Offshoring in Asia

Australian companies operating call centres in low-cost countries such as India and the Philippines have long been the poster child of labour globalisation.

But local companies are increasingly relying on foreign workers to do a lot more than customer relations and sales.

Brisbane-based Diverisfy has a team of 300 people in the Philippines who perform everything from preparation of contracts and bookkeeping to graphic design, social media marketing and computer drafting.

Diversify chief executive Angela Vidler says cost is the main reason driving Australian companies, such as Qantas, Telstra and Suncorp, to “offshore” their workforce.

According to IBISWorld, countries such as India and the Philippines have benefited from business processes being offshored due to their increasing sophistication in IT services, strong English-language skills and lower labour costs.

“The cost of employing someone in the Philippines can be 70 per cent cheaper than having someone sitting in an office in Brisbane.” says Vidler, who founded the company in 2013 and has clients ranging from fast-food chains to telecommunications companies.

“The cost of employing someone in the Philippines can be 70 per cent cheaper than having someone sitting in an office in Brisbane.”

“The cost of office space in Australia is also a big driver. Companies will say their existing premises are full, but they don’t want to extend so they will go offshore.”

Vidler concedes that offshoring is not without its critics, particularly those who accuse companies like hers of stealing Australian jobs. Australian Council of Trade Unions secretary Sally McManus said recently that offshoring was partly to blame for the destruction of Australian jobs security.

But Vidler counters that the jobs taken offshore are low-skilled ones that can be difficult to fit locally.

“People will say you are taking our kids’ jobs, but that is not the case because for every one job taken offshore, the company will add 1 to 1.1 jobs,” she says. “The low-valued jobs are the ones done overseas, leaving the Australian employees to focus on the challenging, high-value tasks. The Filipinos are very process driven and they are the types of jobs that can be done offshore.”

Vidler stresses that offshoring is not outsourcing, which is basically giving a task to a third party to perform. With outsourcing, the clients are not involved in the selecting or managing staff. With offshoring, the foreign staff are essentially working in an overseas office of the Australian company, with Diversify selecting and managing staff who work from two centres in Manila.

“The low-valued jobs are the ones done overseas, leaving the Australian employees to focus on the challenging, high-value tasks. The Filipinos are very process driven and they are the types of jobs that can be done offshore.”

Vidler says the attraction of the Philippines as an outsourcing centre is its 94 per cent English literacy rate, with the country producing about 600,000 university graduates each year. Offshoring is increasingly a lifeline for the economically troubled country, generating about $25 billion, or 7 per cent of gross domestic product, and employing 1.3 million Filipinos.

On a logistical level, the time zone is similar to Australia, making that last minute conference or meeting easier to arrange.

Vidler says Diversify trains Australian companies to culturally engage with their Filipino staff and is not interested in clients who do not treat staff well. She claims Diversify has an 87 per cent staff satisfaction rate and staff turnover is low.

The article orginally appeared in the April 28th issue of The Courier Mail.

“The biggest mistake is not integrating their offshore staff with their domestic office. We tell people that if you have a birthday for someone in the office, buy a cake for both the offshore and local office.” She says companies also have to be realistic about how many staff can work offshore.

“If they currently have 100 staff in Brisbane and want to send them all offshore and only have two left, we tell them they have to be kidding themselves.” She says.

Vidler says technology has allowed such offshoring to occur. “It would not be possible without technology such as Cloud and Skype. It allows you to go global with your workforce. The US has been doing this for 30 years and Australia is just playing catch-up.”

Not all jobs can be offshored, particularly those that require face-to-face contact.

According to the Business Council of Australia, only 2 to 4 per cent of jobs in Australia could be potentially offshored.

This article was written by Glen Norris and originally appeared in the April 28th issue of The Courier Mail.

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