Control and optimization of workforce outsourcing decisions.

The article focuses on developing a mathematical model for organizations employing both internal employees (IEs) and outsource/offshore employees (OEs) to analyze, monitor, and control the extent and distribution of outsourcing within hierarchical manpower systems. Using Markov models, it derives control policies based on proportionality restrictions that regulate OE recruitment relative to internal promotions, addressing competitive and non-competitive scenarios between IEs and OEs. The study establishes feasibility conditions for desired long-run blends of internal and outsource staff, provides methods to adjust infeasible blend targets, and formulates an optimization framework to maximize cost savings from outsourcing under constraints on total outsource manpower. Computational examples illustrate the application of these models, demonstrating how organizations can balance cost efficiency with workforce composition control, making the models useful decision-making tools for managing outsourcing strategies.