CEOs prefer to keep dollars in Australia

A survey of 200 Australian CEOs has found most Australian businesses prefer to keep their outsourcing dollars onshore.

A survey by Talent2 reports respondent CEOs said it made sense to outsource work to specialist companies, particularly payroll services.

But an overwhelming majority of the respondents (85 percent) said they preferred to outsource work domestically.

A further 41percent of those surveyed said they already outsource payroll services, 27 percent outsource the human resources department while 27 percent have already outsourced their call centres.

There is no breakup in the figures though as to how many of the current contracts are outsourced to Australian-based companies.

Lee Ward, general manager of global outsourcing and infrastructure services for Unisys Asia Pacific, said there is a clear move by Australian enterprises to offshore work and outsource work domestically.

Ward said the topic of offshoring is addressed when contracts are negotiated, because it is seen as the next "wave" of productivity above and beyond local outsourcing.

"Most executives like to see their work stay onshore, but the reality is that for a lot of companies they will be forced to investigate offshore opportunities to remain competitive," Ward said.

"Today, all of our contracts are legacy contracts that were signed up with local delivery models; however, several of our clients are exploring offshore models with us.

"Unisys currently has two main centres for offshoring - Bangalore and Shanghai for business process outsourcing (BPO) work. We also use Malaysia for BPO work and the Philippines. Some of our existing clients also see a benefit in having the outsourcing company offshore the work for them as it puts a buffer between them offshoring themselves."

Mike Scott, general manager of HR services with Accenture Australia, said the company anticipates increased spending on outsourced IT and business processes in Australia both for onshore and offshore service provision.

In terms of outsourcing, the traditional heavyweights are starting to feel the pinch as the market becomes increasingly more competitive. Despite IBM Global Services reporting revenue growth of 3 percent for the full year last year, revenue posting for the last quarter fell 5 percent compared with the same period the previous year.

US outsourcing advisory firm TPI found the six largest outsourcing providers (Accenture, HP, CSC, ACS, EDS and IBM) are losing the mega outsourcing deals and report that 2006 could be the first year that commercial IT outsourcing revenue declines.

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