By Donal Graham

The business benefits of looking overseas cannot be ignored,
There has been a lot of recent media commentary around the perils of offshoring, focusing on increased offshoring of financial services as a way to trim costs. In The Age on Tuesday it was reported that ever more jobs are heading to New Zealand.

The article was well researched and provided insight into a key driver for offshoring, not only to New Zealand but to other places such as India: the simple fact is that Australian labour costs are increasingly uncompetitive compared with other countries.

As Ken Henry noted in 2006, Australia had much to gain from ‘offshoring’, most obviously through a lowering of costs to business, which ultimately was passed on to consumers. “Opposition to offshoring is based on the same protectionist nostrums that were once used to support the high tariff wall that a generation of Australian policymakers has been busy dismantling,” he said. “It may be dressed in different garb, but it is no more respectable.”

The case for offshoring is clear; ultimately it will benefit our economy and create more highly skilled, high-wage jobs for Australians. If offshoring succeeds, Australia will ultimately prosper as it has continued to do for the past three decades as large numbers of traditional manufacturing jobs went offshore. We can continue to do the same as offshoring gains increasing traction in our services sector. As a high-wage developed nation, Australia cannot compete with wage costs in developing nations. Instead we must compete on other grounds, including the excellent skills of our workforce and innovation.

Well-implemented offshoring programs have already yielded benefits in sectors such as finance, engineering, energy and resources. Indeed, offshoring has been an absolute necessity where our current skills crisis would otherwise curtail growth and expansion.

Examples in the West Australian market include overseas sourcing of engineering skills for significant resources projects and offshore fabrication of oil and gas capital projects.

The opportunities for offshoring are increasing fast. New technologies have made offshoring easier, and enabled an increasingly broad range of services to be provided from other countries, and at lower labour costs compared with domestic costs. Increasing capability from overseas also means that offshoring is offering much more than simple wage arbitrage.

Underneath the offshoring debate is an implication that some people interpret as: “Less educated or less well-trained resources will take over from Australians, which will result in lower quality goods and services.” There are certainly examples of bad offshoring experiences. Offshoring, similar to any other major business transformation, can be problematical in early stages.

But Deloitte’s evidence is that most organisations do achieve significant cost, service and innovation improvements.
Offshoring’s dynamics are being driven by several factors. Firstly, the emergence of giant offshore vendors has emphasised the importance of re-engineering processes beyond what in-sourced operations often are able to achieve.

Secondly, the industrialisation of processes is taking place across many industries. For example, recent research shows 91 per cent of financial services companies are simplifying processes, and 74 per cent have centralised operations.

Finally, major captive, or “in-house” offshore, operations of some global organisations now match the scale of large third-party outsourcers. All these factors are providing service delivery capabilities that exceed those previously delivered onshore. I do not suggest that offshoring is a simple panacea that should be adopted by any organisation.

But in my view, Australian businesses would be amiss not to be considering the opportunities, and of course, also the risks, presented by offshoring.

The quickening pace of change and sophistication of offshoring means it is imperative for boards to have clarity on long-term plans. It can take several years to successfully prepare and execute off shoring.
The public, assisted by the more hysterical tabloid media reporting, sees offshoring as a threat, stealing jobs from Australians.

Yet the real problem in Australia, now and in coming years, is that there will not be a lack of jobs — it will be a lack of workers and a lack of the right skills.

Recent pronouncements on likely substantial future jobs creation from companies such as Wesfarmers and BHP indicate the scale of the challenge.

The fact is clear that Australian businesses should continue to assess what work can be offshored to maintain and enhance their global competitiveness.

Donal Graham is a partner in Deloitte’s business transformation consulting practice.
© 2012 Copyright John Fairfax Holdings Limited. www.theage.com.au

By Shaun Drummond

Just as more Australia companies are considering outsourcing in response to rising costs and flat revenue, a global consulting firm has predicted that offshoring will decline from 2014 and cease by the end of the next decade.

