An examination of HR outsourcing in Australian organisations : motivations, process and performance

Date of Award


Degree Type


Degree Name

Doctor of Philosophy


Faculty of Business and Law


The objective of this research was to explore the HR outsourcing process and examine the interaction and effects of the factors of business strategy, motivation, HR function outsourced, and the outcome. The interaction of these factors was modelled upon a theoretical framework based upon current literature. This framework was investigated using both a qualitative and quantitative approach. The goal of this research was to characterise these factors and identify the relationships between these factors. The qualitative approach consisted of six case studies where one-to-one interviews were conducted with HR managers of medium to large Australian organisations. The responses to the interview questions from each interviewee was analysed to determine outsourcing characteristics and unique issues not previously identified within current literature. These issues included: when an organisation does not have the resources to conduct thorough research into the identification and selection of a service provider then they will use the recommendations of peer organisations. When an organisation contracts a service provider a relationship is established that will bond the two parties. The length of the service contract is dependent upon the complexity of !he outsourced HR function. The quality of service from a service provider must match that of the organisation. Finally, the contract between the service provider and the organisation must contain provisions for a changing economic environment. The quantitative approach consisted of a survey distributed to 1995 medium to large Australian organisations identified from the Dunn and Bradstreet database. A total of 163 valid responses were received from which 124 outsourced one or more HR functions. This corresponded to a response rate of6.22%. The survey data was analysed using factor analysis to reduce the business strategy variable to two categories: Innovative-Quality Enhancement and Cost Leadership. Similarly, Factor analysis was used to reduce the variables of Motivation to four categories: HR Management, Learning, Reduced Cost and Political reason. The variable of Process was reduced to four categories: Reserved, Regular, Rapid and Relaxed. The outcome variables were reduced to two categories: Organisation and Operational. Cluster analysis was used to classify the cases based upon these reduced factors from which the relationships between these factors were analysed. The analysis found that no relationship existed between business strategy and motivation also no relationship was found between business strategy and outsourced HR function. A partial relationship was found between business strategy and process and another partial relationship was found between outsourced HR function and process similarly a relationship was found between process and outcome. Several relationships were found between motivation end outsourced HR function. The results from this exploratory research have significant implications for human resource management theory and practice. The developed theoretical framework provides a useful model of the HR outsourcing factors within Australia. This framework together with the unique factors identified through the qualitative analysis provides a significant platform from which additional research may be conducted.

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