The role of human resource management: strategic role, interdependence, outsourcing HR functions and using domestic and global contractors (HSC Business Studies Topic 4)
“Strategic role of human resources; interdependence with other key business functions; outsourcing - HR functions, using contractors”
Human resource management (HRM) is the effective management of the formal relationship between the employer and employees. Its strategic role is to align the workforce with the business's long-term goals: the right number of people, with the right skills and motivation, in the right roles, at the right cost. HRM is interdependent with operations, marketing and finance. Businesses may outsource HR functions (payroll, recruitment, training) and use contractors, domestic or global, to cut costs and add flexibility and expertise, at the cost of control, and with legal risks if the arrangement breaches workplace law.
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What this dot point is asking
The syllabus lists: "role of human resource management: strategic role of human resources; interdependence with other key business functions; outsourcing: human resource functions, using contractors (domestic, global)". The "students learn to" points include "explain the interdependence between human resources and other key business functions" and "discuss the advantages and disadvantages of outsourcing in the global market".
The strategic role of human resources
HRM used to be seen as administration: hiring paperwork, payroll and records. Today it is a strategic function because a business's people are often the hardest resource for competitors to copy.
HRM contributes strategically by:
- Workforce planning: forecasting the number and type of employees the business will need as its strategy changes (growth, automation, new markets), comparing that with the current workforce, and planning recruitment, training, redeployment or redundancy to close the gap.
- Acquiring and developing capability: recruiting and training for the skills the strategy needs, including future skills such as data and artificial intelligence.
- Aligning performance and rewards with business goals, so employees are rewarded for what the strategy needs.
- Shaping culture: values, behaviours and leadership that support customer service, safety, innovation or efficiency.
- Leading change: managing restructures, new technology and relocation with consultation and fairness, which reduces resistance and disputes.
- Managing legal and ethical obligations: pay, safety, discrimination, consultation and privacy.
In May 2024 Telstra announced that up to 2,800 roles, roughly 9 per cent of its workforce of more than 31,000, would go in a restructure expected to save about $350 million a year, with $200 million to $250 million in restructuring costs. In February 2026 it proposed about 840 further role reductions, with some service and delivery work moving to Infosys and some data and AI work going through its joint venture with Accenture, including to Accenture's hub in India.
HRM's strategic tasks: plan which roles change; consult employees and unions as required by awards and agreements; redeploy staff where possible; pay redundancy entitlements correctly; retrain remaining staff for new technology; and maintain engagement and reputation. How well HRM does this affects whether the savings are achieved without damaging service or morale.
Interdependence with other key business functions
| Pairing | HRM provides | HRM depends on |
|---|---|---|
| Operations | Skilled workers, rosters, training for new technology, safe work systems, job design | Operations plans (volume, technology, layout) that determine how many staff and which skills are needed |
| Marketing | Customer-facing staff whose behaviour delivers the brand promise (the "people" element of the extended mix) | Marketing plans and forecasts that determine staffing for campaigns, launches and peak periods |
| Finance | Workforce plans and labour cost forecasts; productivity | Budgets for wages, superannuation, training and recruitment; finance's assessment of the cost of HR decisions |
- Operations example
- When Woolworths announced its automated and semi-automated distribution centres at Moorebank in 2020, replacing older centres, it committed to offering 650 redeployment roles at the new sites and career transition support for affected workers: an operations decision that depended on HR planning and consultation.
- Marketing example
- After the Federal Court ordered Optus to pay a $100 million penalty in September 2025 for unconscionable sales practices, Optus committed to new training and induction for sales staff and a specialist care team for vulnerable customers. How salespeople are recruited, trained, targeted and rewarded directly shapes the brand.
- Finance example
- Wages are one of the largest costs for most businesses. When the Fair Work Commission's 2026 Annual Wage Review increased modern award minimum wages by 4.75 per cent from 1 July 2026, finance had to budget for higher wage costs and HR had to apply the new rates correctly.