But in the meantime, the Hackett Group says another 750,000 jobs in finance, procurement, IT and HR roles in the US and Europe will go offshore to low-cost centres such as India, Malaysia and the Philippines.
(See previous coverage in Offshore swell, which appeared in Capital magazine on April 18.)

The number of “business services” jobs in the US and Europe will have nearly halved from 8.2 million in 2002 to 4.5 million by 2016. In that period, finance roles declined by 42 per cent, second to IT roles on 54 per cent and outstripping jobs creation of 20 per cent due to economic growth across all business services jobs.
The number of finance jobs lost in the US and Europe due to offshoring peaked in 2009 after the GFC at around 233,000, and losses have been steady at around 160,000-170,000 a year since then. But these numbers are forecast to halve next year and decline steadily from then on.

“The number of business services jobs being offshored is rapidly declining because the majority of these jobs have been moved already,” the Hackett Group report says. In addition, it says productivity improvements due to automation are “taking a large bite out of the number of offshorable jobs”.

There may be more roles that Australian firms can outsource, as they have been slower to than their US and European counterparts to take up the practice. But this is in large part due to a lack of revenue and cost pressures, as well as the internal economics not stacking up due to the smaller size of companies and finance teams compared with larger companies overseas.

With cost pressures rising, Martin Fahy, Asia-Pacific practice leader at the Hackett Group, said “increasingly more sophisticated roles in the areas of business analytics, general ledger and intercompany accounting are being offshored and outsourced as firms seek to standardise high knowledge tasks and drive greater consistency of analysis across markets”.

But in the Australian context this has mostly been confined to larger companies. Martin Pardoe, a leadership adviser at Executive Onboarding, has led several shared service moves in Australia. For businesses below $1 billion in turnover, finance teams would probably constitute no more than about 30 to 40 people. “Smaller organisations would rarely go offshore – it is just too hard,” he says.

Even some multinationals still maintain local services centres. BP Australia was one of the first to set up a shared services centre in Australia more than a decade ago; in its case, a wholly owned subsidiary called Elite Customer Solutions. It still has this centre, which now has 500 employees, even though BP has fully outsourced centres in other locations around the globe.

The local centre started with customer services and scheduling and logistics team. It now has about 16 separate functions. As well as telesales, market and communications, it now has accounts receivable and payable, general ledger and more sophisticated finance functions like the preparation of statutory accounts and performance reporting.

BP Australia’s CFO, Brooke Miller, was general manager of Elite until last year.

She says there are financial benefits in this “captive business service centre”, but the chief benefit is the centralisation of expertise.

“A separate business service centre offers a very real opportunity to focus on both process improvement and driving expertise,” she says.

“Bringing together the people with these skill sets – who may once have been scattered throughout your business, engenders faster identification and adoption of process improvement. There are also benefits for recruitment, training, career paths can all be harnessed to ensure you are building a very specific set of skills and capability in the processes required by your business.”

BP has captive and outsourced service centres around the world in Kuala Lumpur, Cape Town, Chicago and Budapest. Miller won’t comment on whether the captive model here will change, except to say that the “model has driven real value for BP. The challenge – for both parties – is to use this strong foundation to reinforce the culture of continuous improvement.”

Miller says, “the boundaries of what people understand to be a business service centre are expanding rapidly”. “The days of a service centre reporting on ‘highly transactional’ activity only should be well over by now – the market is growing ever more sophisticated.”

Fahy expects the roles that will stay in-house will be focused on “highly contextualised business partnering, where the task is characterised by a high level of tacit knowledge”. Typically this will involve making decisions that require a lot of local knowledge, like whether you are going to use a certain business model.
“Counters in shops or vending machines”, for example, he says.

The finance teams left in companies in developed countries are likely to be fairly small and “deeply embedded with the business supporting decisions around [things like] capital allocation, brand and marketing spend and value chain optimisation”, he adds.

