In this opinion piece Chris Luxford looks at the challenges facing the local workforce, like off-shoring and the shifting skill requirements, and how these will impact how businesses access staff with the right skills for their operations.
“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change” – Charles Darwin
A 14-year-old in 2012 considering what kind of career they might be interested in once they leave school has a tough challenge on their hands. Not only because of the seemingly endless possibilities, but also because many of today’s jobs may have become obsolete by the time they enter the workforce, and many brand new ones will have been invented. Copyboy, lamplighter, typesetter … all jobs of yesteryear that no longer exist. And who would have thought all those years ago that one day we would be seeing job advertisements for the likes of ‘Digital Strategist’?
The nature of work is changing across the globe. There was a time when people lived in individual, self-sufficient communities. Over time this has gradually shifted towards an interdependent global economy. During the last century what people do, where and how they do it has fundamentally changed thanks to advancements in technology and the likes of cloud computing and ‘teleworking’. These changes are set to continue at a rapid pace.
Australia’s workforce is changing more rapidly than most. Significant downturns have occurred in retail and manufacturing due to globalisation and widespread job losses in the financial sector have also been noted.
In manufacturing, for instance, close to 1,000 Australian workers have been made redundant in the past 6 months. Australian banks are consistently announcing plans to cut staff, with the widely held belief that 5,000 jobs could disappear from the sector over the next two years.
Aside from redundancies, many companies have turned to off-shoring as a way of reducing costs. Our best estimate is that as many as 50,000 Australian jobs have been off-shored during the past decade. We should expect this trend to continue and certainly should not be fearful of off-shoring, as long as it is done correctly.
Take legal firm Baker McKenzie as a case in point. As far back as 2001 it established a dedicated back office facility in Manila, referring to the action as ‘legal process off-shoring’. The resultant shared services centre now delivers cost savings to the company of up to $US25 million ($26.8m) per year.
It is time for industry to accept that employee resources will come from many sources – local, regional, national and international. At Aegis, we have developed a model that includes what we refer to as ‘cross-shore’, whereby locals who work for an organisation actually move to another country and deliver the exact same service overseas – USA agents being relocated to Mumbai, for instance. This approach delivers improved economies of scale, development opportunities for the individual employee by offering them the opportunity to explore the world, as well as cost savings for all involved, without compromising the quality of the work. These are usually short-term stints overseas and generally involve some kind of official training program, leaving the employee with an internationally recognised qualification.
The challenge for the Australian workforce is the dramatic shift of skill requirements due to rapid advancements in technology, communication, automation and processes. Traditional organisations that once required mechanical task based skills now require “knowledge worker” type skills. Whilst unemployment in certain areas increases, skill shortages across many other sectors likewise increase.
A recent skills index highlighted an undersupply of skilled labor in corporate services, IT and engineering – another reason to consider tapping into external and overseas talent to ensure Australia does not forgo the benefits of its strong links with the growth regions of Asia.
There is a massive time commitment involved in up-skilling, therefore sourcing talent elsewhere becomes a more and more attractive option.
To address this, organisations need to re-think how they access people with the skills to execute all aspects of their business operations. The traditional hire, train, deploy, develop, promote model simply doesn’t cut it in a modern day business environment. Nor will the traditional model of outsourcing non-core business functions against a strict contractual and service level model. In short, new models for the engagement of resources will need to be developed. Mallesons Stephen Jaques, for instance, announced late last year that it planned to utilise the skills of 200 trained lawyers in India.
Conventional thinking on core versus non-core function outsourcing will come into question. Non-core functions in many companies have already been outsourced, mostly for cost arbitrage. There isn’t much more that can be extracted here, but is it delivering value? When it comes to core functions, the continued skills shortage in many areas limits innovation and causes costs to rise in the fight to retain talent, eroding margins. Organisations will need to look at unique partnering models that enable them to access highly skilled and talented resources critical to the core of their business, but with the flexibility and capacity to scale the workforce up and down and move efficiently from project to project, the same as Software as a Service (SaaS) has been adopted in IT to deal with business and traffic fluctuations.
In summary, more and more organisations are coming to realise that over the next two decades true competitive advantage will only be achieved through accepting that resources and skills will come from many different sources and locations and will be engaged for varying degrees of time.
Australia has a unique opportunity to take a world leading position in creating workforce opportunities in the new global economy. But this can only happen when companies develop the courage to boldly change their operating paradigms and adopt a new approach.
