Gartner: Australia wins and loses from offshoring

Australia continues to be a major beneficiary of offshoring by global companies but research company Gartner Inc. warns it is an opportunity largely going to waste.

While India has attracted the most attention as a nation hosting offshore projects, Australia is in the unique position of offering skills for a range of higher-level or management-related onshoring tasks but the government is doing nothing to capitalize on our IT skills, quality of life and proximity to South East Asia.

Currently the most popular outsourced tasks to India are entry-level programming or data entry and call centre positions, jobs that analysts believe will be the first to be hit by automated software.

Gartner vice president and analyst, Rolf Jester, said the government is doing nothing at all to promote Australia as a haven for onshoring tasks. Jester said he considers the government should have a direct involvement in this, both to promote Australian talent and grow domestic business, talent and opportunities.

“It is an issue in Australia, but one that can be a success story,” Jester said.

“The role the government needs to take is to help increase capital investment to remove obstacles for companies wishing to onshore to Australia; currently there is no answer and at the economic level there is a role for some kind of government intervention.

“Rather than an offshoring contract hinging on labour costs, you have to look at how you can sell your complete service.

“There are plenty of international subsidiaries in Australia, but currently no indigenous success stories.” Jester said that tax incentives offered to overseas companies looking to onshore to Australia would be one way to attract business; however, the government has largely overlooked this opportunity.

Bob Hayward, Gartner senior vice president and research fellow, said if Australia was not seen as a destination for offshoring, IT services could ultimately suffer with the result that there would be no strong, indigenous IT base.

Haywood considers the best way to grab our market share is by offering tax incentives for companies to offshore to Australia.

“We need to give tax incentives for offshoring, or some way of providing incentives for the offshore market, but unfortunately the Australian government is not concentrating on policies that create new jobs,” Haywood said.

“The whole issue of offshoring is emotional and traumatic because people lose their jobs, but it would be worse to not create new jobs.

“Unfortunately, there are no votes in the IT industry for the government and the population has a different view of offshoring — one in seven people in the U.S. had a negative reaction when they found their call centre was in a foreign country, but (only) one in 100 said they would pay more per call to access a local contract centre.”

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