“While outsource providers have become more sophisticated and will often to do more complex roles, my experience is that these roles are more often kept in-house,” Pardoe says. “If you have got a business running in Australia, in order to budget and forecast you need to be sitting down with the business.”

Australia also has unique barriers to sending even some transaction work offshore. “Australia has one of the most complex tax regimes,” he adds. “It is harder for [an offshore provider] in another country to perform the payroll tasks for an Australian company. The implications of getting payroll wrong are so absolutely enormous.”

The cost reductions and quality improvements have to be high to overcome the potential for damage to reputation and the risk of losing staff that you need to retain is high.

“Quite often some people leave because they have an expectation they may be let go,” Pardoe says. “The challenge is recruiters know what is happening, so they will target people in that period.”

As well as the cost of transfer to data to new systems, he says you need to retain people with the knowledge of those systems in the transition period.

“Often the good ones, you will sit down with them one-on-one and give them particular responsibility during the transition, and you can [give] retention bonuses to keep them.”

SHAUN DRUMMOND
Writes for The Australian Financial Review

Source: Australian Financial Review

By Shaun Drummond

STEPS TO OUTSOURCE

• Strategy
• What are you trying to achieve?
• Does outsourcing assist that?
• What is the migration plan and what are the implementation considerations?
• How will it impact on internal and external customers?
• Options
• Which option suits you? What’s in, what’s out?
• Is the business case clearly understood?
• When can you expect a return on investment?
• How will benefits/savings be shared between you and the outsourcer?
• What are your criteria for short-listing outsourcers?
• Is the contract team sufficiently staffed and skilled?
• Transition
• Who manages the transition?
• How do you ensure all requirements are met, and that there are no gaps?
• What’s the communication plan?
• Sourcing management
• What service levels are appropriate?
• How will an outsourcer be held accountable for improvements?
• How will you set pricing?
• How do you maintain quality?

“It is almost as if the dam has burst. Philosophically, it is not where you do things, it is how and what you do.”

So says a company director and former chief financial officer, who, like many, is unwilling to comment openly on the controversial issue of outsourcing finance jobs offshore.

While shared service centres in Australia are common, local companies have typically held on to more back-office roles than many Western counterparts. Subdued competition by oligopolistic markets, and an ever-growing economy, has led to local companies outsourcing less, says Martin Fahy, Asia-Pacific leader at The Hackett Group, a strategic advisory firm. But with a deteriorating growth environment, outsourcing – including sending work offshore – is looking more compelling. On average, a full-time finance employee costs $130,000 a year here, compared with, say, $30,000 in Asia, Fahy says.

Transactional finance roles were among the first white-collar jobs to be outsourced, especially in banks, where large numbers could be contracted out for a good price.

PwC’s head of sourcing, Martin Green, says the “second wave” of outsourcing is now here, and includes “middle office” roles such as procurement, human resources, logistics and distribution, elements of sales and marketing, and the production of standard management reporting. Some large business process outsource (BPO) vendors – major providers include IBM, Accenture, Genpact, WNS, Infosys and Tata – are also offering to take over more sophisticated finance roles.

Of the areas commonly under the finance department’s control, the least outsourced areas globally are “knowledge-centric”, or higher skilled roles, in procurement, finance and external reporting, according to The Hackett Group’s research. But the adviser expects outsourcing of these areas to low-cost countries to double in some cases in around three years’ time.

Capital spoke to two Australian companies – Kimberly-Clark, which is completing a large outsourcing program in Malaysia, and ASX Ltd – which has pulled back on some outsourcing, to examine the drivers of decisions in this area.

