Are outsourcing and skill formulation mutually exclusive? The experience of a heavy manufacturing firm

This article draws on case study research that analyses the impact of outsourcing on skill formation. The subject of the study, a restructured heavy manufacturing enterprise, used outsourcing as a key ‘transformational’ strategy. The discussion is contextualised with a framework of the changing emphasis on the role of skills in competitiveness, major reforms in the vocational education and training (VET) infrastructure, and Australian workplace data which illustrates the increase in ‘numerically flexible’ firms. Evidence from the case study organisation suggests that through strategic alliances, partnerships and outsourcing many of the vendoring contracts provided an opportunity for skill enhancement, rather than skill diminution. These findings challenge the view that contracting out represents a ‘threat’ to the current mechanisms for skilling the workforce.