07 Jul Regional businesses thrive with offshore staffing
Australia is one of the most urbanised countries in the world, with around 90% of our population living in cities. This presents an ongoing ongoing challenge for regional businesses that often struggle to find qualified and skilled staff.
Take the example of an accountant in Lismore, NSW, trying to attract good talent. Lismore is a significant regional city of around 50,000 people with a highly regarded university, but being a regional area it can’t offer the salaries that can be secured 200 kilometres away at Brisbane, or even 100 kilometres away on the Gold Coast.
As a result, there is an annual exodus of accounting graduates to larger cities, and also an ongoing loss of experienced accountants chasing higher salaries. Accountants in Lismore, competing for the remaining staff, are unable to grow due to the lack of local talent.
In Casino, a town of less than 10,000 people 30 kilometres from Lismore, the problem is worse again, where around 10 accounting firms compete for a small pool of business clients with tight budgets. This equates to tight salaries for accounting staff, making it even harder to attract and maintain a skilled team. In both cities accountants can find more exciting opportunities in Brisbane and Sydney.
Offshore staffing can solve these regional staffing challenges, injecting life back into regional communities.
The financial services industry is particularly suited to offshore staffing for many reasons, including the increasing commoditisation and automation of financial compliance work. Offshore staffing helps to maintain margins in the face of falling work volume and in the perceived value of some accounting services.
For example, the accountant in Casino who cannot fill a senior accountant role locally, could establish an offshore accounting team. Some have tried old-style “outsourcing” with mixed success, but the industry has evolved to now offer many different staffing models and levels of quality control.
However, proper planning is essential. Trying to solve the wrong problem is what causes many offshore attempts to fail.
Trying to find a senior accountant in the Philippines or India who will be an expert in local tax law and be able to liaise with clients effectively is a flawed approach. One of the many things we teach our regional clients is to free the time of their existing Australian senior staff by gradually moving much of the lower end work to a qualified and experienced offshore team under their control.
By better leveraging the highly skilled local staff, you can get far more value from the team members you already have and won’t need more of them to grow the business.
There are a number of other flow-on effects that are good for regional businesses, such as:
• Improved customer service levels due to work being turned around faster. Financial planning, accounting and SMSF firms, for example, can turn around some jobs in 48 hours that local-only firms quote weeks to complete because the local firms must ensure they have high yield at all times. Offshoring allows you to overstaff in order to deliver faster service to clients.
• With higher margins and profit, smart firms frequently return a portion of that profit to their local staff. As a result, regional firms with offshore teams tend to pay higher wages to their valued local staff. In turn that pushes more money back into the regional community.
• It might sound counter-intuitive but local Australian staff often enjoy their job more as a result of having a complementary offshore team integrated to the business. This is because a well-executed strategy involves shifting lower end work, often considered boring, away from your higher paid local staff.
In fact, the whole idea that engaging offshore teams can benefit a regional community seems counter-intuitive, but nevertheless it works. In some ways it’s not unlike the ongoing immigration programs that have successfully brought people to regional areas. Offshoring simply uses technology to connect workers instead of airplanes and immigration.
Of course offshoring has far wider applications than our focus here on financial services. In any industry where a regional business is struggling to attract or retain skilled office-based staff, offshoring can provide a strong, flexible and compliant solution, with proper planning and execution.