Outsourcing: a labour skills shortage solution

Outsourcing: a labour skills shortage solution
Natalie Toniotti
Natalie Toniotti
    6 minute read

Ask any business today what their number one recruitment concern is and one in five of them will state the difficulty of finding suitably skilled or qualified staff. Australia is a country that has always thrived on worker migration. As a result of the lasting effects of the pandemic, with lockdowns and border restrictions, we are still struggling to get back on our feet. Not to mention the 81% of employers who believe candidates have become more demanding with salary expectations compared to pre-pandemic conditions, businesses nationally are looking for a ‘fix’.

In this blog, we discuss how outsourcing could be the solution to help businesses out of this ‘labour skills shortage sinkhole’ and back to focusing on what really matters.

What is causing the labour shortage in Australia?

In 2020 alone, skilled worker immigration dropped from 200,000 to 70,000 in a single year. The government’s pandemic rollouts forced many temporary workers back home in order to keep people safe and limit worker movements across Australia. While this strategy contributed greatly to the arguable success of the nation’s COVID-19 spread management, today, the effects are being felt in the recruitment industry.

In the year leading up to February 2022, 1.3 million people, or 9.5% of employed people changed jobs in Australia. This is the highest annual job mobility rate Australia has seen since 2012. The effects of which have since spurred the growth of workplace phenomena supporting a change in working lifestyles such as The Great Resignation, The Great Reshuffle and The Great Re-evaluation.

The struggle to find and attract quality talent is also increasing with candidate ghosting on the rise. Data from SEEK’s recent March 2022 employment dashboard highlights the decline in applications per job advertisement, dropping 42.5% from February 2021 to February 2022.

The top two reasons for retention issues in businesses stem from competition from other jobs and unsatisfactory salaries or conditions. This is putting pressure on businesses to increase salary and compensation packages to keep the quality talent they currently have or fork out a significant amount to facilitate recruitment costs… keeping in mind that the cost to hire a single employee has more than doubled in a year from an average of $10,500 to $23,860 per candidate.

What are the effects of labour shortages?

A lack of skilled talent can lead to a stunt period in a business’s growth since there just isn’t enough expertise, knowledge or hands-on-deck to facilitate scalability opportunities. Training costs can rise as the ‘show must go on’ and businesses are forced to hire ill-suited candidates to keep up with production or project deadlines.

How can outsourcing help solve labour shortages?

Think of it this way, by 2030, if the demand and supply for talented staff does not rectify itself, the global talent shortage is anticipated to reach 85.2 million people. That’s around AUD $12.4 trillion in unrealised annual revenues. Although these losses will impact all industries, knowledge or skill-intensive sectors with financial services, manufacturing, business services and technology likely to feel it the most.

An increase in demand and a decrease in supply will always result in the demand product becoming more costly and sometimes difficult to find; these are the basic principles of economics. The demand here is the need for skilled workers. Now, outsourcing is an alternative resourcing strategy that can help rectify this issue by allowing businesses access to a global pool of quality talent, all while reducing employment costs by up to 70% in the process and more.

Access to a global talent pool

Outsourcing means your business can tap into a global talent pool and source candidates from anywhere in the world. Got a problem sourcing skilled graphic designers in Australia? Not getting enough applications via ads locally or even advertising remote work nationally? Why not consider looking in popular outsourcing locations like the Philippines? Branching out and doing research into what markets are available could open you up to places where what skills you lack close to home may actually be in surplus somewhere else.

So you find the skills you need offshore, how can you make sure your outsourcing venture is a success? Check out our 5-part education series for all the tools you need.
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Decreased labour costs

If you decide to outsource, you could save up to 70% on employment costs alone. That’s because the salary you would pay for most roles in Australia is likely to be significantly less in a lower-cost economy like the Philippines. The cost of living in the Philippines is also much lower than in most Western countries which means that the salary provided to outsourced Filipinos is usually higher than they would receive for a local equivalent position.

Improved staff satisfaction rates

Outsourcing can help you to identify roles and tasks that would be best suited to send to an offshore employee. That way, your local team can focus on what they do best and what motivates them, improving job satisfaction for employees in the long run.

Hiring offshore team members can help relieve any unnecessary stress felt by your local team through the provision of additional support. Your staff will appreciate this, job satisfaction will increase and attrition will decrease. This means less likelihood of losing the quality onshore employees you currently have to a competitor.

Foster business growth

One of the many reasons businesses struggle to grow is a lack of funds to invest in additional resources to support growth objectives. Businesses often don't have the time to recruit new employees to leverage potential growth opportunities. On top of this, there are businesses that go through peak periods where there is too much work and then times when there isn’t as much.

There is often a very short lead time to hiring offshore, providing a further advantage in that it can be very quick to scale up a business, depending on the role type. Outsourcing can also free up funds that can be used to reinvest back into the growth of your business. With the additional support of outsourced team member(s), you can increase the capacity for your business to take on more work without having to worry about labour shortages or rising talent costs.

Improve business flexibility and availability

Outsourcing can provide businesses with the flexibility to meet changing resourcing requirements in response to fluctuating customer or market demands. This flexibility can help your business navigate risks, support sustainable business growth and plan for peak periods where additional support may be required. An additional bonus is removing the costs associated with lengthy recruitment drives or setting up contact centres suddenly. Outsourcing providers are experts at both - all you need to do is communicate your needs and let them take care of the rest.

How outsourcing can boost business planning

Whether it's labour shortages or simply time for a change, building a successful business means continuous business planning. There should never be a time when you are not looking for ways to improve your strategic and operational plans. Adaptability and flexibility are key.

Want to know how you can leverage outsourcing to boost your efficiencies and help to deliver on your business plans?
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