MAN302 Strategic Business Management: PwC Australia Offshoring

This report provides a strategic analysis of PwC Australia's offshoring strategy, examining the external and internal factors driving the decision to move jobs offshore. It assesses the impact on various stakeholders, including employees, customers, and shareholders, and evaluates the potential for gaining a competitive advantage. The report also identifies risks associated with offshoring, such as communication challenges and intellectual property protection, and proposes mitigation strategies. Ultimately, the analysis aims to determine the relevancy of offshoring in terms of increasing revenue and improving PwC's overall business performance in a competitive market.

Running head: STRATEGIC MANAGEMENT
Strategic Management
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Executive summary
The purpose of this assignment is to discuss about the strategic impact of offshoring jobs for
PwC, Australia. This report has elaborated to business leaders by analysing its ongoing
external and internal issues, which are responsible for employing strategy of moving the jobs
offshore. They are thinking to expand a part of customer service and accounting operation to
foreign locations as well. This strategy has a deep impact on different stakeholders and this
report has analysed the company’s benefit from moving the jobs offshore in terms of gaining
competitive edge and improving the business. Apart from various benefits, this strategy has
invited risks as well. Evaluating those issues, this given report has made an effort to analyse
its relevancy in terms of increasing revenue.

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Table of Contents
Introduction....................................................................................................................2
External issues: strategically moving jobs to offshore...................................................2
Internal issues: strategic consideration for moving jobs offshore..................................4
Impact on stakeholders for shifting jobs offshore..........................................................5
Identification of stakeholders.....................................................................................5
Impact of offshoring...................................................................................................5
Gaining competitive advantage by expanding the business offshore............................6
Risk of offshoring jobs and probable solutions..............................................................7
Mitigation procedure..................................................................................................7
Conclusion......................................................................................................................8
References......................................................................................................................9

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Introduction
PWC, Australia operates as a global network in no less than 157 countries with
massive workforce working together to deliver quality solutions in assurance, advisory and
tax related services. In Australia, PWC works following a code of conduct to build a
relationship of trust within society by solving critical issues within their industrial boundary.
Understanding the nature of customers is important while providing solutions in finance and
accountancy. As argued in Ebiringa and Kule (2014), based on the core business model, they
seek for continuous improvement aligning with the client company’s value of services. This
report will enlighten the business leaders by analysing its ongoing external and internal
issues, which are responsible for employing strategy of moving the jobs offshore. Inevitably,
this strategy will have a deep impact on different stakeholders and it will further analyse the
company’s benefit from moving the jobs offshore in terms of gaining competitive edge and
improving the business. As described in Grappi, Romani and Bagozzi (2013), apart from
various advantages, this strategy will invite risks as well. Evaluating those issues, this given
report will try to analyse its relevancy in terms of increasing revenue.
External issues: strategically moving jobs to offshore
The central issue with PWC is, after successfully re-entering into consulting business,
they are facing immense competition from newly emerged businesses. They are consistently
trying to get hold of the current market position in midst of such increasing competition (Tate
et al. 2014). They have a requirement of keeping their market share in a stable place to ensure
sustainability as the business place is consistently increasing.
Political factors in developed countries are stable and fairly reliable in most of the
cases yet in case of developing countries the company needs to verify closely the areas of
taxation policy, labour law, trade and environmental regulations or tariff systems. The current

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scenario is the company is trying to get hold of the global market as well for being
competitive and for that all these factors need to be handled with care to remain relevant with
correspondent market.
Economic factors are important of the business place as the buying power of
customers determines sales and revenue. The recession in UK and even in Australia affected
the business in terms of sales profit and growth. Therefore, opportunity of offshoring the jobs
or hiring other firms with the same offerings in services can be an effective solution to remain
cost effective yet affected profitability.
Social influences like cultural differences and behaviour has become another risk
factor for the company. As the service deals with highly professional work, Australian
population could not manage to supply skilled expertise to manage the workload. Better
employment packages and benefits have become futile in front of this crisis of skilled and
efficient workforce. Therefore, company’s decision of offshoring the jobs can be considered
as appropriate and cost effective as well. However, issues of cultural barriers and language
are disturbing the balance.
Further, technological changes could act as a restriction in front of organisational
operation. New technological inventions, emerging software and coupled with that changing
customers’ perception is the biggest challenge of industry. As described by Chen et al.
(2014), to gain competitive edge in market PWC needs to improve their IT infrastructure for
ensuring better performance from employees Woking both in home location and offshore. As
described in Manning (2014), improved IT mechanism is one of the important resources of
any business firm to satisfy contemporary requirements of customers. However, balancing
with rapid changes and innovative technology is critical for PWC midst of staff scarcity.

