headquartered and operating in India. The Indian organization in our sample also relied on outsourced training vendors, although all were from India. The selection of firms using India to provide outsourced training reflects this country being recognized as a favoured outsourcing destination for organizations from across the world (Sharda and Chatterjee 2011). It is estimated that the outsourcing sector has contributed employment for 2.5 million in India with the outsourcing industry annually generating US$76 billion in revenue in recent years (NASSCOM 2011).

After agreement to participate in the study was received, a senior HRD professional at each firm sent the electronic survey to those employees identified from internal HR records as having received training from an outsourced vendor in the last one year. The HR professionals confirmed that employees were aware that the training was external to meet one of the requirements for the study. Of approximately 724 employees contacted through email, a total of 246 completed, and usable surveys were received for a response rate of 33.9%. The demographic variables indicated that the respondents were 67% male, 58% were between ages 25 and 34, and 39% had more than 10 years of total work experience. In this sample, approximately 52.4% had a bachelor’s degree and 41.9% had a master’s degree as their highest level of education. The majority (79.7%) of employees worked in a junior-level position with 17% in middle-level positions. We did not find any significant country difference for our dependent variable organizational commitment between the employee groups. This maybe the result of the unique characteristics of the sample population occupation with Prasad, Enns, and Ferratt (2007) suggesting that IT employees are generally considered to be a homogenous group globally. Constantine (1995) noted that the IT, and specifically, software professionals’ occupational subculture can be stronger than any measure of national culture. The unique and strong occupational culture for IT professional prompted Dafoulas and Macaulay (2001) to suggest that a ‘Russian programmer would be more similar to an American peer than to a Russian marketing manager’ (6). The findings of this study aligns with our research where we did not find any significant difference between the two groups in their commitment to respective organizations as their commitment to the occupation supersedes any country differences.

Measures

The self-administered questionnaire used for this study included measures of training frequency along with previously developed scales. In addition to demographic items the survey also gathered general training information including the number of out- sourced training programmes attended. All the training outsourcing items were mea- sured on a 5-point Likert-type scale ranging from 1 (strongly disagree) to 5 (strongly agree), and the organizational commitment items were rated on a 7-point Likert-type scale with responses ranging from 1 (strongly disagree) to 7 (strongly agree).

Galanaki, Bourantas, and Papalexandris’ (2008) three-item quality benefit from outsourced training scale was used to measure the quality of outsourced training. The reliability measure of internal consistency (Cronbach’s alpha) from data in the original study was reported at 0.72 (Galanaki, Bourantas, and Papalexandris 2008). The relia- bility estimate from data in the current study produced a coefficient alpha of 0.62. While below the generally agreed upon lower limit of 0.70, it is above the suggested minimum reliabilities for exploratory research as suggested by Hair et al. (1998). Perceptions regarding the usefulness and relevance of outsourced training were measured using six items from Narayan and Steele-Johnson’s (2007) 20-item training attitude scale. An

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exploratory factor analysis (EFA) was conducted to test the factor structure of this six- item subscale, and the results confirmed the suitability of a single factor. The reliability estimate from data from the six-item scale was 0.90. Perceptions of the degree of customization of outsourced training were measured using three items from Gainey and Klass’ (2005) idiosyncratic training scale. The reliability estimate for this scale was 0.73. Organizational support for outsourced training was measured using 10 items selected and slightly modified from the original 16-item scale. Noe and Wilk (1993) perceived support from senior staff scale (α = 0.93). An EFA was conducted as no reliability data were available for this modified 10-item version of the scale, and the results confirmed the suitability of a single factor. Organizational commitment was measured using the eight-item affective commitment subscale (ACS) and the six-item normative commitment subscale (NCS) from Meyer and Allen (1997). The reliability estimates from data for the affective and the normative domains were reported as 0.85 and 0.73, respectively, in the original study (Meyer and Allen 1997) and 0.90 and 0.75, respectively, in the current study.

Data analysis

A three-stage hierarchical multiple regression analysis was used to examine the effect of each training outsourcing variable on the dependent variable, organizational commitment. When conducting the hierarchical regression, all variables were standardized and entered into the analysis in the order suggested by previous research. In the first step the demographic variables, organization size (number of employees) and frequency of parti- cipation in company-provided training events were entered. The frequency of participa- tion in company-provided training events was controlled because of the previously established relationship with organizational commitment (Bartlett 2001).

