THE BENEFITS AND CHALLENGES OF HUMAN RESOUCE OUTSOUCING: THE CASE OF BREWAERY COMPANIES IN ETHIOPIA

Abstract

Human Resource Outsourcing (HRO) has gained significant importance globally as organizations seek to reduce costs, improve efficiency, and access specialized expertise. This study investigates the benefits and challenges of HRO in the brewery sector in Ethiopia, a growing and crucial industry for the country's economic development. Using a qualitative research design, the study collected data through in-depth interviews with 24 participants, including country directors, HR managers, and talent acquisition specialists from major brewery companies and HR outsourcing service providers. The findings reveal that recruitment is the most commonly outsourced function, particularly for short-term and high-turnover roles such as promoters, merchandisers, and temporary sales staff. The primary benefits of HRO include cost reduction, improved recruitment efficiency, and the ability for internal HR teams to focus on more strategic functions. However, challenges such as misaligned expectations, low service quality, and insufficient understanding of the brewery sector's unique needs were identified. Both brewery companies and HR service providers are actively working to address these challenges through improved communication, regular performance reviews, and the introduction of new support services. The study recommends that future research expand to other sectors and regions, HR service providers develop a deeper understanding of the brewery sector's needs, and brewery companies establish clear communication channels and expectations. The study also recommends that for HRO to reach its full potential, it must evolve from a cost-saving tactic to a strategic partnership based on mutual understanding, sector-specific expertise, and continuous collaboration.