Ausbuy

Outsourcing; Is It Solving Problems or Creating Them?

July 22nd, 2007

We have almost full employment in Australia so when we hear about a call centre moving overseas we don’t get too excited. We can be reasonably confident that the jobs lost will soon be replaced. Our companies are also pleased to be able to access skills which may be in short supply in Australia. However, we must remember that the real reason for outsourcing is to cut costs, by exploiting the low wages in developing countries. Before we take a relaxed view of outsourcing we should consider the following points:

ºThe threat of cheap foreign labour can be used to force down local rates. Does Australia want to become a low wage economy with a new class of working poor?

Overseas workers make no long term contribution to Australia and pay no taxes in Australia.

ºThe skills that are being outsourced may be necessary steps in the training and developing of Australian talent. When that is the case, taking the easy option of outsourcing is not in Australia’s long term interest, as it will only make the problem worse. A training levy scheme or skilled migration would appear better options.

ºThe economy is creating new jobs, but these jobs may not be in the same area or utilise the same skills. If you close down a centre in say Bathurst, the displaced workers may have to go to Sydney to find new jobs. This makes the problems of regional Australia even worse. If the skills are not complementary, new training is required.

When we consider the above, it is clear that outsourcing is not in Australia’s long tem interests. The pressure placed on executives to cut costs is relentless, and national interests are not given any weight by stock exchange. However, in the case where companies rely on government work and are not facing international competition, it is reasonable to expect them to think of what is good for Australia. The same considerations should apply to companies that are protected by government licences, like the banks.

We would also question the efficiency of many outsourcing arrangements. Companies say they value the goodwill of their customers, but anyone who has tried to query an invoice or have an IT problem solved by someone who doesn’t understand Australian English, would find it hard to believe they care about the public.

The whole quest of outsourcing must be discussed before we drift too far down the road to reverse.

These are Ausbuy Press! 5 comments.(View comments) Tell a friend

5 Comments »

1. I agree with your article on outsourcing. I am prepared to pay more to keep Australians in work. I also object to trying to explain myself to people who don’t understand my accent or to having my details given to direct marketing companies in Bangalore.

   Comment by Michael — August 9, 2007 @ 3:11 pm

2. I agree with you. I am fed up phoning help desks in places like Delhi. I am a polite person but 30 mins spent trying to fix my computer by talking to someone I can’t understand would try the patience of a saint. Only one thing is worse and that is Telstra’s word recognition software.

   Comment by sceptic — August 10, 2007 @ 3:25 pm

3. We used to talk about training and succession planning. Now, if we are lucky, we recruit someone who failed at the same job in another company. Otherwise we outsource the job and many companies state in their mission statement that their greatest resource is their staff. They must think we are stupit

   Comment by wiseguy — August 10, 2007 @ 3:40 pm

4. It is ludicrous that even the Australian Government is sending jobs overseas. The Tax Office is spending approx $200 million on EDS services overseas and we don’t have any details of how much the Commonwealth is spending - but it’s a lot. Has Australia gone MAD? if we wish to be the clever country we should be encouraging these skills at home.

   Comment by Gami — August 10, 2007 @ 3:56 pm

5. Why not get things done as cheaply as possible? If our companies don’t keep their costs down they will pass on the extra costs to the consumer and we will all pay. What you are suggesting is a form of sheltered workshop.

   Comment by ozziejoe — August 13, 2007 @ 12:06 pm

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