Australian business espouses merits of outsourcing
Australian business espouses merits of outsourcing
Almost one in six Australian organisations have undertaken an offshore IT outsourcing project or are actively thinking of doing so, a new study carried out for the Australian Information Industry Association (AIIA) has revealed.
The poll of 100 companies and government agencies, conducted by the Australian IT research company ITR, found 12 percent of enterprises have already completed an offshore project while another 5 percent are considering it as an option later this year.
“The phenomenon of offshore outsourcing of IT projects is still in its early stages in Australia,” said AIIA chief executive, Rob Durie. “Our survey found both strong support and passionate resistance to the strategy.”
Of those organisations that expressed a preference for sending work overseas, software development (53 percent) and software design (41 percent) are the most popular projects for outsourcing.
The findings highlight important implications for government policy and the domestic IT industry, according to Durie. Buyers appear loyal to local developers, with 66 percent of all respondents saying they simply preferred an Australian provider.
However, 65 percent of those who have used the offshore option say they did so to receive superior quality of work.
“The survey indicates that our challenge will be to be seen as globally competitive in the eyes of some IT buyers,” said Durie. “With the study finding 82 percent want the government to provide additional tax incentives to encourage the local industry, a case can be mounted for targeted government assistance around the issue of local capability including skills and quality.”
Durie noted that while India is the most popular destination, respondents also cited the US, UK, France, Malaysia and Canada.
“This indicates that if we can develop our capabilities and market them effectively, Australia can be a destination for offshore outsourcing,” he said.
Deciding factors for sending work overseas are cost savings and proven record (both 76 percent) and better quality of work (65 percent).
Durie added: “This survey while indicative in its results, has given us a starting point for understanding the true effect of offshore outsourcing on the Australian IT industry.
“Despite a mountain of publicity, offshore outsourcing is not yet widespread but there is clearly a potential for it to take a substantial foothold, as it has done in the United States and Western Europe.
“Given the results of this survey, AIIA will now conduct more research to better understand the motivation, strategies and outcomes for local companies and government agencies that either embrace or reject the offshore option.
“In this way, we will be able to accurately assess the potential impact and guide industry strategy and government policy on this very important issue, which could affect thousands of Australian jobs and send millions of dollars overseas."
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