Outsourcing human resource functions
Outsourcing is using an external provider to carry out work that could be done inside the business. HR functions commonly outsourced include:
- Payroll processing and award interpretation;
- Recruitment (agencies screening candidates, psychometric testing);
- Training and development (registered training organisations, leadership programs, compliance training);
- Employee assistance programs (confidential counselling);
- Workplace relations and legal advice, workers compensation claims management and redeployment or outplacement services.
| Advantages | Disadvantages |
|---|---|
| Lower cost through the provider's scale | Less control over quality and the employee experience |
| Specialist expertise (for example complex awards and employment law) | Confidential employee data held by an outside party (privacy and security risk) |
| Variable cost: pay only for what is used | Provider may not understand the business's culture |
| In-house HR can focus on strategic work | Loss of in-house skills; dependence on the provider |
| The business remains legally responsible for obligations such as correct pay |
Using contractors
Contractors are people or businesses engaged under a commercial contract to perform specific work, rather than employed. They are responsible for their own tax, superannuation (in many cases), insurance and equipment, and are paid for results or on invoice.
Domestic contractors
- Advantages
- flexibility to increase or reduce labour quickly; access to specialist skills for a project; no leave entitlements or long-term commitment; costs linked to output.
- Disadvantages
- usually higher hourly cost; less loyalty and control; knowledge leaves when the contract ends; and legal risk. Under the Fair Work Act, sham contracting (disguising employment as contracting) is unlawful. The Closing Loopholes reforms (2023 to 2024) require the employment relationship to be judged by its real substance and practice, not only the written contract (from 26 August 2024), and allow the Fair Work Commission to set minimum standards for "employee-like" workers on digital platforms and for regulated road transport contractors.
- Case: Qantas ground handling (domestic outsourcing gone wrong)
- In 2020 Qantas outsourced the work of about 1,820 ground handling employees to third-party providers. The courts found the decision breached the Fair Work Act because one reason for it was to prevent employees from taking protected industrial action; the High Court dismissed Qantas's appeal in 2023. Qantas agreed to a $120 million compensation fund in December 2024, and in August 2025 the Federal Court ordered a $90 million penalty. Outsourcing decisions must respect employees' workplace rights.
Global contractors
Global contractors perform work from overseas: customer contact centres, IT and software development, back-office processing and data work, often in countries with lower labour costs and large skilled workforces.
- Advantages
- lower labour costs; access to large pools of skills (for example technology); round-the-clock service across time zones; scalability.
- Disadvantages
- less control over quality and working conditions; data security and privacy risk; communication, time-zone and cultural differences; negative publicity and morale effects from local job losses; and ethical risks in overseas labour practices.
- Case: data risk offshore
- In July 2025 Qantas disclosed a cyber attack on a third-party customer servicing platform used by one of its contact centres in Manila, which exposed data on 5.7 million customers. Using external and overseas providers does not remove the business's responsibility for customers' information.
- Case: AI and support roles
- On 30 July 2025 Atlassian told about 150 customer support staff in a pre-recorded video that their roles were being cut as it expanded AI-based customer support; affected staff reportedly lost laptop access shortly afterwards and received six months' pay. The method was widely criticised, showing that how HRM manages separation affects reputation as much as the decision itself.
Stem. A mid-sized insurer plans to move its customer contact centre to an overseas provider to cut costs by 30 per cent.
- Benefits: lower labour cost; the provider can scale for peak claim periods (for example after storms).
- Risks: customer data security; service quality for complex or distressing claims; local redundancies, consultation obligations and morale; reputational damage.
- Recommendation: keep complex claims and vulnerable customers in-house; outsource routine enquiries only after security audits and service standards are in the contract; consult staff early, offer redeployment and training, and pay correct redundancy entitlements; monitor customer satisfaction and complaints monthly.
Strategic HRM links workforce planning, capability, culture and change to the business's long-term goals. Show the link to strategy.
Show what HRM provides to the other function and what it needs from it, as in the table above.
Outsourcing and contracting must comply with workplace law. The Qantas case shows the cost of getting it wrong, and sham contracting is unlawful.
Address both, and connect global contractors to the "students learn to" point about outsourcing in the global market.
How this dot point appears in the HSC
- Section I: identify outsourcing or the interdependence shown in a scenario.
- Section II: explain the strategic role, interdependence with another function, or the advantages and disadvantages of outsourcing (3 to 6 marks).
- Section III: recommend whether a business should outsource HR functions or use contractors, with implementation steps.
- Section IV: evaluate the effectiveness of HRM, where strategic role and outsourcing decisions provide evidence.
Exam-style questions
Questions in the style of NESA exam questions on this dot point, each with a worked answer. They are written by ExamExplained unless tagged "Past paper"; the year shows the paper a question is modelled on.
