Falling AUD prompts offshoring concerns

Falling AUD prompts offshoring concerns

With the Australian dollar suffering a volatile fall in recent times, third-party offshoring providers have been forced to increase their standard of work to retain Australian business, according to one offshoring expert.

Nick Sinclair from The Outsourced Accountant, a business process outsourcing company, stated that the low dollar has had some impact on outsourced operations, but that outsourcing remains a viable option.

“Even with the low Australian dollar, offshoring is still a viable strategy. When the dollar was 25 per cent higher, you could get four full-time staff offshore for the cost of one onshore in Australia. This has now gone back to a 3:1 ratio,” he said.

Mr Sinclair said that because of the falling dollar – and based on his own experience in dealing with third parties – outsourcing providers definitely "increase the standard of work now that the cost is more expensive”.

Mark Said, partner at firm MKS Harris, told AccountantsDaily that third parties would focus on increasing their time efficiency so as to remain an attractive alternative.

Mr Said currently outsources 90 per cent of his compliance-based work to the Philippines.

“If the quality is there we need to make sure that the quality stays but the efficiency improves”, he added.

Mr Said noted that although the fall in the Australian dollar has had “a bit of an impact”, it would take drastic measures for firms to consider cutting ties with their third-party service providers.

“You’d need a massive rise in employment costs overseas and a drastic drop in the Aussie dollar, even more drastic than what it is now,” he said.

Firms would be prepared to eat the rising costs overseas, as even a 10 per cent increase in overseas prices would still be “miles and streets ahead of where we [Australia] are,” said Mr Said.

If an Australian firm opted to sever ties with an outsourcing provider, Mr Sinclair added that finding the in-house capacity to reintegrate the services and providing accurate workflow management would pose the biggest threat to operations.

Mr Said echoed this sentiment, noting that a reintegration of services would prove to be both a time and a resource constraint.

“I would have to accommodate five more people, which I would find difficult in achieving”, he said.

Mr Sinclair concluded by noting that the majority of his clients utilise outsourcing as part of an overall staff strategy, not just for pure cost reasons, so any decision to reintegrate compliance services would be based around finding suitable staff to administer the services and process them within the timeframes required.

Falling AUD prompts offshoring concerns
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