Features

Tapping the Source: Acquire the Offshore Advantage

April 17th 2015 - Friday

By Scott Stavretis

In the past few years, offshoring has gained increased traction among businesses worldwide that discovered that cost savings and skill upgrades can be realised by sending certain functions abroad. The success of these efforts has led firms to offshore services in ever increasing numbers.

SIGNS OF THE TIMES

Let’s look at the findings in the US. According to The Hackett Group, about 663,000 large-company jobs in information technology, human resources, finance and purchasing have been offshored from the United States since 2002, and by 2016, another 275,000 jobs in these sectors will be moved abroad.

On the other hand, Forrester Research has forecasted that a total of 3.4 million service sector jobs might move abroad this year. We are talking here of a wide variety of functions that business leaders see benefits from being outsourced.

The global movement is happening in Australia as well. A recent report by Australia’s National Institute of Economic and Industry Research (NIEIR) points out that with more than 20,000 jobs moving offshore each year, it is expected that between 700,000 and 1 million jobs will be offshored in the next three decades.

Of note, as well, is the significance nearshoring is currently playing in the market, given the maturity and diversity of service capabilities in nearshore locations. Global offshore providers are now locating their delivery centres and placing key resources in nearshore locations.

WHAT’S DRIVING THE SHIFT

The business landscape is changing before our very eyes. These are among the many drivers for the global outsourcing trend.

In the case of the production of goods or services, the primary motivation for offshoring, based on opinion surveys, is to cut costs. Lower costs begin with lower wages and benefits packages in developing countries. For example, specialists from the Philippines (one of the primary offshoring destinations) receive a fraction of what their counterparts from developed countries earn in a year.

A Harvard Business School survey said 70% of companies moving activities outside the US considered the lower wage rates as the main attraction. But a third also said they were offshoring to have better access to skilled labour.

Initially, only low-level or labour-intensive jobs were outsourced. In recent years, however, the outsourcing of high-level jobs has become necessary because there simply is not enough trained and skilled manpower in global countries, including Australia, for all the functions generated by booming and diversifying businesses.

Fortunately, offshoring destinations have the educated and trained human capital resources to effectively perform high-skill functions such as information technology and communications (ITC) outsourcing, finance, knowledge process outsourcing (KPO) and creative tasks.

Other factors driving global offshoring are governments’ deregulation of domestic service industries and the liberalisation of restrictions on international services trade. As a result, businesses have been adopting new information and communications technologies at a faster rate, lowering telecommunications and transportation costs and encouraging vertical specialisation.

Again, Australia is in step with the world as the government and all sizes of Australian businesses are forging productive partnerships with offshoring companies. Indeed, technological advances and deregulation have expanded the kinds of activities that can be located abroad – which is good for their economy, and makes Australian businesses more competitive as well.

Scott Stavretis is the CEO and a founding director of Acquire BPO with over 15 years of executive management experience. Acquire employs nearly 7,000 experienced professionals and operates seven state-of-the-art contact centres across Australia, the Philippines and the Dominican Republic.

Source: The Outsourcing Guide (www.theoutsourcing-guide.com). The Guide is the sister publication of the Outsourcing magazine.

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