Outsourcing Management and Impact in Australia

This assignment delves into the complex world of outsourcing in Australia. It analyzes various aspects, including the motivations behind outsourcing decisions, the impact on businesses and employees, legal considerations, and best practices for successful outsourcing management. Drawing from scholarly articles and case studies, it provides a comprehensive understanding of the challenges and opportunities presented by outsourcing in the Australian context.

“OPPORTUNITIES AND CHALLENGES OF OUTSOURCING BUSINESS
FUNCTION AND PERFORMANCE OF BUSINESSES IN AUSTRALIA”
Student Name: Student ID:
Subject Name: Subject ID:
Date Due: Professor Name:
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Table of Contents
“OPPORTUNITIES AND CHALLENGES OF OUTSOURCING BUSINESS FUNCTION
AND PERFORMANCE OF BUSINESSES IN AUSTRALIA”...............................................1
1.0 Introduction.....................................................................................................................3
1.1 Company Introduction-Optus...........................................................................................3
1.2 Company Introduction- Telstra........................................................................................3
2.0 Project Objective.............................................................................................................4
3.0 Project Scope...................................................................................................................4
4.0 Literature Review.................................................................................................................4
5.0 Conclusion............................................................................................................................8
Reference Lists...........................................................................................................................9
Appendix..................................................................................................................................10
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1.0 Introduction
Business functions outsourcing has become a key driving force for a number of industries.
Growth in Australian economic and business sectors will reach beyond expectations (Mani,
2010). With globalisation impending large number of challenges, businesses for keeping up
with competing forces will strive to do whatever they are best. In order to establish core
competencies, businesses are devising sustainable and new methods for achieving
performance to drive their bottom line. Majority of businesses in Australia has found
outsourcing as the key drive to be cost effective. Cost effectiveness, leaner production
methods and efficient ways to perform such that businesses can enhance their skills and
expertise. While there remain innumerable opportunities with outsourcing, there are certain
prominent challenges as well (Banerjee, 2009). The scope of this research discusses
prominent opportunities and challenges extended in outsourcing, especially in the
telecommunication sector of Australia. The scope of this study is limited to analyzing
outsourcing opportunities and challenges of Optus and Telstra, which are giant
telecommunication companies in Australia.
1.1 Company Introduction-Optus
Singtel Optus Pty Ltd is second largest telecommunication company in Australia, which is a
wholly owned subsidiary of SingTel. Its headquarters is based in Sydney, New South Wales,
Australia and was established in 1981. The Company has several products including fixed
telephony, mobile, internet connection, cable television, leased lines, data transmission
amongst other products. It employs more than 8,900 employees and earns a net revenue of
A$9.02 billion with net income of A$812 million.
1.2 Company Introduction- Telstra
Telstra Corporation is an Australian telecommunication and media company. Established in
the year 1975 with headquarters in Telstra corporate Centre Melbourne, Australia. The
Company employs approximately 36,450 employees and has operating profits of A$6.12
billion with revenue worth A$28.01 billion.
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2.0 Project Objective
In order to attain goals of the study, following project objectives needs to be identified.
 Project Objective 1: To analyse key reasons for outsourcing of functions
 Project Objective 2: To understand the key opportunities provided through
outsourcing of functions Project Objective 3: To understand the key benefits offered through outsourcing of
functions
 Project Objective 4: To analyse the key challenges faced while outsourcing
 Project Objective 5: To diagnose favorable locations and key costs in outsourcing
3.0 Project Scope
Project scope defines the relevant areas in which the study will be able to make key impacts.
The scope of the project is extremely limited to theoretical study and analysis only (Burdon,
2011). Further for the purpose of this study only two-telecommunication giants has been
taken for analysis. Thus, the scope of analysis is also limited and cannot be applied or
extended to any other industry. The project scope can only be applied in telecommunication
sector and then the study can further be extended, to provide more applicability.