In the second step, supervisory support to outsourced training was entered initially as perceptions of organizational support are strongly related to organizational commitment (Whitener 2001) followed by relevance and usefulness of training. It was predicted that customization and quality of outsourced training would account for additional variance over and above supervisory support and relevance and usefulness of outsourced training with these variables entered in steps 3 and 4, respectively.

Results

The means, standard deviations and bivariate correlations between all variables are presented in Table 1. The outcome variables including both affective and normative commitment were negatively skewed; however, there was no sizeable skewness in the distribution of the outcome variables, and the values were well within the range. Regression analysis revealed that the residual diagnostic plots were normally distributed for both affective and normative commitment.

Previous studies have not considered frequency of participation in outsourced training events and the possible relationship with organizational commitment. The results showed a significant relationship between normative commitment and frequency of participation in outsourced training events (r = 0.14, p < 0.05), although no relationship with affective commitment was found. Therefore, hypothesis 1 was partially supported.

The quality of outsourced training was moderately correlated with affective (r = 0.24) and normative commitment (r = 0.19) at p <0.01 level and displayed a weak effect size. The usefulness and relevance of outsourced training was moderately correlated with

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affective (r = 0.38) and normative commitment (r = 0.27) at p <0.01 level with a weak to moderate effect size. The customization of outsourced training was moderately correlated with affective (r = 0.29) and normative commitment (r = 0.25) at p < 0.01 level, showing a weak effect size. Supervisory support towards outsourced training was also moderately correlated with affective (r = 0.40) and normative commitment (r = 0.34) at p < 0.01 level, which revealed a moderate effect size.

The results of the hierarchical multiple regression showed that the first step collectively explained 8.7% of the variance in affective commitment, which was statistically significant, F(8, 216) = 2.56, p < 0.05 and 16.2% of the variance in normative commitment, which was statistically significant, F(8, 215) = 5.12, p < 0.05. The coefficient values (see Table 2)

Table 1. Correlation matrix for all variables.

Variables Mean SD TR COTR OSTR QT RL CT SS AC

TR 4.55 2.02 CO TR 2.71 1.52 0.83** OSTR 1.83 1.14 0.66** 0.13 QT 3.87 0.55 0.20** 0.11 0.20** RL 3.69 0.65 0.13* 0.09 0.11 0.55** CT 3.35 0.70 0.06 0.00 0.09 0.44** 0.55** SS 3.97 0.80 0.03 −0.04 0.10 0.13* 0.19** 0.17** AC 4.59 1.12 0.15* 0.15* 0.07 0.24** 0.38** 0.29** 0.40** NC 4.15 1.03 0.18** 0.13* 0.14* 0.19** 0.27** 0.25** 0.34** 0.75**

Notes: *p < 0.05, **p < 0.01. TR = frequency of participation in total number of training, CO TR = frequency of participation in number of company-provided training, OS TR = frequency of participation in number of outsourced training, QT = quality of outsourced training, RL = usefulness and relevance of outsourced training, CT = customization of outsourced training, SS = supervisory support towards outsourced training, AC = affective commitment, NC = normative commitment.

Table 2. Results of hierarchical regression analysis with the main predictors.

Affective commitment Normative commitment

Variables β ΔR2 β ΔR2

Step 1: Demographics and control V −0.09 −0.14* Education −0.12 −0.09 Organization size 0.18* 0.24** Company-provided training 0.09 0.04

0.09* 0.16* Step 2: Significant predictors Supervisory support 0.34** 0.28** Relevance 0.29** 0.19*

0.23** 0.13** Step 3 Customization 0.04 0.00 0.00 Step 4 Quality −0.02 0.00 0.00 Total R2 0.32** 0.29**

Notes: *p < 0.05, **p < 0.01.

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indicated that only organization size was statistically significant (β = 0.18, p < 0.05) for affective commitment and gender (β = −0.14, p < 0.05), and organization size was statistically significant (β = 0.24, p < 0.05) for normative commitment.

In the second step of the regression the variable supervisory support for outsourced training along with relevance and usefulness of outsourced training explained an incre- mental variance of 23.2% in affective commitment, which was statistically significant at F (10, 214) = 10.05, p < 0.01 and an incremental variance of 13.1% was explained by normative commitment, which was statistically significant at F(10, 213) = 8.81, p < 0.01. The overall variance explained in affective commitment was 32% and in normative commitment was 29.3%.

