Does offshore labor hire take jobs away from locals or does it actually help to create more jobs for local Australians in the long-term?
A survey conducted by the Australian Business Process Outsourcing Association, found that 45 to 65 percent of Australian organizations outsource some business processes. The reasons?
In 2018 Australian companies are becoming increasingly more global – as big businesses are growing, we’re seeing big corporations in small to medium enterprises, take on outsourcing solutions to help their businesses grow, not just as a quick fix, but as a part of their long term business plans.
Australian businesses are increasingly turning to outsourcing solutions for their business needs. From small business start-ups to fortune 500s, business outsourcing is now proving to help improve a company’s productivity and overall net worth. In the case of Australia, the result of offshore labor hire is actually showing to increase jobs locally whilst improving local opportunities.
Below we will attempt to unpack the common misconceptions around offshoring – uncovering doubts of a bygone era where outsourcing jobs were seen to be a threat to local jobs and livelihoods. We’ll show why offshoring is fast becoming an Australian business norm which comes with a lot of benefits to the local economy and why European companies should follow the same process. This will unveil how local Australian based company, Acidgreen, was able to contribute to a 400% increase in local jobs creation in the last 8 years by seeking outsourcing solutions.
#1 Business outsourcing is all about cost cutting
Cost cutting isn’t the only reason that companies choose to offshore staff. A reliable company would almost never recommend a business to replace its entire local staff replace with an offshore team. Strategies to offshore staff are implemented with the intention of helping a business achieve its growth goals. For example, a company may be inclined to turn down new business if they are close to approaching capacity. They may be in a position where they’re not able to afford the $70K+ it would cost to hire a new employee. Instead, they may be able to take on an employee offshore for $20K+ to take off some of the load, allowing the business to take on the new business and continue to grow.
An article published by The Telegraph UK explains that, “a more productive firm can pay higher wages to the remaining workers, and hire more local employees in different types of occupations than those offshored.”
#2 Offshore labor hire takes jobs away from locals
The idea of offshoring is to shift tasks which may be lower skilled but still essential to the business function. The costs saved from offshoring these skills allows resources to be distributed to the team, locally:
You’ll gain productivity as you’ll have more time to focus on doing meaningful work.
You’ll have the ability to spend more time with clients face-to-face to allow you to form deeper relationships.
You’ll have time to engage in more networking events, positively growing your business opportunities.
Ultimately, outsourcing allows you and your local team to focus on meaningful work, work which will translate in seeing your business grow.
So, what does this mean for local Australians wanting jobs?
As businesses grow there is a natural need for more staff. What we’re finding is that the savings from offshore labor hire for essential staff members results in businesses having the ability to hire more locally based staff, often in higher skilled roles. Allocation of costs allow businesses to stay competitive and achieve sustainable growth. As the business grows, it continues to contribute to the local economy, resulting in the creation of local jobs.
This was definitely the case for Acidgreen, a Sydney based marketing company. As CEO, Mark Larcher explains, “Acidgreen had a multi-million payroll and was struggling with cash flow and meeting liabilities. As a small business it was hard to attract and retain the best talent. Building a team offshore afforded the ability to scale quickly, this enabled us to provide a faster service to clients and to take on more work than we could previously. The jobs we were winning became more profitable, due to reduced costs and we started doing more than ever, with our bigger team. We have quadrupled the company size in the last few years and are more profitable. We have now reinvested these profits locally to hire more staff in Sydney. Going offshore has actually helped the local economy by allowing us to grow significantly as a company and all taxes are paid in Australia.”
Essentially, offshoring can allow you to ‘spend less time working in the business and more time working on it’!
#3 Staff working overseas are in sweatshops receiving lower pay
The stereotype that outsourcing means cheaper, lower quality work is quickly changing as people are coming to realize that these ‘one size fits all’ statements are fundamentally false. Comparatively, offshore workers are usually paid a lower hourly rate than a local doing the same job, but the rate of pay would be aligned to what is expected locally in the home country. Staff offshore enjoy the same standard of living that staff locally in Australia would expect and the same working conditions are provided, such as appropriate access to internet and office facilities. For example, in the Philippines, professionals take great pride in their work and focus on quality assurance. It shows too, with demand for Philippine Outsourcing services growing by 30% year on year.
Outsourcing solutions are fast becoming the business norm, and it’s become clear why this is so. As we saw earlier, 45 to 65 percent of Australian organizations outsource some business processes. We saw how outsourcing actually contributed to job creation in the local environment and how outsourced staff allow for a business to flourish in the long term, ultimately benefiting the local Australian economy and contribute to local job creation.
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