4.0 Literature Review
A literature review allows analysis pertaining to particular literature sources from journals or
books that allow insight into the topic (Pai, 2007). While benefits of outsourcing cannot be
overemphasised, initially opportunities and then challenges related to outsourcing in
Australian telecommunication sector are discussed. Second largest telecommunication giant
Optus is expected to make outsourcing pertaining to HR and finance. It has tied up with
global tech firms, which has also resulted in numerous job cuts, which is expected to be
transferred offshore (www.afr.com, Retrieved on 15th August 2017). The Company cut
almost a thousand jobs to cut costs worth $200 million to reshape its business. The Australian
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Financial Review highlighted that Infosys and Accenture will help benefit Optus towards a
sustainable growth, though affecting employees who would lose their jobs.
Opportunities with job cuts in Australia and offshoring will be primarily attached to
inexpensive labour. Accenture and Infosys based in India have employees with lower cost of
living, which is essentially lower than Australia. This cost reduction will directly affect their
profitability, allowing business to save on budget (Fisher, 2008). There will be additional
perks associated with close time zones, as there will be no need to pay for night shifts. G.
D.K. Beverakis (2009), “Taking information systems business process outsourcing offshore:
The conflict of competition and risk.” In the Journal of Global Information Management,
page 32 identifies such innumerable benfits of outsouricng along with pertinent risks
(Beverakis, 2009). While talent and skills are the key benefits of outsourcing, they often
imposes challenges as well. Parent company needs to evaluate potential in host country along
with training and development programs. Often outsourced workers are at par skilled or more
skilled comapred to those of Australian counterparts. They preserve key business fucntions
adequately by servicingthem well. K. Penter (2009), “Offshore Business Process Outsourcing
to India: Two Australian SME Case Studies.” In Information Systems Outsourcing. Springer
Berlin Heidelberg., pages 549 to 561 identifies cases of several Australian SMEs outsourcing
to India and other developing countries (Penter, 2009). There has been tremendous surge in
outsourcing from Australian companies to Phillipines and India, as there are numerous
benefits attached. Phillipines has become a hub for outsourcing of key functionalities as
Australians benefit from its time zone as well. SME is order to expand are increasingly
considering key startegic partners offshore. Such offshoring has allowed them opportunities
to expand as well. According to Mohammad Abdul Razzaque and Chang Chen Sheng,
Modernisation of business globally has developed the system of outsourcing functions. This
helps to expand business through latest techniques. Many industries use journals, well-known
magazines to expand the knowledge for planning, management and so on.
Hammer and Champy along with Davenport and Short, published reports research in
outsourcing business functions. Functions, which are developed for payroll, customer service,
big data via agencies outside or within the country. Outsourcing facilitates business to
overcome other activities through expertise (Kohlbacher and Gruenwald). Many books has
been published by Oliver Schmidt, according to him, if during working hours business, place
suffer home network issues, and work cannot be proceeded further, so here outsource works
as leader in their own expertise. He explains that recent companies, depends on outsourcing
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agreement. Innovations are major principle taken into consideration while outsourcing
partners for activities. Business sectors like those that IT uses outsource for employment,
software is as discussed by Orrin Klopper. He gave presentation on how IT sector are
benefited through outsourcing.
Authors and researchers Lacity, Mary C. and Solomon, Stan and Yan, has pointed and
published how with the help of outsourcing business can developed and progress immensely.
Researcher actively participates on development and expansion of outsourcing Business
functions. Researcher Leslie P gives critical review as outsourcing for software’s, customer
service helps to expand business globally.
Reasons according to Robert and Gordon why the trend setup to use outsourcing have
developed further since last few years are due to changing trend for economy. Companies
previously operated all the services through self and working employees. This was the
reason, for not use of outsource system. Organisation needs to understand the term outsource.
As per them outsource refer to, employees hiring, software installation, manufacturing of
goods through contractors and so on. It can be concluded that Outsourcing is an influential
business strategy, which can lead to greater success and expansion.
Australian company Telstra plans to outsource 170 jobs to India, which is considered to be
fastest growing unit for the Company (www.thehindubusinessline.com, Retrieved on 15th
August 2017). The Company plans to reorganise internally its operational activities to form
five key activities. India office will act as a back office for functioning of the various
operations department. This will impact an overall of 30,000 jobs in Australia but the
Company Managing Director John Allan did not want to comment on amount of job losses.
For Telstra outsourcing will provide more client and market opportunity for the Company. P.