In the third and fourth blocks, customization and quality of outsourced training accounted for limited incremental variance in affective and normative commitment at non-statistically significant levels. The last two predictors did not add to the overall variance, leading to the decision to drop the last two predictors from the final model.

The four components of outsourced training examined in this study such as quality, relevance and usefulness, customization and supervisory support had a significant positive relationship with organizational commitment. Each component accounted for a weak to moderate percentage of unique variance in organizational commitment. Supervisory support, relevance and usefulness of outsourced training added 23% of the variance in affective commitment and 13% of the variance in normative commitment over and above the demographic and control variables fully supporting hypotheses 3 and 5.

Although quality (5.8% of the variance in affective commitment and 3.6% of the variance in normative commitment) and customization of outsourced training (9% of the variance in affective commitment and 6% of the variance in normative commitment) uniquely contributed to the overall total variance explained in organizational commitment, the variables did not add any incremental variance to the model in steps 3 and 4, respectively. Thus hypotheses 2 and 4 were only partially supported.

Discussion

The continued international trend towards companies outsourcing their HRM and HRD activities (Babcock 2004, 2006; Jayanti 2012; Shih and Chiang 2011) has raised questions on the effectiveness and impacts of having outside contractors provide key HR functions (Shih and Chiang 2011). Previous studies of HR outsourcing have largely overlooked the relationship and influence on the workplace attitudes of employees resulting from third- party vendors providing HRD. To date, the employee voice has been largely absent from the training outsourcing literature despite the acknowledgement that potential employee impacts should be fully considered by managers (Shih and Chiang 2011). This study examined the relationship between employee perceptions of outsourced training and organizational commitment using a sample from two global software consulting firms. Despite the much anecdotal speculation that employees value outsourced training, there has been little empirical study beyond simple evaluation studies often conducted by outsourcing firms. The current findings show that aspects of employee perceptions of outsourced training within the international IT industry are related to the desired work- place attitude of organizational commitment.

As was hypothesized, the results supported that frequency of participation in out- sourced training programmes was found to be significantly related to normative commit- ment. This finding is in congruence with earlier studies (Bartlett 2001), which indicated that frequency of participation in internal training was significantly correlated with

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affective commitment. Ahmed and Bakar (2003) also found frequency of participation in training was positively correlated with both affective and normative commitment in their study conducted with an international sample. The findings from this study confirmed that the relationship also holds when the training is provided by an outsourcing vendor.

The quality and customization of outsourced training accounted for a weak to moderate percentage of unique variance in organizational commitment, providing support for the hypothesized relationship. However, the results of hierarchical regression analysis showed that quality and customization of outsourced training did not add incremental variance over and above supervisory support and usefulness and relevance of outsourced training. This finding could be explained by the high inter-correlations between relevance and usefulness of outsourced training with the quality of outsourced training (r = 0.55) and customization of outsourced training (r = 0.55). However, tests for multicollinearity including variance inflation factor (VIF) and tolerance values showed that these were well within the accepted range. This result may have been caused by the lack of specificity in the definition of these constructs and the difficulty for respondents to rate their perceptions in the absence of comparable non-outsourced training experiences. Gilley, Greer, and Rasheed (2004) noted that firms may outsource part of their training programmes to reduce the costs of main- taining training staff for all company-sponsored learning activities.

The results showed that supervisory support towards outsourced training was the strongest predictor of organizational commitment. This finding confirms the results of several previous studies (Ahmed and Bakar 2003; Bartlett 2001; Noe and Wilk 1993; Shore and Wayne 1993), noting a strong relationship between active encouragement from top management and senior staff and increased training participation and commitment. Employees may have a greater desire and sense of obligation to remain in organizations when they view their senior managers and supervisors as supportive with their participa- tion in outsourced training events. This could also suggest that firms adopting training outsourcing with management largely ambivalent and focused primarily on the cost savings aspects of using external training vendors may experience lower levels of employee organizational commitment.

Implications

The debate to either ‘make or buy’ HRs dominated the earlier literature on training outsourcing (Greer, Youngblood, and Gray 1999). The results of this research study have expanded the focus from organizations and vendors to employees who receive training from outsourced firms. This research has highlighted that employee attitudes towards outsourced training and organizational commitment are related, encouraging further research to consider relationships of training outsourcing to other key workplace attitudes and behaviours. This study emphasized the potential role of social exchange theory in examining employee perceptions of training outsourcing. The findings of this study seem to confirm the suitability of the application of this theory to explore if individual employees continue social relations on the basis of their expectations that such relationships will result in mutually beneficial outcomes for both the parties (Zafirovski 2005). The application of reciprocity, a core feature of social exchange theory, might suggest that employees view their firms’ decision to outsource training as more than a simple cost-saving strategy. If employees believe that the decision to outsource training considered both the cost rationale and the desire to improve learning with access to specialized expertise in terms of quality, usefulness and relevance of training, they may reciprocate with increased organizational commitment.