One lesson is that the smaller the number of roles to be outsourced, the harder it is to justify on cost alone. Not only are the savings less, due to fewer roles, but also if the roles are to be sent to an external provider, the contractual terms that can be negotiated are less appealing. “Low complexity activities around accounts payable, accounts receivable and fixed assets – it is a pretty easy case to outsource that on paper,” says Dan Egbert, a consultant at Corporate Executive Board. “It gets harder to do when you move to aggregate general ledger, reporting and analysis, and [then harder still for] forecasting and planning.”

For ASX, those scale barriers have resulted in much of its finance roles staying in-house. “[For] traditional back-office roles like accounts payable, accounts receivable, payroll and general ledger processing, given ASX’s size it is not cost-effective to transfer these to a third-party supplier,” says ASX CFO Ramy Aziz. “Also, ASX can continue to improve efficiencies and service levels more easily with these functions located in-house.”

ASX did outsource some roles for the support and maintenance of IT systems several years ago, but some of these have been brought back inside the company “to reduce ongoing costs and improve support, particularly in terms of speed of responsiveness”, Aziz says.

Other IT roles are also being brought in-house, such as the development and support of the derivatives trading platform, tasks previously done by a US firm. After the supplier upgraded the system, about five staff were recruited to support the application in-house last year.

At Kimberly-Clark, the outsourcing story is different. It is a global firm with numerous finance teams in different countries, but the maker of Huggies nappies and Kleenex tissues is now consolidating some of the simpler finance roles in a regional shared services centre in Malaysia.

It is moving about 100 finance jobs from its offices around the region, including Australia, to what is known as a “captive” in the outsourcing trade: the centre is owned by the company. The company considered cheaper alternatives, including “off-the-shelf” outsourcing to a BPO provider, but chose the captive option as the primary goal was ensuring quality of service to allow the business to grow faster in Asia.

Kimberly-Clark’s south Asia finance director, Jason Monaco, whose responsibilities include Australia, says around 75 per cent of the finance jobs will stay in each country. Those going to Malaysia are accounts payable, corporate reporting, fixed assets and parts of accounts receivable.

It has taken about 18 months since planning began and the first roles moved across in May last year, with about a further 12 months to go to completion.

The ones that stay in each country include “business facing roles” such as analysts and financial planners, and those that are compliance-related. The average annual salary for an accounts payable clerk in Malaysia is about $11,000 a year, according to The Hackett Group, but Monaco says cost reduction was not the primary reason for the move, given the workers they are replacing are coming from both high and low cost countries.

“To accommodate that growth across the region we needed to ensure the finance function has the right infrastructure,” he says.

“Rather than have 10 to 15 different country organisations that do largely the same thing off of the same systems, we wanted a structure that had a better ability to leverage our scale and enable the back-office process efficiency that goes with a much bigger business across the Asia-Pacific.”

Monaco believes there are also benefits in co-locating staff in the same types of roles in one place.

“You can better enable process entralized ion,” he says. “Rather than create multiple training and development programs, [for instance], you can have a single program managed in the same way.”

One of the biggest challenges in the move is dealing with job losses and ensuring staff that stay aren’t resentful and can work with the new team.

“It is never fun letting go of people and that happened in a number of countries,” Monaco says.

In other outsourcing moves, he has seen the remaining finance team and the people that have taken over their colleagues’ jobs “having a hard time working together”.

Kimberly-Clark has dealt with the risk by being honest with staff about what they were doing and the reasons for it, he says, and including them in devising the new centre. “Having more input was better for everybody because we got closer to the day-to-day activity and we probably would have designed it less effectively if those that were doing the work weren’t involved.”

Mohit Sharma, the head of Mindfields, a consultant on BPO, says providers are keen on acquiring whole back offices, including the more highly skilled roles that have stayed in-house. These workers are valuable to outsourcing companies as they seek to provide such expertise to clients. If they do buy people with these skills here, those that require closer contact with clients are likely to stay in Australia, he says, while the less skilled work they also acquire goes to cheaper labour centres overseas. Sharma is advising on four such deals in Australia, involving an insurance company, a wealth management firm, a bank and private equity fund.[Updating this by 27 March – just need to check if deals mentioned have gone ahead]

“What [the outsource companies] are doing now that’s newer is rolling more of the analytics and the reporting activity into those centres,” says the Corporate Executive Board’s Egbert. Some are also offering to take over more complex tasks like forecasting and transaction analysis roles.

