Booz Allen Estimates 182,000-364,000 Australian Jobs Could Be Offshored

Study says between 2-4% of current jobs could be offshored — number is lower than many expected.

SYDNEY, May 7, 2004 — Released this week by Booz Allen Hamilton, the report "Outsourcing Globally — Trends and Implications of Offshoring for Australia" examines the potential for offshoring and the advantages and disadvantages of global outsourcing for Australian companies.

The number of jobs that could be offshored is lower than many would have expected for a number of reasons:

73% of Australia's labour force serves domestic service industries, which cannot be offshored (eg retail trade, accommodation, cafes and restaurants, health, and community services and cultural and recreational services).

Outsourcing is largely about scale and the ability to provide services at a more competitive cost. Jobs that are offshored are expected to come from larger companies (ie those employing more than 100 employees). When looking at business growth, 66% of employed persons are in businesses with less than 99 employees.

"Offshoring is not for every firm and certainly not for every business process." said Tim Jackson, managing director for Booz Allen Hamilton in Australia, New Zealand and South East Asia. "As senior managers in Australian companies look at which functions could be offshored, they need to work out whether it makes sense, taking into account a wide range of considerations including cost, quality and reliability."

Among the report's other findings:

The types of jobs currently being offshored include human resources, finance and accounting, financial analysis, customer support/call centres, health care support services, transaction processing and computer.

The job types not only include manual labour or call centre work, but are also targeting middle class university educated professionals.

India is positioned to topple Australia's regional dominance in call centres within a year.

Minimal job loss is expected from sectors such as mining and resources as they have already undergone substantial consolidation during the '90s.

The study reminds us that it has been estimated that Australia potentially benefits from offshoring to the tune of $US400M ($519M) per year.

"The factors that make offshoring such an inviting proposition for Australian companies also make Australia a popular offshoring site." says Jackson. "Australia provides obvious cultural and language similarities to the US. The other benefits are lower economic and political risk as well as better infrastructure compared to some countries with relatively lower labour costs".