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However, the findings also potentially suggest that in the current organizational land- scape with non-standard and contingent employment relations, the conventional approach to social exchange theory may need to be reconsidered in order to examine the tripartite HRD outsourcing relationship that exists with the employer, employee and external training vendors (Kalleberg 2000; Kessler, Coyle-Shapiro, and Purcell 1999). Outsourcing provides an additional dimension to the employment contract with a needed recognition in both theory and practice that the selection, operation and outcomes from outsourced training providers can cause and impact to how employers and especially employees view the terms of employment. Lastly, while our study did not ask for perceptions of the success of outsourcing, it is worth considering that the relationship between outsourced training and organizational commitment may be very different in the case of a failed and unsuccessful outsourced training initiative.

There are a number of implications for HRD practice that can be drawn from the findings of this study. The increased use of training outsourcing as a global HR business practice, coupled with limited knowledge of this practice on employee attitudes, has highlighted the need for HRD research on this topic. The findings of this study inform the practice of HRD in showing that training outsourcing can be positively related to desired employee attitudes.

There remains more rhetoric, myth and misinformation surrounding the topic of training outsourcing and how it may impact quality, timeliness, cost reductions, core competencies, innovations and employee morale (Shih and Chiang 2011). Despite this, the outsourcing of training is often inconsistent in implementation, and research has not provided practitioners with the needed information to fully consider the most valuable elements of high-quality and impactful outsourced training programmes. The findings of this study provide practitioners with the knowledge that employee perceptions of quality, usefulness and relevance, customization of outsourced training and supervisory support are associated with higher commitment levels. Although a causal link cannot be estab- lished between employees’ perception of effective and ineffective outsourced training practices with organizational commitment, the significant associations found with out- sourced training indicate that the constructs are related. With this knowledge, HRD practitioners should be more aware of outsourced training and the factors that relate to commitment.

Limitations, recommendations and conclusion

This study has several limitations. The first limitation was the use of perceptual data based on a survey using a single source, i.e. employees who received outsourced training. The percep- tion of employees and employer may vary on how much the outsourced training programmes were customized or how much the outsourced training programmes were relevant. Single or common method variance as described by Podsakoff et al. (2003) is noted as a potential limitation. Future studies should consider using different research designs and multiple data sources to further examine attitudes related to e-training outsourcing.

Limitations relating to measurement issues also warrant attention. It is important to acknowledge that the results could be biased depending on the training programme selected. For the majority of the sample, the survey was conducted after a very successful outsourced training event. This resulted in very positive employee reactions and high levels of satisfaction with the training programme which perhaps overstated and enhanced perceptions towards all outsourced HRD activities and increased their commitment to the organization. For future research it would be worthwhile to consider employee reactions

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following an unsuccessful outsourced training event. Moreover, the type of training outsourced whether technical or soft skills could also change employee perceptions towards outsourced training. Future studies should incorporate different types of out- sourced training to explore if employees react in different ways to various types of HRD.

Given the increasing use and considerable debate on the costs and benefits of training outsourcing, this study is an important addition to the existing HRD literature. Although literature exists on studies examining the relationship between external training providers and client organizations, there is little evidence of empirical investigations on training outsourcing from the perspective of employee attitudes. This lack of academic scrutiny leads to a variety of unanswered and unresolved issues including what factors should be considered when organizations outsource training. The presented study was a first step to address the concern that the insiders’ perspective or employee voice has been missing from the outsourcing literature (Kessler, Coyle-Shapiro, and Purcell 1999; Shen 2005). The results of this study supported the proposition that training outsourcing is positively associated with employee commitment. It is hoped that additional studies in this area will build on and further develop knowledge in this area so that the rhetoric on outsourced training is increasingly supplanted by research.

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  • Abstract
  • Problem statement
  • Theoretical framework
  • Research questions and hypotheses
    • Hypothesis development
  • Method and procedure
  • Measures
  • Data analysis
  • Results
  • Discussion
  • Implications
  • Limitations, recommendations and conclusion
  • References