Deregulation, downsizing and outsourcing at Telecom New Zealand and Telstra: towards an explanation of employment relations strategies in terms of transaction costs economics

Telstra and the Telecom Corporation of New Zealand (TCNZ) are examined against the backdrop of deregulation, corporatisation and privatisation of telcommunications companies (TelCos) world-wide. This changing context has seen TelCos face new opportunities and threats amid changed product markets. The deregulation of the New Zealand and Australian telecommunications markets has been accompanied by moves towards deregulated labour markets in New Zealand and Australia. TCNZ and Telstra pursued strategies of cost reduction through downsizing, outsourcing and the introduction of new technologies. Their ‘core competencies’ moved from a technical to a consumer orientation. Moves by both firms towards greater outsourcing and downsizing raise questions about the possible long-term effects of this strategy and its implications for employment relations (ER). We draw on transaction costs
economics (TCE) to assist in analysing their changing ER practices and strategies during the 1990s.