Aussie companies outsource at home

By Kate Southam

Global expansion is a bigger driver for Australian companies opting to outsource than cost efficiencies, according to a new report. And areas set to see significant growth include HR and marketing functions.

While “ outsourcing” usually conjures up images of call centres in exotic places and cost cutting, the new research tells a more complex story. The three largest areas of BPO are print and document management (PDM); HR functions and finance and accounting.

Another interesting finding was that most companies would prefer to keep the work in Australia.  

The Business Process Outsourcing Report 2012 claims to be the first in depth look at what is happening in BPO from the buyer’s point of view. The research was sponsored by IBM and conducted by media company, The Sauce.

A total of 216 companies took part in the research ranging in size from 500 employees up. A third of respondents employ between 1,000 and 3,000 people.  

Key findings include identifying the hot areas for expansion over the next 12 to 24 months. These are:
29 percent of companies plan to outsource PDM.
Outsourcing HR functions is set to grow by 23 per cent.
Outsourcing of marketing functions such as customer management is projected to increase by 21 per cent.
The use of outsourcing for online marketing is expected to nearly triple from 6 per cent to 17 per cent largely driven by social media.
80 percent of banking, financial services and insurance sector respondents use  BPO as a way to expand globally.
83 per cent of manufacturing respondents and 73 per cent of retail sector organizations see outsourcing as a way to cope with the carbon tax.

Overall, 44 per cent of companies outsource at least one business process but that figure is 59 per cent for companies with 500 to 1000 employees.  

Of those surveyed, 96 per cent believe using a BPO provider overseas, known as off shoring, is a risk and 83 per cent would like to outsource within Australia.

The Sauce editor Martin Conboy says on shoring is increasingly difficult because the right skills cannot be found – highly skilled IT professionals.

“Broadly speaking BPO can be divided into three areas and the smallest of these is voice outsourcing – telemarketing, customer support and so on. Help desk is voice BPO but it a ‘cousin’ of the call centre rather than part of that sector.

“Then there is finance and accounting and HR back office support functions but ITO is by far the biggest.

“ITO workers are the developers, web designers, code cutters, data centres specialists.

“India is the dominant provider with a plentiful supply of very, very bright people able to deliver a service for far less they anyone could here.”

Mr Conboy told that even at the call centre and back office level Australia was not developing enough people to meet demand and couldn’t at the right cost.

While university graduates were happy to perform back office roles and other business outsourcing processes in places like the Philippines that was not the case here.  Even students and school leavers in Australia prefer retail and hospitality to call centre work, he says.

“People say ‘keep the work in Australia’ but employers can’t find the people with the right skill sets.

“There are over 200 outsourcing shops in Australia but it is not a growing sector as Asia is too competitive. India is not without its risks. There are geopolitical risks and the infrastructure is creaky and the telephone system antiquated but this is changing.”

Mr Conboy says Australia would be better placed putting its energy into upskilling workers with computer skills and encouraging school and university students into mathematics and the sciences.

“The amount of data in the world has doubled in the last two years so the rock stars of the future workforce are data analysts,” Mr Conboys says.

“These are people who can create software that will quickly make sense of big data and people who can design algorithms around complex human behaviour.”

“The world has already shifted so the discussion needs to as well. We should be asking what we could do in schools and universities to develop the right skills because if we don’t then we have no other choice to look overseas to India.”

IBM is a BPO provider. Mr Conboy is also the president of the Australian BPO Association and a director in outsourcing provider FooBoo., April 2012

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