PwC’s Green says BPO vendors are now prepared to do deals for smaller numbers. “Historically the business case hasn’t been there for a lot of smaller organisations but now there are smaller business process outsourcing deals being made where there’s as little as 25 to 50 staff,” he says.

While BPO providers are offering to take on more complex roles, both Egbert and Green say some roles are likely to remain in-house. Green says it includes those requiring more “judgment” and which need closer contact with management, including planning and budgeting, entrali of return on capital, pricing and investment, capital budgeting and customer product profitability. “For higher order roles, [outsourcing] is not as much about cost as it is about accessing [people] that are better than what you have actually got,” he says.

Monaco says that in the future, more sophisticated finance roles at Kimberly-Clark could be moved into “a entralized format”, but “we’re not there yet”. He would want to ensure the company could maintain the quality of what is being delivered and that “I continue to drive the right flow of talent through my business over time”, he says.

This article appears in the first edition of Financial Review Capital magazine included with the newspaper on Wednesday 18 April 2012.

The Australian Financial Review

Shaun writes about CFO issues from AFR Sydney newsroom.

By Mia E. Abellana

AS Cebu aims to sustain its ranking in the top 10 of Tholons’ list of emerged cities for outsourcing, its promoters are working to meet the demand for talent from companies seeking to outsource operations in Cebu.

Cebu Investment Promotions Center (CIPC) managing director Joel Mari Yu said that Tholons recommends that Cebu develop its talent supply pipeline to sustain the growth of the IT-BPO sector.

The average number of graduates in Cebu for the last three years was 22,757. Accounting graduates make up 2.4 percent, while business graduates make up 19.4 percent. Medical course graduates account for 12.9 percent, IT graduates for 16.9 percent and engineering for 11.7 percent.

Other graduates make up 36.6 percent, which Yu said can be a good source for BPO jobs handling voice operations.

College graduates
For the last three years, the average number of college graduates for the three regions in the Visayas was 79,256.
Yu noted that Cebu City’s outsourcing revenues reached an estimated $1.25 billion in 2011, with 126 locators and 65,000 employees in the sector alone.

From just four companies doing software development and CAD in 2000, more than 100 companies have been operating in Cebu as of 2011 doing business, knowledge process and information technology outsourcing, posting an average growth rate of 240 percent.

And from just 1,200 employees in 2000, the sector now employs 65,000, growing at an average of 484 percent. Currently, BPO holds 72 percent of the industry’s employees while ITO and KPO share 14.5 and 13.5 percent, respectively.

The top five biggest call centers in Cebu, which were ranked by CIPC according to the number of employees, employ 17,700. Convergys, which landed the top spot, reportedly wants to employ 8,000 by the end of this year, Yu said.

Aside from making sure there is a steady stream of qualified employees, Tholons also recommended that Cebu maximize its BPO segment and its capabilities and develop KPO (knowledge process outsourcing) segment and capabilities.

KPO refers to services such as research and development, financial and insurance research, paralegal content, medical content, biotechnology and pharmaceuticals.

Yu showed that Cebu is home to several outsourcing companies offering KPO services and they are not just American companies. The list of foreign direct investments in non-voice IT operations number 38. Aside from American companies, the list also includes those based in Japan, Australia, Singapore, Canada, Great Britain, India and Germany.

Tasks
These companies handle research and development, engineering design, content development, animation and graphics, data conversion, software development, medical transcription, legal and accounting, credit checks, Internet shopping, hardware support, web development, back office support and finance.

