IBM opens outsourcing centre to lure Japanese market

IBM Corp. launched a business transformation outsourcing centre in Brisbane on Monday, primarily aimed at luring the Japanese and Asia-Pacific region outsourcing dollar into Australia.

Australia’s economic maturity, combined with the push for Queensland’s Smart State initiative, is expected to make Queensland the ideal outsourcing location for Asia-Pacific, especially Japanese companies.

According to IDC outsourcing analyst Aprajita Sharma, the business process outsourcing (BPO) dollar in Australia in 2004 was worth some A$2.8 billion with predictions it will hit A$3.6 billion by 2008.

In 2004, IBM exported more than A$650 million in services and kind from Australia, up 6.4 per cent from 2003 and 17 per cent from 2002.

Phillip Bullock, managing director and CEO of IBM Australia, said the deal further cements Queensland as a key part of IBM strategy.

Ian McClenaughan, Big Blue’s Queensland general manager, said Queensland is attractive as an outsourcing destination because it boasts a variety of skills, culture and language, as well as the necessary technology.

“What we are offering is a business process for client transformation,” McClenaughan said.

“The sustainability of the Smart State is not just for cheaper labour, but we do have skilled labour that allows the transformation.”

The centre has 20 staff of differing nationalities now and that figure is expected to rise to 100 people by the end of the year and expected to swell to 1,000 seats within the next 10 years.

The Queensland government has offered tax exemptions for the IBM BPO office in the form of payroll tax relief that is expected to continue over the next five years as a way to attract such investment into Queensland.

At the launch, Premier Peter Beattie claimed that the deal is an example of the Smart State in action, adding he could think of no better symbol or example of a Smart State than Queensland providing ICT services to Japan.

“These are Smart State jobs….We have to compete in a globalized economy by getting these jobs,” Beattie said.

“There was a time when outsourcing was viewed as a way of reducing costs, now it’s a specialized way of managing services.”

“We (the Queensland government) have provided small assistance in the form of payroll tax relief….I am a great believer in using tax policy as a lever to stimulate the local economy.”

The first year running costs of the centre amount to between A$8 million to A$10 million for capital expenditure and salaries.

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