The role of costs in outsourcing decisions: Selected studies of public sector organisations

There is a rapidly growing trend towards outsourcing many and varied functions and services by the Australian public sector, and which is promoted by the public sector reforms agenda and government policy, as a means for reducing costs. However, much of the literature concerning outsourcing, and especially that which relates to the public sector and how and why costs are used in outsourcing decision-making, is anecdotal and dogmatic.

Agency theory and transaction cost economics, the conventional, explanatory frameworks applied to outsourcing as well as aspects of contingency theory, are integrated to derive a series of propositions and testable hypotheses, and develop an a priori model of the role of costs in Australian public sector outsourcing decision-making.