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Offshoring is no longer a dirty word, and here’s why…

For a long time offshoring was spoken about in hushed tones, but in 2022 with a skills shortage that’s the worst I’ve ever seen, I believe it’s time we finally came clean.



We’ve had skills shortages every 10 years for the last couple of decades, but this time round, in Australia, we are feeling a shortage of people as well as skills.


And that’s exactly where offshoring can help: it provides people to fill the gaps.


Right now, we are in the midst of a perfect skills shortage storm: we have an ageing population, our immigration is almost at a standstill, and people changing careers and industries during the pandemic, retention issues in critical roles (nursing, teaching) have all exacerbated the pain.


We’ve also had a real push towards university education over and above a TAFE or technical qualification. Perceptions of higher wages and higher status jobs with a uni degree have driven a drying up of the feeders into TAFE, traineeships and apprenticeships. But anyone who works in the mining industry will tell you – the salaries being paid to trades people are through the roof, with no sign of slowing down any time soon.


We have a dire supply chain issue – our supply of technically skilled people is up the proverbial creek.


If your only solution to the labour shortages is to post an ad and pray that the unicorn you seek will apply, then you really will be feeling the pinch and will see impacts to your revenue.


If your other solution is to utilise labour hire firms, then I hate to tell you but the same will be true but this time not only will your revenue be impacted, but your bottom line will also take a toll. Not to mention the fact that the labour hire firms are fishing in the same pond as you and are also feeling the brunt of the shortages.


The nature of workplaces has changed for the majority of office based roles.


We’ve gone from a "Hugo Boss power lunch" culture to a "banh mi in your Lululemon activewear at your local deli" culture in a very quick time period.

And there’s no sign of that changing based on the feedback from the candidate marketplace.


As a sidenote, if you’re not offering remote and flexible work environments, you won’t be seen as an attractive employer so you will be doing a lot more praying than your competition! Especially if you’ve seen the Seek data on the top search term for FY22 Q2.


So what’s that got to do with offshoring?

If there’s anything positive out of the pandemic, it’s that it has shown us that remote working, works.


It means there is a real opportunity to look at the nature of your workforce, your workplace and the work your teams are doing.


Offshoring should be seen as one answer to the supply issue we are facing. It’s not the only answer and needs to be considered as part of an overall resourcing strategy, but it shouldn’t be discounted when you’re trying to find solutions to your people gaps.


In Australia, more than 30,000 businesses have offshored work to different countries. The industry is worth $35billion and is growing at 3.3% which shows there is a huge appetite for it in what has traditionally been a finance, telecoms, banking and other service industry space.


There are no statistics on how many of those experiences have been examples of sh!tshoring, but with a cycle of 2-5 years before the work is onshored or insourced you can guarantee that a large proportion of the time it’s because of a poor experience (although, in 80% of the cases, the reason given is a “managerial decision”… )


Understanding the impacts to your customers and employees is obviously critical before you decide to move any work offshore or to an outsourced provider. Transitioning work to a different person or company needs to be well thought out and well managed.


If your first thought is this can be done anywhere, by anyone then you might as well set fire to your cash now.

Underestimating the capability and experience of your current team is a sign of corporate arrogance that is a sure fire way to ensure a sh!tshoring scenario.


The current Qantas baggage handling situation is one such example. The impact to customers, because the experience and capability of the team was completely underestimated, means that the ripples of those impacts will be felt for some time to come.


This is not a new space for Qantas. They offshored their maintenance division a few years ago to Malaysia, but you can absolutely guarantee that their risk management conversations were far more detailed, took longer and were definitely more considered than the decision to outsource the baggage handling work.


This is a perfect example of corporate arrogance and limited exposure of senior leaders to coal-face roles. This also is a side-effect of encouraging people towards university degrees rather than the promotion pathways of the past where leaders came from those very coalface roles so they had a really clear understanding of the requirements of the work when they were making their decision on how and where it would be undertaken.


Offshoring is one solution to the current skills crisis – but only if it’s done well. If it's not, the reputational damage is difficult to quantify, but will be “felt” on the balance sheet for a number of years to come.


Remember – your employer brand is wedded to your consumer brand. Impact one, you will impact the other.


My handbook “Offshoring or Not-Sure-ing” gives you practical tools and tips on how to ensure you mitigate risk as much as possible when you’re reviewing the feasibility of outsourcing or offshoring.


We work in a global world where distributed teams are connected by technology and leadership. Smart businesses will use this to their advantage.





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