In response to our ongoing opinion poll ” why outsourcing shouldn’t be opposed”, Martin Conboy, President, Australian Business Process Outsourcing Association, responded in a gritty Australian fashion. The message he conveyed is, just like you can’t unscramble an egg, there is no point opposing outsourcing, in any justifiable manner! Below is the full text of his spirited argument.
“Although such decisions (outsourcing) may be variously explained in terms of enterprises trying to focus on their core business and to increase efficiency, the conventional thinking is that the prime motive is usually to cut costs. It may seem to be counter-intuitive, however our own research, The Australian BPO report 2012, tells us that reducing costs (79%) is the least important driver influencing a company’s outsourcing policy. When we recently canvassed the opinions of Australia’s major corporations, 71% of respondents told us that global expansion is the most important driver influencing their company’s outsourcing policy followed by access to skilled manpower and ability to scale. Narrow minded short term populist political commentators in the USA will get swept aside by the pragmatism that outsourcing presents.
This is a major turnaround to conventional thinking and puts to rest the furphy about BPO 1.0, lift and shift, and that cost is the major driver for outsourcing. Cost is always going to be important but these days it is taken as a given and ranks well down the list as a commercial driver.
What the research is telling us is that our business community has matured and moved beyond a pure cost approach to outsourcing. As we have argued all along, outsourcing and offshoring are a legitimate part of the business landscape. It also tells us that major Australian corporations are becoming less myopic and looking at the opportunities being presented by an emerging and fast growing Asia. An example that comes to mind is the insurance market in Vietnam. So mark this day down as the shift in thinking moves us along the journey to BPO 2.0 and beyond.
The main reasons for the growth of outsourcing in Australia are:
1. It’s too hard for Australian companies to find suitable staff even if they want to – so what choice do they have if they want their phones answered. I did see a study years ago that said that of any given western population, only 2 % would be interested and suitable to work in a call centre.
2. There is tremendous pressure on companies from shareholders to reposition their capital in their business and change the make-up of their balance sheets and move to an operating expense environment with all of its attendant tax benefits. This means that they will look to outsourcing as a way of releasing capital, by off-balance sheet funding.
3. The surge in the value (spending power) of the Australian dollar against all other countries, has only amplified how inexpensive it is to assess highly skilled, well-educated, motivated and willing labour in Asia and emerging Africa.
4. There are tremendous opportunities for call centre / customer service knowledge transfer / consulting in Asia especially in China.
Interestingly, we are seeing different types of outsourcing opportunities being requested by Australian companies ie KPO, with requests for non-voice back office projects. By and large companies are telling us that what they want is access to skills not readily available in Australia, especially around social media and this allows them to focus on their core competencies and support their specialist higher-level employees in Australia.” –
President, Australian Business Process Outsourcing Association
and Publisher at The Sauce