K.Ross (2009), “New technology and work in the Australian telecommunications sector:
What role for technicians?.” In Labour & Industry: a journal of the social and economic
relations of work, pages 45 to 66 views increased opportunities with outsourcing (Ross,
2009). Increased productivity is a quick aspect that Australian companies are easily able to
visualise from outsourcing of their fucntions. Saved income from increased productivity can
be diversified into generating more income from other related projects. Outsourcing will
allow these companies access to latest technologies as advanced accounting programs that are
more efficienct. IT infrastucture that are provided by outsourced firms have impended high
levels of impact on these companies which has in turn translated to cost saving, outsourcing
and so on.
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D. Brown (2007), “The Black Books of Outsourcing: How to managem the changes,
challenges, and opportunities. Published by John Wiley & Sons identifies the challenges
associated with outsourcing with companies (Brown, 2007). There are several negatives
associated with outsourcing that have translated into allignment isues, cultural issues,
delivery related challenges and so on. While outsourcing companies needs to analyse
functions that they can outsource as It, accounting, operations, HR related aspects can be
outsourced on the other hand companies need to consider keeping marketing and sales in-
house. While outsourcing of functions analysis of impact on various business stakeholders
needs to be conducted (Chadee, 2009). While outsourcing might directly benefit the
Company, on the other hand it might have a negative impact on society at large. Various
employees are now averse to working for Optus or Telstra, hence there has been a loss of
commitment that has lowered productivity. Cultural gap is a major issue in companies while
offshoring. Succesful offshoring and outsourcing requires improvised communication,
investment and successful partnership. Efforts needs to be made for bridging cultural gap
amongst outsourced functions and company (Schniederjans, 2015). Critical success factors
for the purpose of outsourcing has to be evaluated prior to outsourcing. Magement of
adequate quality control measures has to be impended which can evaluate appropriate
delivery os desired services. Parent company needs to conduct on-going training such that
continued efforts can be made towards delivery of services. Parent company should not view
outsourcing as a cost curtelement only, rather it should be identified as an investment
endevour (Wreford, 2011). This will allow open lines of communication to understand any
gaps or lags in services and then accordingly such gaps can easily be bridged. Cultural
divergence in outsourced company needs to be attempted and respected for overcoming of
any pertinent issue.
Outsourcing of functions needs to necessarily take care of all non-essential items that
encompasses non-core activities. It can effectively reduce overhead costs, creating more
opportunities for a company to expand and grow its business (Lewin, 2009). Positive impact
of outsourcing, can free an organisation from various investments into infrastructure,
technology and support processes. This can substantially help reduce capital expenditure. It
enables a business to create flexibility for manpower and staffing for managing workforce
effectively. There are however certain disadvantages of outsourcing as well that exposes risks
of the company, as it might lose confidential data. Loss of crucial information is a key stake
in outsourcing of any functionality (Susomrith, 2013). This might lead to management losing
control over key business functionalities, thus having no control over outsourced functions.
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Business leaders llok at outsourcing in a way that enable to drive profitability in businesses.
There needs to be transformation in attitude and ways outsourcing in current situation is
visualised as it might lead to creating an overall business viability and sustenability for the
future. It needs to be considerd a separate entity of the business rather than a profit driving
machine. Such atribute of the parent company can help a long way to save on current job
aspects rather than by just doing away with jobs. with so many stakeholders at bay, it
becomes essential for a firm to evaluate the critical resources and analyse long term impacts
that any action of a firm can suitably understand. Such in-depth understanding can help
generate and create unique business capability. Businesses in this manner will not only be
able to overcome challenges but also drive their core business strategies and competencies.
Outsourcing needs to be viewed as a startegic partner rather than comparing them with
outside untis. Busineses needs to make congruent efforts in bridging and developing any
startegic partners that they associate with for greater customer satisfaction. With increased
customer satisfaction, there can be greater brand value development and brand recognition.
All endevours will be later recognised as attitudes for creating long term business impacts.
Rather n striving in the short term such long term efects evaluation can render viability and
return on investments.
