In brief
- A number of businesses have in recent months announced expansions of skilled workforces abroad.
- Experts say the Australian workforce is unable to offer specialised talent at the same scale as some Asian markets.
From banks to retailers, a growing number of Australian businesses are expanding offshore workforces as they seek to cut costs, access skilled workers and adapt to a changing global business environment.
This week, Woolworths announced it was offshoring some jobs to Asia in a bid to "remain competitive with the rapid expansion of international players in the market" by "removing complexity, increasing productivity and driving efficiency across our business".
SBS News understands corporate jobs across finance, human resources and IT would be affected, but Woolworths has not confirmed how many of its nearly 10,000 corporate employees would be impacted by the decision.
It follows a string of announcements in recent months from companies shifting some operations abroad, including Telstra, National Australia Bank (NAB) and Officeworks.
Last month, Officeworks said it would offshore a small portion of its support office jobs to Bengaluru, India, and move customer service work to Manila in the Philippines, reportedly telling staff it would also start using more artificial intelligence (AI) and automation to tighten efficiencies.
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Earlier this year, Telstra announced it would cut more than 200 jobs and move work to a team in India.
A spokesperson for the telco's joint venture with technology consultancy Accenture said the changes would allow the business to "use Accenture’s global capabilities, advanced AI expertise and specialist hub in India" to deliver its data and AI strategy more quickly.
Drivers behind the shift
Helena Li, a senior lecturer at the University of Technology Sydney Business School, said while businesses have long moved functions such as call centres offshore to reduce costs, more recent decisions reflect the growth of highly-educated workforces in emerging Asian economies.
She said these countries have invested heavily in education and workforce development, creating a deep supply of workers with the skills businesses need.
"There is an oversupply of skilled workers in the emerging economies, so they are very good at very low cost," she said.
Vikas Kumar, a professor of international business at the University of Sydney, said the trend was different to traditional offshoring.
He pointed to a shift in higher-level positions moving abroad, using the analogy that the "corporate brain" of Australian companies is now being globalised.
"This is way more important than, say, the globalisation of the limbs or the hands, which used to happen, say, 20 or 25 years ago."
Kumar argued that while cost remains a factor, the primary driver is increasingly access to skills and capability.
Companies are establishing offshore hubs in locations such as Bengaluru because they can access specialised talent at scale, particularly in areas like technology and AI.
He noted that many firms are not outsourcing these functions to third-party providers, but are instead creating and owning their own offshore operations.
"So this is clearly a long-term strategy, and not just a temporary one," he said.
Offshore hubs
Bengaluru, one of India's leading technology hubs, is home to thousands of employees working for Australian companies.
It's a region sometimes described as the Silicon Valley of India, hosting major multinational companies, engineering institutions and a thriving technology startup sector.
Several major Australian businesses have outposts there.
Commonwealth Bank employs more than 6,500 staff there, while ANZ employs 9,000 in Bengaluru and 2,000 in Manila, making up around 28 per cent of its workforce, according to the Australian Financial Review.
An Officeworks spokesperson said some activities currently performed by an Australian support office would transition to a "new global centre" in Bengaluru.
However, they noted the majority of the Officeworks team would continue to be based in Australia and it would continue to create more jobs in Australian communities.
A Woolworths spokesperson said the business expected to create approximately 2,500 new roles in the year ahead across new Australia and New Zealand stores, and it has operated teams throughout Asia for many years.
The Philippines and Vietnam are also hubs for offshore customer service functions. China, too, represents a deep talent pool, though Kumar said that varied levels of English proficiency can make it harder for businesses to operate in that market.
NAB employs roughly 2,000 workers in Vietnam's Hanoi and Ho Chi Minh City at its "global innovation centres", according to its website, in addition to thousands of employees in the Indian cities of Bengaluru and Gurugram.
Those operations account for around 17 per cent of its total workforce.
AI is changing the equation
Li said the rapid adoption of artificial intelligence was also reshaping the global workforce, with some countries moving faster than Australia to develop AI-related skills.
While Australia has a highly-skilled workforce, she argued some emerging economies have made AI capability a national priority through education and training initiatives.
While AI has been used at large-scale to automate some tasks, Li said the technology has also created demand for workers who can critically oversee and review AI-generated outputs.
She called for better education pathways to develop skills that can keep Australia competitive.
"We don't have really a good curriculum or program to develop the AI skills we need," she said.
"Critical thinking, human-centered skills, communication ... and the ability to verify what is AI giving to us."
Kumar says the talent and expertise exist in Australia, but "we do not have the way to scale that up, and that is increasingly becoming very important".
"The rate at which companies are realising the need to integrate AI into the company functions means that we actually need more people, not fewer people."
A call to use global talent 'responsibly'
Kumar said Australia could build the skills it needs domestically, but this would require greater investment in AI training across universities, TAFEs and the corporate sector, with employers taking a more active role in upskilling workers.
While it would be impractical to suggest businesses refrain from using global talent, he said they should do so "responsibly" by continuing to invest in Australian graduates in developing local technology roles.
While this may involve higher costs in the interim, Kumar argued it deliver more sustainable outcomes in the long run and have a "spin-off effect on the entire economy".
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