Recent research has cast a spotlight on the mounting challenges faced by Australian businesses amidst a tight labor market and escalating wages.
With the current 11% superannuation rate and a minimum wage of $23.23 per hour, a substantial portion of businesses (48%) are considering the option of hiring overseas labor to navigate financial constraints or to address personnel shortages.
These revelations have emerged from an extensive survey conducted by independent panelists comprising 159 directors and decision-makers. The comprehensive study was commissioned by moneytransfercomparison.com, a prominent comparison service. The complete survey results, featuring detailed breakdowns across different states, can be accessed here: [survey link].
Why are Australian businesses eyeing offshore talent?
The landscape of Australian business operations has seen a surge in demand for offshore labor. In May 2023, job vacancies numbered at a staggering 431,600, with wages witnessing an uptick of 5.75% in July 2023. This confluence of factors has potentially ignited the interest of business owners in considering overseas labor to alleviate the pressures they face.
Notable insights from Money Transfer Comparison’s research have revealed that 25% of businesses are looking to source overseas labor in order to reduce costs. An additional 21% are seeking foreign workers due to the inherent difficulty in finding suitable local talent, while 14% aim to tap into international labor markets to acquire employees with specific skillsets. Conversely, 32% are hesitant to outsource work overseas, with only a smaller faction (8%) entertaining the idea under more significant financial duress.
Russell Gous, spokesperson for Money Transfer Comparison, sheds light on the conundrum: “While it’s evident that wages need to align with inflation during these times of cost-of-living crisis, businesses haven’t been given the necessary support to cope with the recruitment, compensation, and retention costs. Staffing has emerged as one of the most formidable challenges for Australian businesses post-pandemic. While higher wages can attract new talent, the added expenses might be unsustainable for many small enterprises. Moreover, the demand for specific skills may be outstripping supply. The option of outsourcing overseas labor and navigating the intricacies of international payment can serve as a cost-effective solution and a bridge in these uncertain times.”
South Australia and Victoria at the forefront
The research also highlights the geographical variance in the adoption of offshore labor strategies. An impressive 75% of South Australian businesses are contemplating overseas labor markets as a means to curb operational costs. Following closely, 30% of New South Wales businesses and 28% of Victoria-based enterprises are mulling over the same strategy. In contrast, approximately 44% of businesses in Queensland appear to be relatively insulated from staff shortages and financial pressures triggered by escalating wages.
What Roles are Businesses Outsourcing?
The survey offers insights into the specific roles that businesses are considering outsourcing. A significant proportion (21%) is actively seeking employees with technical skills, emphasizing the prevailing skills shortages within the country. This deficiency is further characterized by a “suitability gap,” where individuals hold the requisite qualifications for technical positions but may not be the best fit for the roles they apply for.
Beyond technical skills, businesses are also eyeing consultants (18%), contractors (17%), administrative or virtual assistants (14%), bookkeepers (13%), customer service (12%), marketing (11%), human resources (10%), and sales (9%) as potential roles to be outsourced. A notable third (35%) of business owners, however, express no intention to outsource labor from overseas.
Regional Disparities in Outsourcing Trends
The survey delineates significant disparities in the inclination to outsource work overseas across different states. In New South Wales, a substantial 71% of businesses are contemplating offshore outsourcing, compared to a comparatively smaller 49% in Queensland. Interestingly, Victoria takes the lead in sourcing overseas talent with technical skills, accounting for 29% of businesses, while only 5% of Queensland businesses are pursuing a similar route.
Russell Gous concludes with a holistic perspective: “These findings illuminate the challenges that businesses across Australia are grappling with in the face of rising wages and a fiercely competitive labor market. The strategic outsourcing of specific functions overseas can serve as a mutually beneficial solution, easing the financial burden for business owners during these tumultuous times.”
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