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Small businesses are increasingly being faced with the dilemma of outsourcing to cut costs and maximise profits but at the price of domestic jobs and accountability.
The outsourcing of huge sectors of the Australian workforce has becoming an increasingly difficult problem to tackle as companies look to cut costs and maximise profits.
Small businesses have been relatively immune to this trend until recently as the internet has opens up a whole new world of freelancers, mainly in developing countries, undercutting Australian workers.
Freelancer.com.au, which pairs small businesses and entrepreneurs – usually in rich countries like Australia and the UK -- with suppliers of work in poor countries like India and Egypt has noted that small businesses are using it for such tasks once safely in the domain of domestic employees.
Customer support projects, for example, rose 89 per cent in the first quarter of 2012 to 1173 projects globally.
“Small to medium enterprises are … turning to online freelancers as a cost-effective means of providing around-the-clock customer support,” the company said.
The type of work projects favoured on Freelancer.com’s global activities, where the average project costs less than $200 and can be worth 10 times the amount of labour by Australian standards, also includes data processing, which grew 187 per cent in the quarter to 18,351 projects, and data entry, which rose 111 per cent to 30,837 projects, according to the website.
Competition from cheaper overseas markets has diminished Australia’s skilled manufacturing industry and textile sector for decades. Now, as work becomes more mobile through the help of the internet and other digital technology, more customer service work and information technology jobs have been uprooted and sent abroad.
So far the trend of small businesses and entrepreneurs sending their work overseas remains minuscule compared to the scale of large corporate outsourcing. But the possibilities opened up by the technology that acts as a sort of auction site for work is immense.
Australian National University economist Timo Henckel said for local workers the real risk was if small businesses aggressively began outsourcing task traditionally performed by them.
“You would have displacement if this were to happen really quickly,” he said, giving the example of an accountancy that could be put out of business by a spike in competition.
“On the other hand because [the work] is done more efficiently, that frees up resources for a domestic firm to engage in some other activity or to use those funds for further expansion,” he said.
Rivals such as PeoplePerHour.com, Elance.com and Guru.com provide similar services to the global labour market. At the same time business leaders and politicians in Australia routinely lament the poor productivity of the domestic economy.
Already small businesses and entrepreneurs have shown a zeal for the opportunity to offshore some tasks. In Freelancer.com’s latest statistics, demand for business process outsourcing (BPO) projects has risen more than 300 per cent worldwide over the past three months, to 5150 jobs posted on the site.
After BPO projects, the fastest growing type of work was Adobe PDF-related work, ranked no. 2 in the quarter, with 1386 projects in the quarter. Projects involving Microsoft’s accounting software Excel were in the No. 3 spot with 20,300 projects in the quarter.
Christopher Hire of innovation agency 2thinknow said piecemeal outsourcing of work was common in the technical community in Australia. ‘‘But it’s not visible to the client.’’
Typically a web design company can save through outsourcing specific tasks on any given project, he said. However, the work was limited to tasks.
"You can’t outsource accountability,’’ he said. ‘‘You can only outsource tasks."Source- show link