Outsourcing company might work with several customers, which makes it have no priority
for any particular client. This will eventually lead to delay in processing of information and
work. There might also be errors in work accompanied as outsourcing firm caters to a number
of customers. In many cases hidden costs arises in case outsourcing terms and conditions are
not clearly spelled out (Javalgi, 2009). However, any types of challenges pose needs to be
overcome by outsourcing company by integrating in management control, adhering to quality
issues, communicating and in estimating risks. Australian companies in order that they can
meet global challenges are focussing on doing what they do best. In such endevour to remain
competitive and extend core competencies, they are assessing potential outsourcing
destinations across developing countries. While such outsourcing continue to offer immense
potential opportunity, they are having a multitude of effects on Australia. With rising
unemployment, rising inflation and lowering income potential, the economy is steadily
starting to suffer. As large and global corporations are multiplying their wealth, purchasing
power of individuals are gradually declining leading to lowring potential of the economy.
Hence, business leader needs to consider effects of outsourcing in a broader light compared
to their own advantages.
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5.0 Conclusion
Analysis from the above situation and understanding of the Australian telecommunication
sector it can be well stated that benefits outweigh challenges. There are tremendous amounts
of opportunities that are provided to the host country in case it outsources some of its key
functions. However, while outsourcing, the outsourced company’s profile needs to be
carefully analysed such that appropriate profitability and sustainable business can be
established. The parent Company needs to equip and provide adequate training such that
outsourced company’s services or products are at par with the parent company’s designated
standards. There need to be frequent evaluation of resources and capabilities at the
outsourced company. With appropriate and proper monitoring benefits from outsourcing can
be reaped adequately.
Reference Lists
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Banerjee, A. &. 2009. International Service Outsourcing: Using offshore analytics to identify
determinants of value-added outsourcing. . Strategic Outsourcing: An International Journal,
68-79.
Beverakis, G. D.-K. 2009. vTaking information systems business process outsourcing
offshore: The conflict of competition and risk. Journal of Global Information Management,
32.
Brown, D. &. 2007. THE BLACK BOOKS OF OUTSOURCING: HOW TO MANAGE THE
CHANGES, CHALLENGES, AND OPPORTUNITIES. John Wiley & Sons.
Burdon, S. &. 2011. Mobilizing for value added partnerships. . Journal of Information
Technology Case and Application Research, 22-41.
Chadee, D. &. 2009. International outsourcing of information technology services: review
and future directions. . International Marketing Review, 411-438.
Fisher, J. H. 2008. Understanding the outsourcing learning curve: A longitudinal analysis of a
large Australian company. Information Systems Frontiers, 165-178.
Javalgi, R. R. 2009. Outsourcing to emerging markets: Theoretical perspectives and policy
implications. Journal of International Management, 156-168.
Lewin, A. Y. 2009. Why are companies offshoring innovation? The emerging global race for
talent. Journal of International Business Studies, 901-925.
Mani, D. B. 2010. An empirical analysis of the impact of information capabilities design on
business process outsourcing performance. Mis Quarterly, 39-62.
Pai, A. K. 2007. Offshore technology outsourcing: overview of management and legal issues.
Business Process Management Journal, 21-46.
Penter, K. &. 2009. Offshore Business Process Outsourcing to India: Two Australian SME
Case Studies. In Information Systems Outsourcing. Springer Berlin Heidelberg., 549-561.
Ross, P. K. 2009. New technology and work in the Australian telecommunications sector:
What role for technicians?. Labour & Industry: a journal of the social and economic
relations of work, 45-66.
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Schniederjans, M. J. 2015. Outsourcing and insourcing in an international context.
Routledge.
Susomrith, P. &. 2013. Motivations for HR outsourcing in Australia. The International
Journal of Human Resource Management, 704-720.
Wreford, J. P. 2011. Opaque indifference, trust and service provider succcess in offshore
business process outsourcing. In Proceedings of the 22th Australasian Conference on
Information Systems (ACIS).
www.afr.com. (Retrieved on 15th August 2017). Optus cuts jobs by outsourcing HR and
finance. http://www.afr.com/technology/enterprise-it/optus-cuts-jobs-by-outsourcing-hr-and-
finance-teams-20160623-gpqe1g.
www.thehindubusinessline.com. (Retrieved on 15th August 2017). Australian firm Telstra to
outsource 170 jobs to India. http://www.thehindubusinessline.com/info-tech/australian-firm-
telstra-to-outsource-170-jobs-to-india/article4897524.ece.
Appendix
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