Outsourcing and financial crisis: evidence from Icelandic service SMEs

Purpose - The purpose of this paper is to analyse the application of outsourcing within Icelandic service companies in the wake of the banking collapse. Design/methodology/approach - Findings are based on comparing surveys conducted in early 2009 (381 answers) and in the summer of 2013 (212 answers). Findings - In general outsourcing did not increase, but most SMEs had extended their outsourcing in almost every area of operation, such as human resource management (HRM), IT and peripheral tasks. Also, more SMEs gave cost-reduction as a reason for outsourcing in 2013, and more respondents in 2013 expressed a positive experience of outsourcing. It is uncommon for companies to outsource human resources or lay off staff. Instead, outsourcing mainly focuses on aspects of information technology as well as administrative and peripheral functions. Research limitations/implications - The research highlights service firms in one country by survey methods. Further research is needed in other sectors and countries, and more varied research methods are recommended. Originality/value - Research on outsourcing in SMEs in the wake of the financial crisis is rare, and very few studies have focused on the HRM implications of outsourcing in SMEs. This study can inform researchers and practitioners on critical aspects of outsourcing.