Offshoring Continues to be Seen as a Smart Strategic Decision

A recent report into the state of offshoring within Australia has identified that the majority of businesses that adopt and implement an offshore strategy think it is a smart strategic decision.

The Driving Factors of Offshoring

87% of businesses currently offshoring think that it has been a smart strategic decision with just 13% stating that it was not. The perception of offshoring is changing.

87%
13%
Yes
No

The positive response to offshoring has been overwhelming

Rising wages, limited talent pools, rigid human resources requirements and government taxes are all impacting on Australian businesses and their ability to grow. These issues were all identified in the report with close to 50% of respondents indicating that cost pressures pushed them to offshore.

35% of respondents highlighted that expanding capacity and enhancing capability are major drivers of the decision to offshore functions within a business.

49.12%
19.3%
14%
17.58%
Cost pressures
Capacity issues
Expanding capability
Others

Different businesses with different reasons to offshore

With the current digital communications environment changing rapidly, and the marketplace becoming more and more global, offshore teams are seen as a cost effective way to expand service to meet the needs of a global business environment.

Interestingly, the report also identified the more and more businesses are starting to place value on the other drivers of change; less emphasis is placed on cutting costs or reducing local headcount.

No Cuts to Local Headcounts

The majority of respondents did not cut local headcount to adopt their offshore team, rather they used the resources to supplement and augment their workforce. However, although only 11% of respondents made local roles redundant, a significant amount of respondents did indicate that they did cease local hiring which does impact on the ability of entry-level job seekers attaining roles.

10.81%
16.22%
24.32%
48.60%
Had to make local roles redundant
Had to impact and have not stopped hiring locally
Had an impact and have stopped hiring locally
Had no impact and no local jobs were lost

The effect of offshoring on local headcounts

While only 11% of respondents made local roles redundant, a number did indicate that offshoring would impact the future hire of local entry-level and business support services. However, overall this allowed them to invest in local talent for higher, value-add postions.

It is important to note that automation of tasks and functions is now considered more of a threat to local roles than offshoring is.

Avail of the full report on the State of Offshoring in Australia today and see why more businesses are adapting offshoring as a business strategy.

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