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The sector PWC operates in is a critical part of their clients’ businesses. It is time
consuming and depends on efficiency of workforce. As it deals with large sum of money and
to avoid further legal complication for flawed solution the company can seek for skilled
human resource by outsourcing efficient talents and remain cost effective at the same time.
Economic-environment of Australia is stable and based on their GDP growth it can
be stated that offshoring jobs is favourable for solving the issues of such global business
offering tax advisory and consultation services (Schröder 2013).
Internal issues: strategic consideration for moving jobs offshore
Strengths of PWC in midst of increasing competition is that their client base is wide
and international. Therefore, according to Rodrigue, Magnan and Boulianne (2013), it will be
favourable to move jobs offshore to recruit more knowledgeable, efficient workforce who
have varied technological skills. Their international profile along with work culture and core
values, company is capable of attracting international job market as well.
With such good profile and prospect the company can easily crack the opportunity to
gain a stable position in international market by taking leverage of offshoring jobs. PWC will
be able to gain more exposure if they shift jobs offshore to combat issues of increasing
competition.
Weakness of the firm is, although they have international presence and considering
offshoring job profiles as a strategic approach for combatting competition, remaining in the
list of first four financial consultancy services is difficult for them due to poor brand
management (Mite and Cruzes 2013). Besides, SMEs consider PWC as expensive in terms of
asking financial and tax solutions. Strategic decision of outsourcing can make it difficult for
management leaders for expanding size of organisation.

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Such issues will lead them towards growth threats and competition will increase
simultaneously. As a result, threat of losing reputation and market share is highly possible.
Acknowledging these threats outsourcing skilled employees in a cost effective manner will be
helpful for PWC.
Impact on stakeholders for shifting jobs offshore
Identification of stakeholders
According to Adam Cobb (2016), stakeholders are the people who are related to the
business of a certain organisation both directly or indirectly. Their actions, goals, policies and
procedures are able to influence or they can be influenced even by these factors. Investors,
board of directors, employees and shareholders are internal, whereas, government, suppliers,
customers are the external stakeholders of any business as in case of PWC as well. The entire
market place from where the company can gain resources is the biggest stakeholder of
businesses operating internationally.
Impact of offshoring
 One of the major reasons companies tend to move their operations such as
manufacturing and customer service units overseas and creating opportunities of new
jobs, mainly for lower labour costs and more skilled employees relevant to business
operations. However, the cost of maintaining IT infrastructure will be higher and
investment will be needed for further training of employees.
 Company owners, shareholders, investors can save a large amount of monetary
resources by saving from employee expenses if the country selected for offshore
location is flexible in terms of legal, political regulations and labour cost is low.
 However, the home country and develop locations will face scarcity of jobs and for
business turnover company will shift attention to offshore locations. Therefore,

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government will be answerable for that. Besides, government will not have to face
immigration issues as locals wills remain at their place working under the same
organisation.
 Customers will enjoy more efficient services by paying same price as before.
 Shareholders will experience profitability and employees have to learn more
technological techniques in terms of managing offshore teams. Offshore employees
can have experience of working under an international brand, learn new procedures
and get enough benefit as per country’s norms which will make justice to their
expertise.
Gaining competitive advantage by expanding the business offshore
While operating in Australia, PwC spotted that domestic market is more convenient in
terms of recruiting engineers and not accountants. Consistently, two sessions of interviews in
one year resulted in only ten desired candidates for helping the customers with tax issues.
This has become the biggest concern for the organisation as they have to consult with and
hire small and medium enterprises to handle the workload. Acknowledging this fact as a
serious concern in terms of customer satisfaction and market competition if PwC could think
for offshoring their half of the accountant and customer service department to another
country preferably in an Asian location it will be successful as far as increasing competition
is concerned Mihalache and Mihalache 2016). Factors which will increase competitive
advantage are as follows.
 Offshoring jobs will give the company more brand recognition and more efficient
service to customers.
 As a new unit in a different location it will try to conserve more money and operations
will be fresh and faster than competitors. By saving staff costs investors can input that

