Aussies Too Fire Broadside at Outsourcing

For the last several weeks, US politics have been dominated by discussions about the shift of information-technology (IT) jobs to lower-wage nations. Now, Australians are joining in to register their protest. A new deal between American company IBM and Australian telecom giant Telstra threatens to move 450 Australian jobs to India, where IBM has said it will base the conglomerate's IT operations. Moreover, an additional 1,500 call center and customer service jobs are expected to be moved over the next few years. Australian unions and opposition politicians are as eager as labor advocates in the US to make job loss an election year issue before the federal polls that are expected later this year. The outsourcing of jobs has rhetorical value as a rallying cry for opposition politicians, particularly since 51% of Telstra is owned by the government. – YaleGlobal

Aussies Too Fire Broadside at Outsourcing

Kalinga Seneviratne
Monday, March 1, 2004

WHAT is happening in the United States - a campaign against outsourcing of professional jobs overseas, particularly to India - is gathering steam in Australia as well.

Last week, three Australian professional unions banded together to launch a 'Save Oz Jobs' campaign with a rally opposite Australian telecom giant Telstra's headquarters in Melbourne, protesting against the company's decision to outsource much of its IT work overseas.

The unions plan to lobby politicians, students and the general public with the aim of making outsourcing IT and other service industry work offshore an election issue during the federal polls expected this year.

Already they have succeeded in getting the opposition Australian Labor Party (ALP) on their side. Unions succeeded in driving through an anti-offshoring resolution at the recent ALP national conference, which forbids government departments and related entities from having any work done overseas, if it could be done efficiently in Australia.

The furore over outsourcing of high-tech jobs to India comes at a time when the Australian government is encouraging its companies to venture out to India in search of business opportunities.

Yet Treasurer Peter Costello, sensing widespread public discontent at Australian jobs going overseas, saw fit to criticise Telstra's latest move in a radio interview last month.

'Telstra is a profitable corporation,' he said on ABC Radio, adding, 'I think that wherever possible, those jobs ought to be located in Australia (because) Australia has a very highly skilled workforce.'

The latest campaign over offshore outsourcing began in January, when Telstra, which is one of Australia's most profitable companies and 51 per cent government-owned, signed an agreement with the US-based IBM Global Services to extend their IT outsourcing arrangement under which IBM manages and develops software applications for Telstra.

Unions claim this will involve shifting 450 Australian IT jobs to India, as IBM has said most of its IT work will be done in India.

In addition, the unions say they have leaked memos from the company, which say they are planning to move offshore - mainly to India - not only IT jobs, but also call centres, accounting, payroll and purchasing system management.

The move offshore is part of Telstra's plan to slash up to A$1 billion (S$1.3 billion) in costs by sending up to 1,500 jobs overseas over the next few years. The unions see this as unnecessary because Telstra's after-tax profits for the last six months of last year was over A$2 billion.

The unions spearheading the campaign are the Community and Public Sector Union (CPSU), the Association of Professional Engineers, Scientists and Managers and the Australian Computer Society. They are drawing upon economic nationalist sentiments to garner public support for the campaign, with CPSU's communication secretary, Mr Stephen Jones, warning that the government should act 'to support our local IT industry before it is undermined completely by offshoring'.

An industry report released in January by the consultancy firm Ambition Technology concluded that the boom days for Australian IT developers were 'well and truly' over with the trend to shift IT work offshore gathering momentum.

The report pointed out that demand had dramatically waned for testers, technical writers, trainers, mainframe programmers and developers, with most jobs going offshore to India as large corporations and telecom players sought more cost-effective approaches.

'It is hard to quantify, but we are up in the thousands of developer jobs lost from the IT industry in Australia over four or five years,' said Mr Nick Waterworth, Ambition co-founder, when launching the report in Sydney.

The report, however, highlights strong demand for network engineers, integration specialists, security/risk analysts and bilingual help desk staff.

To counter the offshoring trend, Australia is encouraging offshoring in the other direction, by getting multinational corporations to set up their Asia-Pacific headquarters for IT support in Australia.

Meanwhile, the campaign against offshoring continues, directed particularly at Indian firms and using stereotypical arguments such as 'exploiting cheap labour in an under-developed country'.

An example is how the Australian media and unions viewed Indian software giant Infosys Technologies. When it opened a global IT development centre in Melbourne in 2002, employing more than 150 locals, the Bangalore-based company's chairman, Mr N.R. Narayana Murthy, had to respond to a barrage of questions about IT jobs being done by low-paid Indian staff.

A year later, Infosys signed a five-year deal with Telstra worth A$75 million to provide network and applications management to the telecom firm. Infosys also runs IT operations for other businesses in Australia such as Vodafone and Suncorp-Metway.

The Nasdaq-listed Infosys employs about 19,000 people in more than 30 countries and their global revenue is more than A$1 billion. Yet, in the eyes of many union officials and reporters in Australia, it is not the cutting-edge technology and the multinational nature of Infosys that sticks. What they see is an Indian firm taking away Australian jobs to be done by low-paid staff back home.

Australian Information Industry Association chief executive Rob Durie argued in a radio interview recently that this stereotypical image of Indian technology needs to change. 'They've developed great capabilities in terms of skill, and have also used very strict methodology and quality approaches to enhance their reputation,' he said. 'India now has a very high reputation as a quality developer at relatively low cost.'

That enlightened approach deserves more support.

The writer, a journalist for more than 20 years, is currently doing his doctorate in Australia.

Copyright @ 2004 Singapore Press Holdings. All rights reserved.

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