New research from HR platform Deel reveals that 70% of Australian businesses are preparing to implement cost-cutting measures this year in response to market uncertainty.
Nearly half (45%) of companies are considering salary reductions, while 41% may resort to layoffs, according to Deel’s Australian Business Leader Pulse Check report.
The study examines the challenges facing business leaders, including hiring, human resource management, and their strategies to navigate economic pressures. A key finding is the increasing reliance on technology, with 60% of organisations looking to adopt AI and automation to reduce costs, and 59% planning to consolidate their technology stack and reduce tech vendor reliance.
Cost-saving measures are also driving the ongoing preference for remote work. Despite government debate on hybrid work, 92% of Australian businesses maintain remote work as a strategic priority, with 60% citing it as a key cost-cutting benefit.
AI demand grows, but skills gap looms
With businesses increasingly adopting AI, the need for AI expertise is projected to surge over the next two to three years, with 93% of organisations expecting a greater demand for AI talent. HR, finance, accounting, and customer service departments are among the top areas seeking AI-skilled employees.
However, securing AI talent is proving challenging, with 57% of business leaders citing a skills gap. The hiring process is further complicated by difficulties in evaluating candidates’ AI skills (52%) and managing high salary expectations (52%). In response, nearly half (49%) of Australian businesses are broadening their talent search to include international markets.
This global talent trend is already evident, as 67% of Australian companies report having overseas team members. Access to a wider talent pool, skills transfer, market expansion, and cost savings are some of the main drivers behind this model.
HR and finance challenges persist
Beyond AI, Australian firms face other significant hurdles in hiring and employee retention. More than half (54%) struggle to keep up with evolving benefits trends, and 53% grapple with the fast pace of technological advancements. Additionally, integrating younger generations into the workforce remains a challenge for many companies.
Finance departments, particularly those managing payroll for international teams, are also facing growing complexities. Thirty percent of businesses now handle payroll across five or more markets, and navigating varying tax, labour, and regulatory requirements is a major pain point for 71% of them.
As companies look to streamline these operations, 71% of HR and finance professionals currently rely on multiple payroll tools, emphasizing the need for more integrated solutions.
Shannon Karaka, Country Leader at Deel ANZ, noted, “Global hiring offers companies the opportunity to access specialised skills that may be scarce locally, ensuring Australia remains competitive on the global stage. With 89% of Australian organisations open to international hiring, there’s a growing emphasis on ensuring talent and skills pipelines are developed and invested in, both domestically and internationally.”
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