The concept and practice of offshore outsourcing was first witnessed in the 1970s and 1980s. This was in response to the lessening of trade barriers and vast improvements made in the transport & logistics industries, which combined to open up roles in the manufacturing industry to competition overseas. Then, coinciding with the rapid advancements made in the communication and information technology industry, service based jobs were the next in line to be exposed and made available to the offshore market.In some economies, this exposure and sudden loss of local jobs to an international market was cause for concern, particularly by economies unable to withstand the rapid rate of change. Some economies felt the negative impacts immediately with the results typically involving a corresponding decrease in GDP, high unemployment and political instability. However, it wasn’t doom and gloom for all economies. Some, such as Australia, swiftly adapted and responded in a way that took advantage of the situation through quick innovation and building new business, which in turn grew the local workforce.
Historically and perhaps surprisingly, cost reduction was not the major force behind the appearance and sudden growth of the offshore outsourcing industry. Instead, it is largely attributed to the corporate desire for expansion, accessibility of specific skill sets and knowledge and the increased ability to scale in response to changing market demand. The reasons behind individuals or companies taking their business offshore always varies, but most include drivers such as reduced costs, tax savings, asset protection, risk mitigation, privacy maintenance and limited bureaucratic interference.
Across the world, the rate and number of businesses outsourcing their products and/or processes is growing fast. In Australia, major companies have taken advantage of the opportunity for many years and much to their benefit. It is only in recent years that the practice has become widely accepted and exploited by smaller to medium-sized companies. This shift in attitude by the smaller to medium-sized companies was driven mainly by increased competition (local and overseas), rapidly growing local salaries as well as the variety and elasticity of business models being made available by offshore service providers.
Measuring the number of jobs that have been taken offshore and the direct impact this has on domestic economies is a a complex and difficult task. In part, this is due to a lack of official statistics that directly quantifies the number and extent of roles taken abroad. Most of the data currently available is based on high profile companies only e.g. the major banks.
