Australia is ranked as the best place in the developed world to base software development operations, according to KPMG 2004 Competitive Alternative Study.
The KPMG study says Australia is the best place to locate software design businesses, and Web and multimedia operations, and it was the second least expensive place to do business overall.
In the category of software design, Australia's total annual operating costs came out the lowest at AU$10.7M (compared to ten other countries including the US and the UK). In the Web and multimedia category, Australia again featured the lowest total annual operating costs with AU$8.8M.
According to the report, as a location for setting up research and development operations, Australia came in second after Canada. Two of the key reasons for Australia's high ranking, as stated in the report, are low taxes and a low-cost and flexible IT workforce.
For software development operations, the report cites Australia's highly skilled, multilingual workers, R&D tax concessions, and an advanced IT infrastructure as reasons for the country's emergence as a low-risk business environment.
Minister for Communications, Information Technology and the Arts, Daryl Williams, believes that if Labor introduces similar Commonwealth laws as the Industrial Law Reform (Fair Work) Bill recently introduced in South Australia, thousands of jobs could be forced overseas.
IDC analyst Phil Hassey says the KPMG report shows that not all IT jobs are going to India. "The opportunity for offshore servicing is very large and segmented. It's a matter of finding the best locations and [they] may not necessarily be India."
"Australia's solid IT infrastructure and a good domestic market, which provides innovation and skills, [are] a great advantage to the country," Hassey adds.
Hassey, however, believes that "in the long term, Australia will be under pressure to keep this rank. Outsourcing will be very critical and other countries will be working really hard to attract investors in software design, Web and multimedia. I think Australia will still have niche opportunities but software development will be more likely to go offshore."