Original5 marksExplain the strategic role of human resource management.Show worked answer →
Marks guide (Original, modelled on NESA criteria). 5 marks: explains how HRM contributes to long-term business goals and competitive advantage, with specific processes or strategies and an example. 3-4 marks: describes the strategic role with some explanation. 1-2 marks: some relevant information.
Model answer. Human resource management is the effective management of the formal relationship between the employer and employees. Its strategic role is to align the workforce with the business's long-term goals, so that the business has the right number of people, with the right skills, in the right roles, at the right time and cost. HRM does this through workforce planning (forecasting future staffing needs as the business changes), recruitment and selection, training and development, performance management, rewards, and managing culture and change. Because a skilled, motivated and adaptable workforce is hard for competitors to copy, people can be a source of competitive advantage.
The strategic role is clearest when a business changes direction. When Telstra announced in May 2024 that up to 2,800 roles would go in a restructure expected to save about $350 million a year, HRM had to plan which roles were affected, run consultation, manage redundancies and keep the remaining workforce engaged and skilled for the new structure. HRM decisions therefore shape costs, productivity and the success of the strategy.
Original4 marksOutline the advantages and disadvantages of outsourcing human resource functions.Show worked answer →
- Marks guide (Original, modelled on NESA criteria)
- 4 marks: outlines at least two advantages and two disadvantages relevant to HR functions. 2-3 marks: outlines some. 1 mark: some relevant information.
- Advantages
- Specialist providers of payroll, recruitment, training or employee assistance programs can deliver these services at lower cost because of their scale; they bring expertise and up-to-date knowledge of complex areas such as award interpretation and employment law; costs become variable, rising and falling with need; and internal HR staff can focus on strategic work such as workforce planning and culture.
- Disadvantages
- The business loses some control over the quality and consistency of the service and the employee experience; confidential employee data is held by an outside party, creating privacy and security risks; providers may not understand the business's culture; and in-house HR skills can be lost, making the business dependent on the provider. The business also remains legally responsible for obligations such as paying employees correctly.
Original6 marksDiscuss the advantages and disadvantages of using global contractors. Refer to a business example.Show worked answer →
- Marks guide (Original, modelled on NESA criteria)
- 5-6 marks: discusses both advantages and disadvantages of global contractors with a judgement and a relevant, accurate example. 3-4 marks: describes advantages and disadvantages with an example. 1-2 marks: some relevant information.
- Advantages
- Contracting work to providers overseas can lower labour costs, give access to large pools of skilled labour (for example in technology and customer service), allow 24-hour operations across time zones and let the business scale up or down quickly.
- Disadvantages
- The business has less control over quality, service standards and working conditions; data security and privacy risks increase when customer information is handled offshore; communication, time-zone and cultural differences can reduce service quality; redundancies at home can damage morale and reputation; and the business remains responsible to customers when things go wrong.
- Example
- In February 2026 Telstra said some work in its Service and Delivery team would move to Infosys and some data and AI roles would go through its joint venture with Accenture, with work moving to Accenture's hub in India, as part of about 840 proposed role reductions. The risk side is shown by Qantas: in July 2025 attackers gained access to a third-party customer servicing platform used by one of its contact centres in Manila, exposing data on 5.7 million customers.
- Judgement
- Global contractors can lower costs and add capability, but only if the business manages quality, data security and the effect on its own workforce and reputation.
Practise this
Sources & how we know this
- Business Studies Stage 6 Syllabus (2010) — NSW Education Standards Authority (2010)
- Federal Court fines Qantas for illegally outsourcing ground handling workforce — ABC News (2025)
- Telstra to sack 2,800 workers as part of cost-cutting measures — ABC News (2024)
- Telstra to axe 800 more jobs, move some roles to India — Information Age (ACS) (2026)
- Woolworths to build automated distribution centres in NSW — iTnews (2020)
- Atlassian terminates 150 staff with pre-recorded video, AI customer contact solutions rolled out — Cyber Daily (2025)
- Federal Court orders Optus to pay penalty for unconscionable conduct — ACCC (2025)
- Minimum wages increase from 1 July 2026 — Fair Work Ombudsman (2026)
- Qantas says cyberattack affected 5.7 million customers — Cybersecurity Dive (2025)
- Business Studies HSC exam papers — NESA