Australia, Benefits, Outsourcing, Interview

Australia benefiting from outsourcing: research author

The following is a transcript from The World Today. The program is broadcast around Australia at 12:10 pm on ABC Local Radio.

ELEANOR HALL: The term "offshoring", where a company moves part of it's operations overseas to save money and remain competitive, sparks a range of emotions, mostly fear and uncertainty about the future.

While the United States leads the world with sending jobs abroad, Australia is a big part of the trend. The most recent example here was a proposal from Qantas to base 400 flight attendants in London.

But how serious is the risk?

The global research group, Gartner, which advises IT companies around the world, agrees offshoring does cause pain, but has written a report analysing the myths and realities.

The report's author, Bob Hayward, has been telling our Business Editor, Peter Ryan, that far from suffering, Australia is actually benefiting from outsourcing.

BOB HAYWARD: Well you hear all sorts of numbers bandied about, about the number of people that have been affected and how big this is. In actual fact when you start to look at the figures, the number of people affected by offshoring so far in Australia is very, very small. That's the first myth, and we talk in our report about how it is not even projected to get very much bigger moving forward because there are all kinds of constraints on moving jobs offshore.

The second myth that we come across a lot is people say, "well first we lost farming jobs, then we lost manufacturing jobs, now we are talking about losing services jobs but where else is there to go after that?"

And we make the point in this report that there's plenty of other services jobs. So what happens when we lose services jobs as a result of offshoring? Well we gain more services jobs in the economy and in fact all predictions are that Australia faces these labour shortages in most categories of services jobs moving forward.

Even in the US, in this current year of 2004, with all of the rhetoric and hype about offshoring, the number of people working in, for example in call centres, is actually predicted to increase quite significantly despite all of the work being done offshore.

PETER RYAN: And in fact, Australia has in recent years hosted offshoring and benefited from it.

BOB HAYWARD: This is another myth – that sophisticated economies can't compete when it comes to services against low cost countries. In actual fact Australia has a trade surplus in services. So does the United States. In fact the US and Australia export all kinds of services, whether it is education, whether it is training, whether it is financial services, business consulting and also just in the IT area, where we have seen quite a lot of concern about the movement to offshore, we have right here in Sydney groups of people managing the networks of global companies.

We have multi-lingual call centres supporting software products across the region. If you buy an IBM computer in Japan, when you ask for help on your phone, you are talking to Japanese speaking people who live in Brisbane, in Queensland.

There's a whole range of examples like this.

PETER RYAN: And of course we have some very aggressive State governments, South Australia, Victoria, Queensland, New South Wales, all competing with overseas companies to base here in Australia.

Isn't there a certain level of hypocrisy about some of the counter arguments that governments put up?

BOB HAYWARD: There is an awful lot of hypocrisy when you get into talking about offshore. People who complain the loudest about it are also the people who complain the loudest about the US imposing restrictions on lamb or steel for example.

But you are right, all of the States in Australia and the Federal Government, through things like Invest Australia, are very actively going out to the market globally – putting adverts in top business magazines, going to trade conferences, trying to attract investment by global companies into the Australian economy to employ people, and many of those objectors are based on regional strategies. So having regional R and D, regional call centres, regional operations to support operations above and beyond Australia.

ELEANOR HALL: Bob Hayward from the global research group, Gartner, speaking with our Business Editor Peter Ryan.