Alveena Ahmad
In the wake of the COVID-19 pandemic, the world of work underwent a profound transformation. Remote work became the norm, and businesses adapted to this new reality worldwide. However, this shift in work culture has had unexpected consequences in the tech industry, especially in Australia. In this article, we’ll explore the rising trend of tech jobs going offshore as Australian tech bosses and recruiters respond to the evolving work landscape.
Offshore Resurgence: A Response to Hyperinflation
During the height of the pandemic, many Australian companies repatriated offshore jobs to ensure business continuity. However, the tide has turned once again. Companies are now looking beyond their borders for skilled technology workers, and this change is driven by several key factors.
The Hyperinflation of Tech Salaries
One significant factor motivating this offshore resurgence is the hyperinflation of tech salaries during the pandemic. Australian tech professionals saw their incomes soar, making the cost of hiring local talent increasingly prohibitive for businesses.
A Scarcity of Local Talent
Another challenge faced by Australian tech companies is the scarcity of available local talent. Finding skilled professionals with the right expertise became a daunting task, further pushing businesses to explore offshore options.
Declining Productivity of Domestic Teams
The pandemic-induced shift to remote work brought about concerns regarding the productivity of domestic teams. Some executives believe that certain functions suffer from reduced efficiency when working remotely.
Offshoring: Beyond Cost Savings
Contrary to popular belief, offshoring is no longer solely about cost savings. Instead, it’s a strategic move by tech companies to ensure they have access to a diverse talent pool and maintain high-quality work. Monty Hamilton, Senior Vice President of technology services firm Telus International, emphasized this point, stating, “It’s far less about price as the primary factor…especially in markets like Australia where there is a general feeling among experienced technology leaders that they are overpaying for suboptimal quality.”
Case in Point: National Australia Bank
National Australia Bank (NAB) is an illustrative example of this trend. NAB has established engineering centers of excellence in countries like Vietnam and India, not merely to cut costs but to access the specialized talent they require.
Salary Comparisons: A Stark Reality
To put things into perspective, consider the salary disparities between hiring locally and offshore. In Australia, a senior software developer can earn between $150,000 to $200,000 annually. In contrast, candidates with similar skills and experience based in Southeast Asia or India earn significantly less, typically ranging from $20,000 to $50,000 per year, as reported by Talent, a recruitment firm.
Matthew Munson, Managing Director of Talent, highlighted that employers can save up to 80% in salary costs by hiring remote workers in Southeast Asia compared to their Australian counterparts. This financial incentive is a compelling reason behind the surge in offshoring, extending even to small- and medium-sized enterprises.
The Growth of Offshore IT and Digital Roles
Sharon Melamed, the founder of Matchboard, a platform that connects businesses with suppliers, noted a remarkable 20% year-over-year increase in requests for offshore IT and digital roles. Companies, most frequently developers, “simply can’t find the staff onshore,” she said. “And even if they could, the wages are so high, it’s just not viable, especially in today’s cost-conservative environment.”
The pandemic has shifted perceptions about remote work, making the transition from a local worker in Sydney to one in Manila with just a two-hour time difference seem like a logical choice for many businesses.
Productivity Concerns in the Remote Work Era
While the allure of cost savings and access to a broader talent pool is strong, concerns about declining productivity in remote work environments persist. Some executives believe that certain functions are better suited to an in-office setting.
Jonathan Barouch, CEO and founder of software start-up Local Measure has adopted a hybrid approach. He expanded his technical team by hiring technical quality assurance engineers in the Philippines and a technical team in Cape Town, South Africa. According to Barouch, “It makes sense not only from a cost perspective, but there are some markets where it is way easier to find talent, and as we serve global clients, the extra timezone coverage also reduces our support costs.”
Conclusion
The work-from-home era has reshaped the tech employment landscape in Australia. The resurgence of offshore hiring is a response to the challenges posed by hyperinflation, a scarcity of local talent, and concerns about productivity. While cost savings are a compelling factor, businesses are also recognizing the value of a diverse and accessible talent pool.
