AIIA: Indian outsourcing threat can help Australia
The AIIA on Thursday published a study into the offshore outsourcing business and found that Australian businesses are improving their high-end skills base by outsourcing legacy projects to countries such as India.
Mark Hollands, an independent researcher who conducted the survey on behalf of the AIIA, said that Australian companies are finding that graduates are no longer interested in traditional programming skills and want to move higher up the food chain. This, said Hollands, means companies are farming out legacy projects offshore and increasing the high-level skills of their employees.
"CIOs are noticing a different attitude amongst young people. They used to be happy to hack away at low level code but are not interested in that anymore. They are not playing around with the old code - like COBOL -- which we have to have because they are on our legacy systems. If the graduates today are not going to work on it, who is," asked Hollands.
The answer, according to the survey of CIOs, is offshore outsourcing.
"That is when they start thinking about offshore outsourcing. It is an almost unanimous view. Companies have to recognise which people want to go up the value chain and help them to achieve that. Otherwise they will lose them," said Hollands.
According to the study, if Australia continues to improve its coding skills-base it could challenge India and other developing countries for high-end outsourcing projects from companies based in the US and Europe.
"Some respondents believed that for all the jobs lost due to offshore competition, it was possible for Australia to create an equal number by providing higher value services, thus increasing the value of software sector of the economy," the study said.
Rob Durie, chief executive officer of the AIIA, said that Australia has an advantage because the cost of developing high-end software in Australia is more expensive than India but around 25 percent less than in the US or in Europe.
"We do have a role to play -- costs in the US and Europe are high while costs in India are low. We are somewhere in the middle. Work is coming here in the banking sector and the financial services sector. We are winning more work than we are losing," said Durie.
The Status of Offshore Outsourcing in Australia study was conducted between May and August 2004. Thirty two CIOs were from all over Australia were interviewed from a variety of industry sectors.