Table 5.

List of drawbacks that happened by practicing HRO.

Aspect	Description	References
Lack of psychological contract among current employees	HRO leads to a reduction in the number of permanent employees and often necessitates the recruitment of seasonal employees. Consequently, this can create a gap in organizational and interpersonal relationships, leading to a lack of psychological contact and the dismantling of pre-existing networks and organizational memory. In the long run, the client company may experience inefficiencies, a lack of organizational values, challenges in developing tacit knowledge, and difficulty in obtaining unique competencies.	[1,58]
Risk of opportunist behavior	Despite the cost advantage of HRO, firms must exercise caution when using it due to the associated risk factors. Many firms fear outsourcing because they worry that the service provider might act as an opportunist.	[47]
Restrict Innovation	To gain a competitive advantage and enhance the firm's performance, both the prospectors and innovators avoid outsourcing core HR activities. Instead, they support in-house exercises.	[4]
Restrict to develop expertise	It is found that outsourcing core activities is not always fruitful; instead, it leads to a lack of expertise in the long run.	[9]
Risk of below-standard performance	The risk associated with performance and human resource development influences the decision of whether to make or buy the functions.	[46]
Labor Dispatch and turnover	Several developed and developing countries have adopted HRO and are thus involved in labor dispatch systems. This phenomenon creates a chaotic situation in labor markets, encouraging a lack of job security and psychological contact, and hindering both external and internal organizational culture.	[58]
Less customer Satisfaction	Organisations that outsource their executive recruitment and training tend to experience lower customer satisfaction, and vice versa.	[51]
Ignominy in Career Development	The impact of HRO varies depending on whether it is considered in the long-term or short-term time-bound, especially when it comes to the career development of an organization. A rising level of attrition, stress, and burnout necessitates thorough preparation by the administration for long-term career development.	[49]
Training Effectiveness	HRO for training programs often lacks effectiveness because managers find it challenging to identify the outsourceable components of training. Additionally, aligning the acquired knowledge with the organization's uniqueness becomes difficult, resulting in effectiveness challenges for the outsourced training program.	[23,45]
Misunderstanding regarding company culture	External vendors often struggle to grasp the uniqueness of firms, leading to a limited alignment with the firm's culture and characteristics.	[44]
Unusual Cost pressure	Despite being considered an effective driver sometimes, depreciation may also initiate a cost burden, as it may not be contingent on the market pay level.	[44]