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resources to development of human capital. Efficiency of HR department is not
entirely imitable still competitors will be requiring time to train or recruit professional
a workforce as PwC.
 Price will be location friendly, so there will be no chance of complaint from the small
and medium enterprises regarding hiked service cost. Therefore, expanded offshoring
will attract new customer base as well.
 Operating offshore will invite more technological and software oriented portals to get
feedback, to control the quality and communicate. According to Zimmermann and
Ravishankar (2016), well synchronised HR team likely to deliver work timely and
creates a defined workplace culture. It attracts talents and increases competitive edge
as well.
Risk of offshoring jobs and probable solutions
As per Jensen, Pedersen and Petersen (2013), shifting accounting and jobs of
customer service to offshore PwC needs to be concerned about these following risks or
issues.
 Difficulty regarding communication which means misinterpretation of requirements.
 Promised quality has been altered due to communicational issues or lack of quality
surveillance.
 Unprotected intellectual property.
Mitigation procedure
 In case of failure to understand the requirements analysing the criteria of customers,
workforce’s ability to meet the requirements every possible aspects related to task
need to be cross checked first. Frequent inspection on requirements will reduce
incurred project expenses.

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 Due to close deadline QA testing is being done in haphazard manner so before setting
the deadline even the time must be estimated. Pro-activeness of employees are
expected to avoid such cases. Regular checking of solved customers’ queries will be
sent to quality assurance team to satisfy them.
 To protect the intellectual property PwC must have a strict security policy, secured IT
infrastructure where customers are not allowed to have much internal information.
Conclusion
To conclude, it can be said PwC needs to expand business by shifting and expanding
jobs offshore to gain competitive advantage. It will allow them to cut down staff costs and
hire more skilled employees to satisfy dynamic customer demand.

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References
Adam Cobb, J., 2016. How firms shape income inequality: Stakeholder power, executive
decision making, and the structuring of employment relationships. Academy of Management
Review, 41(2), pp.324-348.
Chen, Y., Wang, Y., Nevo, S., Jin, J., Wang, L. and Chow, W.S., 2014. IT capability and
organizational performance: the roles of business process agility and environmental
factors. European Journal of Information Systems, 23(3), pp.326-342.
Ebiringa, O.T. and Kule, L., 2014. Offshoring for sustainable value management. Serbian
Journal of Management, 9(1), pp.105-119.
Grappi, S., Romani, S. and Bagozzi, R.P., 2013. The effects of company offshoring strategies
on consumer responses. Journal of the Academy of Marketing Science, 41(6), pp.683-704.
Jensen, P.D.Ø., Pedersen, T. and Petersen, B., 2013. Do expectations match reality when
firms consider the risks of offshoring? A comparison of risk assessment by firms with and
without offshoring experience. In The offshoring challenge (pp. 287-299). Springer, London.
Manning, S., 2014. Mitigate, tolerate or relocate? Offshoring challenges, strategic
imperatives and resource constraints. Journal of World Business, 49(4), pp.522-535.
Mihalache, M. and Mihalache, O.R., 2016. A decisional framework of offshoring: integrating
insights from 25 years of research to provide direction for future. Decision Sciences, 47(6),
pp.1103-1149.
Mite, D. and Cruzes, D.S., 2013, October. Expectations and achievements: a longitudinal
study on an offshoring strategy. In 2013 ACM/IEEE International Symposium on Empirical
Software Engineering and Measurement (pp. 123-132). IEEE.

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Rodrigue, M., Magnan, M. and Boulianne, E., 2013. Stakeholders’ influence on
environmental strategy and performance indicators: A managerial perspective. Management
Accounting Research, 24(4), pp.301-316.
Schröder, M., 2013. How moral arguments influence economic decisions and organizational
legitimacy—the case of offshoring production. Organization, 20(4), pp.551-576.
Tate, W.L., Ellram, L.M., Schoenherr, T. and Petersen, K.J., 2014. Global competitive
conditions driving the manufacturing location decision. Business Horizons, 57(3), pp.381-
390.
Zimmermann, A. and Ravishankar, M.N., 2016. A systems perspective on offshoring strategy
and motivational drivers amongst onshore and offshore employees. Journal of World
Business, 51(4), pp.548-567.