Since most of the voice operations are from American companies, Yu admitted this segment of the IT-BPO sector could suffer the most if the United States pushes through with moves to curtail outsourcing.

But with such companies in KPO, Yu said it would be best to push hard in the non-voice field.

Published in the Sun.Star Cebu newspaper on April 09, 2012.

By Mark Atterby – Senior Staff Writer

The Australian Government has raised concerns of offshore dissemination of Australian citizens’ private data in discussions with telecommunications industry.

Should the government legislate on whether customer data can be off-shored or not?
What would that mean for the BPO and Outsourcing Industries?

A recent report from CommsDay.com highlighted how the government has raised some proposals to enhance the security of Australia’s telecom infrastructure. A specific area of concern, according to the CommsDay report, is the extensive use of offshoring in support of the customer service functions of Australian telcos.

Most Australian telecommunication carriers now make use of outsourcing in support of customer service functions, from places including India, Sri Lanka, and the Philippines. The government is proposing that it may require carriers to keep all their customer data onshore or at the very least, require carriers to report full details of all their outsourcing and offshoring activities.

The threat of some Indian or Sri Lankan call centre agent selling peoples personal details to a Ukrainian hacker is factual. Laurence Barlow, from NRG Global Solutions, an Australian provider of outsourcing solutions, comments, “We do fraud work for some of the banks and have visibility of the issue… it’s very real. For the time being we have elected to keep our client data on Australian shores, albeit our call centres are offshore”.

This raises the questions, does that mean we should try and keep all data onshore? And should the government be involved in legislating on the matter? If data has to be kept onshore what impact will it have on existing outsourcing initiatives?

This debate first emerged some years ago, but achieved particular focus around the first evolution of cloud computing and isn’t likely to go away for quite some time.

Chris Luxford, President of Aegis Services Australia, believes that governments should be encouraging debates concerning the security of customer data and privacy: digital fraud is a multi-billion dollar global industry which needs to be tackled, however he believes that the terms used for the debate need to be clarified “Does the situation where a call centre agent in India accessing customer details via a secure VPN with secure login credentials from a database server in Australia, classify as offshoring customer data. Or is it when a database is physically housed in a different country. When we are proposing laws against offshoring data, what are we actually proposing? Is it the physical replication of data offshore or is it the accessing of data offshore?”

Or is it only when an Australian organisation hands over its customer database to a third party offshore provider.

Is the issue one of location or one of security? As Luxford points out, the call centre agent accessing customer details in the situation above needs to write down the details before they could send them to someone else. Alternatively, an overseas hacker could access thousands of records from a security failure in an organisation’s firewall to a database located in Australia.

We can assume Australian’s are comfortable providing confidential financial information to offshore providers, the national trend towards online shopping from around the globe indicates a willingness to trust offshore payment gateways and the proliferation of social media sites like Facebook is testimony to the fact that people will put a lot more than their personal credit card information online.

Australian consumers are targets for overseas scammers and fraudsters. Recently the level of phone scams in Australia has overtaken online scams. The Australian Competition and Consumer Commission released figures last year that showed that 52 per cent of people who have reported scams in 2011 were in fact contacted by telephone.

Most of these scams are generated from overseas locations and outside of Australian jurisdiction, which means the Australian government, can’t prosecute the organisations or the people involved unless they have some connection with an Australian organisation. But these scammers use random generated numbers targeting particular regions with information gleaned from newspapers and the Internet.

The restriction of having data onshore is unlikely to affect the activities of these fraudsters. But there again, these are the last people in the world you want receiving a list of let’s say, a bank’s database of customer details. Their use of it would be unscrupulous and with those details their scam is likely to appear more convincing.

Most BPO and outsourcing providers work closely with their clients to ensure very high levels of security and welcome ongoing debate on how it can be improved. Luxford comments, “You can’t be a successful outsourcer without taking security extremely seriously. Does the industry need to do more? Yes. Security is a journey not a destination. We need to continuously look at how we can improve security. We need to be continuously on the front foot to reduce the fear and improve the confidence of the marketplace”.

