Australia: A country in denial

commentary Daryl Williams made a very interesting statement recently.

commentary Daryl Williams made a very interesting statement recently.

The Minister for Communications, Information Technology and the Arts labelled Australia as the "No.1 outsourcing destination and the best place in the developed world to base software development operations."

Citing findings from research firm KPMG's 2004 Competitive Alternatives Study, he said: "This No.1 ranking confirms that Australia's information and communications technology (ICT) industry is in pole position to win sought-after ICT jobs in the competitive offshore outsourcing market."

The KPMG study, he added, ranked Australia first in software design, Web and multimedia operations based on "our low business costs".

Overall, Australia was ranked the second least expensive place to do business.

It seems like a bed of roses on the surface, but if you dig deeper, you will realise that some pertinent points from the KPMG study were overlooked.

Invest Australia, Australia's national inward investment agency, is a gold sponsor of the KPMG study so the "good news" doesn't really come as a surprise.

The study compared 86 cities from Australia, Canada, France, Germany, the United Kingdom, Iceland, Italy, Japan, Luxemborg, and the United States. But when one thinks of outsourcing and software development, India immediately comes to mind. Unfortunately, it was omitted from the list since the study only covered developed nations.

In the real world, however, when a company decides on an outsourcing destination, India is usually on its radar. Whether a country is developed or not is secondary. What's important are the key elements that make business sense and this includes long-term return on investment. And this is why, in the real world, developing and semi-developed countries like Malaysia, Singapore and the Philippines are also considered as alternative outsourcing destinations.

Williams also used the study to lambaste the Labor opposition party. "If Labor had its way, Australia would quickly lose its No.1 ranking."

"Unlike Labor, which wants to resurrect old-world industrial relations systems and old-world protectionist walls in response to offshore outsourcing, the Australian Government is making Australia's ICT industry the best and most competitive in the world," he said.

I'm not saying we can't be an outsourcing powerhouse. In fact, Australia has edged out India and others on numerous occasions as an outsourcing option. One example is BMC Software's decision to establish its Asia-Pacific sales support centre in Melbourne after reviewing Singapore, India and China.

What troubles me is when politicians come out with guns blazing without taking stock of reality. KPMG's 2004 Competitive Alternatives Study needs to be put into perspective. In fact, any study requires close scrutiny before public comments are made. Williams has done a disservice in this instance by making statements and accusations with blinders on. Let's hope he doesn't make this a habit.

Editor's note: To read Daryl Williams' response to this editorial, please click here.


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