Job Insecurity and Employee Performance Among Outsourced Workers: The Mediating Role of Turnover Intention

Abstract

This study examines the relationship between job insecurity, turnover intention, and employee performance among outsourced employees in Indonesia. Grounded in stress theory and psychological contract theory, this study proposes a mediation model in which turnover intention mediates the relationship between job insecurity and employee performance. Data were collected using a census approach from outsourced employees in a medium-density fiberboard (MDF) manufacturing company in South Sumatra, Indonesia. A total of 350 valid responses were obtained from 410 employees. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4. The results indicate that job insecurity significantly reduces employee performance and significantly increases turnover intention among outsourced employees. In addition, turnover intention was found to negatively affect employee performance, indicating that employees who develop stronger intentions to leave the organization tend to demonstrate lower work contribution and engagement. Furthermore, turnover intention significantly mediates the relationship between job insecurity and employee performance, suggesting that the negative impact of job insecurity on performance occurs both directly and indirectly through employees’ psychological withdrawal from the organization. These findings provide important insight that employment insecurity within outsourcing systems not only directly influences employee performance but also indirectly affects performance through increased turnover intention. The results highlight that outsourced employees who experience uncertainty regarding job continuity are more likely to develop psychological withdrawal from the organization, which subsequently reduces their work engagement and overall performance. This study contributes to the human resource management literature by strengthening the understanding of how job insecurity influences employee behavior and performance through attitudinal mechanisms, particularly in outsourcing contexts.Bottom of Form