| Summary: | This paper reports on empirical work recently conducted on outsourcing among 381 service SMEs in Iceland. The study found that the majority of the firms outsourced some service activities, primarily in the local area, and that they did not have a strategic vision for outsourcing. The motives for outsourcing were more related to strategic aspects, such as a focus on core competencies, increased external expertise, and improved customer service, rather than lowering cost. The most common functions to be outsourced are administrative and peripheral tasks, as well as information technology, while very few outsource human resources or lay off staff. The study contributes to the emerging theory of outsourcing within the service sector. outsourcing; service sector; human resource management; HRM; Iceland; core competencies; pure services; non-pure services; enhanced services; customer services; strategic visions; business strategies; increased expertise; external expertise; improved service; lower costs; administrative tasks; peripheral tasks; administration; ICT; information technology; communications technology; redundancies; staff layoffs; small and medium-sized enterprises; SMEs; entrepreneurs; entrepreneurship.
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