Offshoring back office functions can help small businesses expand, improve customer service and free up cash for advertising and marketing campaigns.
Increasingly small business owners have been taking advantage of cheaper wages in countries like India and the Philippines to offshore administrative and customer service functions.
Scott Linden Jones, author and expert on global resourcing, said that wages in the Philippines were running at roughly one fifth of Australian wages and that small businesses could more easily restructure their operations to take advantage of the cost savings.
He said offshoring was a new reality of the business world and Manilla was becoming increasingly central to these kinds of business models.
“To me this is an evolution of business and it effects all business big and small. And smaller businesses are adapting quicker to this global change and tapping into skills globally in order to improve their businesses in terms of customer service, pricing and growth strategies,” he told Dynamic Business.
“The key thing I guess is that they can adapt to change quicker. There’s [fewer] stakeholders [who] have to involve in those sorts of decisions.”
Offshoring can allow small businesses to take on more staff and pour money into other areas. Many major businesses have adopted this strategy include Jetstar, ANZ, IBM, Dell and Telstra which has about 14,000 people in the Philippines.
“Small Australian businesses now have tens of thousands of roles in the Philippines, every industry you can imagine, from construction to recruitment to technology to professional services,” Mr Jones said.
A report released last month by Salmat found that 80 per cent of businesses using offshore resources had also retained or increased local staff. The average increase in their domestic workforce was more than 200 per cent.
It advised small businesses considering offshoring positions to assess their competitive advantage and examine what functions could be performed better and more cost effectively.
However, Telstra chief executive David Thodey today said that call centre style jobs would be non-existent within five years thanks to technological advancements.
“More and more you’ll use an application on your phone and you’ll use the web to interact with us so the future of call centre jobs is less in the future,” he told ABC radio. “If you think about how you interact with the bank today you don’t go into the bank branch that often. And that’s going to be the truth about many of the traditional service related jobs – it’s going to be more and more digitally done.”