Most Australian organisations invest considerable resources in ensuring the security of their data and most have robust practices and standards in place to counter fraud. They can face significant fines, damage to reputation and loss of business if they fail to manage data about their customers adequately and breach privacy regulations.

“Most organisations today are extremely vigilant with customer data and are not allowing other organisations, particularly outsourcers, access to customers data via the providers systems. In many cases I have seen the client demand that the outsourcer not only use their applications, but also use their PCs and hardware”.

In offshoring work, it is important to realise that there are differences in culture and business practices. According to Laurence Barlow, president of NRG Global Solutions, “This doesn’t mean that things are done better or worse in other countries. It’s just different, culturally and how that translates into business practice. The challenge In terms of offshoring work to Asia or anywhere is to ensure consistency.”

Barlow advises that when establishing an offshore operation, to ensure consistency and that security and compliance issues are addressed, is to have Australian management heavily involved in that operation. So whether an Australian Telco is setting up a captive operation or relying on the services of a third party provider, it is important to have Australian management teams working with local teams to ensure consistency, compliance and quality.

Debates and discussion about the security of customer data and privacy, the outsourcing industry greatly supports any open and reasonable discussion. Luxford comments, “ I believe in any legislation or regulatory regime that builds trust and faith for consumers to engage in the digital economy and enjoy the associated benefits. But we must be careful not to over regulate and slow down the growth and development of this economy or the potential for companies to provide goods and services.”

After twenty two years of customer service experience a resume spanning the Financial Services and IT sectors and including companies such as AMP , Macquarie Investment and most recently nine years at Microsoft Sarah Staveley founded Culture Class ITO offer specialist services in the areas of quality, cultural and language alignment for offshore contact centres that service Australian and New Zealand customers.

Launched in February, Culture Class has designed ‘ANZ Rapport’, a five-day face-to-face course for adult learners working with Australasian customers from offshore locations. The course provides a solid foundation for agents, managers and trainers to understand Australian and New Zealand attitudes and approaches and how these can best be catered for in the context of both verbal and written service delivery.

Sarah explains, “Product and standard soft skill training only represent a part of the training puzzle for offshore contact centres working in the ANZ market. And a good working knowledge of English is not enough to ensure excellence and satisfied customers because Australian and New Zealand English present distinct varieties of the English language.”

With so much negative press lately in the Australian and New Zealand media around offshore contact centre training techniques, ‘ANZ Rapport’ offers the real deal – an approach that avoids the well worn cultural clichés of the ‘gidday mates’, dingoes and meat pies, instead using precious training time to develop a mature overview of Australia and New Zealand, in terms of modern day culture and language and the flow on implications for customer service.

More information: http://www.cultureclass.com.au

By Iain Thomson

The offshoring of IT work to developing nations has been very popular with accountants looking to cut costs, but the limits are being reached of what jobs can conceivably be sent overseas.

Research by The Hackett Group estimates that of the 8.2 million business service jobs available in the US and Europe in 2002, only around 4.5 million will remain by 2016, with the rest moving to India, China, and other global outsourcing centers.

But the limit will then have been reached, with barely a million left that could realistically be moved offshore, and companies that would do so would face “a PR nightmare” and risk losing staff who don’t trust their employers. This would mean an end to the cost savings for Western businesses, and would leave those hosting countries in a bind, since they will have to find new targets if they are to maintain current growth rates.

“In the US and Europe, offshoring of business had a significant negative impact on the jobs outlook for nearly a decade,” said The Hackett Group chief research officer Michel Janssen. “That trend is going to continue to hit us hard in the short-term. But after the offshoring spike driven by the Great Recession in 2009, the well is clearly beginning to dry up. A decade from now the landscape will have fundamentally changed, and the flow of business services jobs to India and other low-cost countries will have ceased.”

