The decision between offshoring and automation is a no-brainer

For many people, automation is scary. At the extreme end, some fear the rise of killer robots, but most of the concern centres on the anxiety of immediate job losses and replacement. This comes as no surprise.

A recent report from McKinsey Australia indicates that anywhere between 3.5 million and 6.5 million full-time jobs will be displaced by 2030 through automation.

While fears over job losses are understandable, that same fear can lead to inaction and businesses becoming irrelevant and extinct — which is a far worse result for employees.  Practically speaking, losing a percentage of staff is better than losing everyone.

Kodak infamously developed and soon dropped the digital camera in 1975, fearing it would cannibalise its photographic film business. This failure to innovate meant the company missed out on the digital and mobile photography revolution, and it has shed more than 100,000 jobs since that decision.

Right now, Australian companies across the board are risking the same fate by failing to innovate — particularly in the area of automation and artificial intelligence (AI).

Offshoring: A band-aid solution

As an alternative or accompaniment to automation, many companies go down the offshoring route.

Market research firm IBISWorld believes offshoring is increasing in Australia, particularly in legal, accounting, IT, finance, engineering and customer services roles. In the past year alone, we’ve seen announcements from major companies across the industry spectrum announcing new jobs abroad while culling local employment.

Australia’s high wages and a range of nearby nations with quick and easy access to cheap labour make a compelling case for companies to offshore — particularly in head count-intensive areas such as call centre support, accounting and credit management.

However, this is short-term gain for long-term pain.

Offshore providers are renowned for poor working conditions, glaringly low wages and often unpredictable domestic interruptions. The result is a conveyor belt of employees who aren’t in a position to meet the needs of their Australian clients.

The telecommunications industry is a classic example. Offshoring customer service roles has been par for the course with major telcos, and many believe it to be a major contributor to the high levels of dissatisfaction consumers and businesses have with the industry.

Worse still, once the decision has been made to offshore, it can be incredibly difficult to reverse. Telstra recently admitted it would now be too costly to bring offshore call centres back to Australia, presenting a serious challenge to improving customer service in an industry ripe for disruption.

Automation not just the lesser of two evils

Automation is fast becoming a need for today’s businesses. Australia has a reputation of being a digital-hungry, early adopter and leader of new technology. It’s only natural we maintain this position and reputation when it comes to automation.

Automation is the clear winner over offshoring. Not only does it typically lead to only a percentage of a department being cut rather than the whole team, but it can actually be a catalyst for job growth and professional development in the long term.

The McKinsey report indicates that automation and AI present an enormous opportunity for national and personal income growth, potentially adding up to $4 trillion to Australia’s economy in the next 10 years.

One of the key benefits of automation is its capacity to take away the grunt work — the ‘no job is perfect’ aspect every role has. Doing so frees up remaining staff — who by definition will be the most experienced and top-performing — to expand their roles and deliver more business value.

This professional expansion within a collective group of employees elevates the role of that department to another level. It’s no longer just a business process, but a business-generating and customer-focused element of an organisation. This improved customer service can lead to expansion and innovation, creating more demand for the enhanced department and leading to further job growth within it.

Changing that perception can make a business click and enables customers to view the department in a completely different way.

Yes, there’s a journey with automation, and some hard readjustment to be realised, but innovation stops for no-one. It’s important that we see past the early pain automation can bring and look toward the value it can ultimately deliver.

The alternatives — offshoring or businesses letting themselves drift towards their own Kodak moment — do no-one any good. They deliver no jobs, innovation or economic growth to Australia. Automation, on the other hand, can stem the flow while improving business and customer outcomes alike.

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