UXC Connect CEO Ian Poole explains why outsourcing ICT infrastructure offers Australian companies more benefits over the offshoring option.
When businesses look to outsource their ICT infrastructure without a clear understanding of the potential benefits, it becomes difficult to accurately measure return on investment. Outsourcing aims to improve the way businesses operate, while offshoring is often about transferring activities overseas to take advantage of lower wages.
Lower wages prevalent in overseas markets mean that sending standard operational business processes offshore can reduce the cost of providing them, but the same can be unsuitable for ICT outsourcing.
According to Ian Poole, offshoring can potentially reduce the costs of managing ICT infrastructure; however, it is not an option available to all government enterprises, and is often unacceptable for many Australian non-government businesses from the data security, skills availability, service level and brand image aspects.
Four reasons to consider outsourcing over offshoring
1. Data sovereignty
Following the precedent set by the European Union, Australia has also expanded its privacy legislation to increase security over personal data. Typical offshoring destinations lack similar protection over data with some countries even claiming sovereignty over any data held within their jurisdictions, which ‘back-to-back’ contracts or security audits of overseas data centres cannot overcome.
2. Appropriate skills
Skills involved in managing ICT infrastructure are more specialised and less easily sourced overseas. Research into consumer acceptance of offshore contact centres has demonstrated significant preferences for support delivered from in-country; offshoring therefore is likely to reduce user satisfaction levels.
When a business’ ICT infrastructure is retained in Australia, offshoring its support can reduce service levels to users. In addition, Australia has secure and resilient power and communications networks, plus the option of placing core servers and storage within a wide choice of world-class Australian commercial data centres.
4. Brand reputation
Similar to how it is unacceptable for Australian governments at every level to offshore their operations, commercial organisations also risk damaging their image with Australian consumers and business customers if they offshore key aspects of their operations.