The IT profession has been hardest hit by the offshoring of service jobs, and will see a 54 per cent drop in employment between 2002 and 2016. Finance employment will fall 42 per cent, procurement jobs by 36 per cent, and human resource jobs will shrink by nearly a third as part of the drive to lower costs through offshoring and automation.

India remains the top spot for outsourcing, taking about 40 per cent of jobs, thanks in part to having an educated and largely English-speaking population. Eastern Europe has around 20 per cent of the market, but faces rising costs, and China is the destination for around 13 per cent of service jobs.®

Source:The Register

Experts at Horizon Business Solutions are recommending that companies look at outsourcing payroll functions in order to free up staff time and allow more focus on core competencies.

Experts Advise Outsourcing Payroll Allows Focus on Business 
Experts are advising the outsourcing of business processing to increase employee focus and flexibility. According to business management expert Dan Robins with Horizon Business Solutions, “The advantages of outsourcing far outweigh any potential problems.”

Business process outsourcing (BPO) began in the manufacturing business with corporations such as Coca Cola outsourcing segments of supply chain management. As small and medium-sized companies began to see the advantages of outsourcing BPO grew. Today BPO involves contracting with third party service providers to management all kinds of operations, processes and functions. Outsourcing payroll has proved to be a major resource and capital saver for companies and organizations. 
The outsourcing of payroll is known as the outsourcing of a back office function and often includes the outsourcing of all accounting and finance processes. When a U.S. company outsources payroll to another country this is called offshore outsourcing. This practice has been the cause of some hot political and economic debates. The cure for this, obviously, is conducting business with a U.S. business management firm, such as Horizon Business Solutions.

“Companies need to focus energy and staff time on their core competencies,” says Dan Robins. “Key employees are freed from the burden of administrative processes and they can focus on doing what they do best, not tied up with payroll.” 
Robins says BPO allows companies to increase their flexibility. Because most BPO vendors offer products on a fee-for-service basis companies can transform fixed costs into variable ones. A variable cost structure helps a company respond well to changes in capacity. Companies also don’t have to invest in assets. This creates more flexibility, says Robins.

Robins goes on to say, “You can reduce your response time to change.” The business management firm specializes in the business services that they are contracted to provide. They stay up-to-date on technology, news and trends in their business and keep their customers’ processes current and efficient.

But potentially most important, says Robins, is a company’s opportunity to focus on their own core competencies without being weighed down by the burden of bureaucratic restraints. Key staff members are free from completing non-core process. They invest more time and energy into their core business processes. A focus on core competencies can give a company the competitive edge that they need to win in today’s tough market place.

BPO also increases the speed of business processes like payroll. The effective use of partners in business increases speed. With experts focused on processes that they specialize in, speed and accuracy increase.

Maintaining entrepreneurial agility is key to a company maintaining its place in the market. Outsources payroll allows a firm to retain their flexibility and focus on creating new business. It helps companies avoid a more bureaucratic mode of operation. Staff can focus on creativity and using expertise. This could actually allow a company to grow faster, as it will be less constrained. Dan Robins says, “Just the equipment savings is huge. Equipment can take years to amortize and may be out-of-date quickly.”

While outsourcing is a major capital saver, Robins acknowledges that no business enterprise is completely without risks. That’s why he says companies should be careful in selecting the outsourcing firm that they use. Robins says, “Horizon Business Solutions offers transparency. There are no unforeseen or hidden charges. Companies should be wary of vendors that don’t offer a clear menu of services that is complete with pricing.” Robins also says outsourcing companies must be able to demonstrate that they can meet services levels and change as the customer’s needs change.

According to the experts at Horizon Business Solutions the few risks of outsourcing payroll are far fewer than the benefits. Freeing staff time to focus on growing business leads and using expert knowledge can and has provided the edge that businesses need to become a leader in their field.

Source: Virtual Strategy