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Outsource magazine: thought-leadership and outsourcing strategy | July 20, 2017

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China, the Cloud and building bridges

China, the Cloud and building bridges
Martin Conboy

It’s been busy for the last few weeks as we drew a line under 2010. In Australia we are all starting to drag ourselves back to work after our break (although many will not come back until after the Australia Day weekend). Sadly this summer, the beer was a bit flatter as our cricket team lost to an in-form English team who now have bragging rights until the next series.  A bright spot was the marvellous antics of the Barmy Army; these guys know how to have a good time.

On another front we are currently experiencing unprecedented flooding in parts of Queensland and NSW so we are bracing ourselves for higher food prices as a lot of the items sold in supermarkets are grown in those areas and a lot of the crops have been completely wiped out. There is definitely something wrong with the weather and it will have to be addressed sooner rather than later.

In December the Australian BPO Association played host to a high-level Chinese BPO trade delegation, lead by Mr Lu Hua, Deputy Director of the China Investment Promotion Agency (CIPA), which is the investment promotion agency of the People’s Republic of China.  CIPA is in charge of “Inviting in” and “Going global” (outbound investment) two-way investment promotion work in line with China’s economic strategies. It is a part of the Central Government’s Ministry of Commerce.

China’s BPO industry is growing significantly, currently valued at US$36 Billion, and is now only second in size to the longer-established Indian service sector.  China’s growth rate is accelerating and it is expected to overtake India in size and value within the next couple of years. This was an important visit and hopefully there will be many more interactions as we strengthen our ties with China. It was great to get up close and personal with them as their tales of growth and change are staggering.

One of the issues that came out of the various meeting was the fact that Australia is once again experiencing a chronic skills shortage – especially in our resources sector. Needless to say this was of interest to the Chinese delegates as they pointed out that they have 6 million university graduates a year and 40 per cent are in engineering disciplines.

Analysts say that excessive restrictions on Australian 457-visa sponsorship and poor retention of older workers will contribute to big skills shortages for various sectors – especially IT – over the next five years. Furthermore rapid growth in the mining, resources and infrastructure sectors was pushing up labour demand and wages.

At one of the working sessions with the Chinese delegation Andrew Banks, the CEO of Talent 2 – a leading listed HR and recruitment firm who are HQ in Australia with offices in the UK – was expressing his frustration with the Australian government, saying that unless the government moved to ease restrictions on sponsoring 457-visa workers, outsourcing work to countries where skills were available would become increasingly common. He has a strong view that a type of special visa could be implemented that allows companies to bring skilled workers for specific projects and be repatriated once the project is finished.

It’s not always easy to move human resources around global markets to match demand; however we are witnessing a hybrid model. Another business strategy along the lines of “if the mountain will not come to Mohammed then Mohammed must go to the mountain”, or maybe not, we are now seeing knowledge workers in other countries completing tasks via web-based browsers and cloud-based applications. It’s not applicable for every business process, however it is proving a godsend for companies who can outsource some of their non-core business processes in order to get their work done.

The IT Cloud is giving a new meaning to the term “knowledge worker”. These workers can work from anywhere, anytime and anyhow from any device. In the future knowledge workers will bring their own Internet access device in much the same way that a tradesman brings his own tools to do his work. They simply plug into the Internet and away they go.

Cloud computing has come a long way in the last few years. Formerly dismissed as a fad or marketing term, it is now rapidly emerging as an inexpensive option for developing IT infrastructure.  Cloud computing is likely to have a very significant effect in outsourcing markets

The Australian BPO Assoc. was invited to attend a Microsoft CIO breakfast in December as Microsoft was rolling out its plans for the Cloud. The Cloud is not an easy thing to get your head around as it means different things to different people and depending upon where you sit will determine your ability to make it work for you. The IT cloud is not a person, place or thing yet we treat it like it’s a noun.

According to Brian Prentice, Gartner’s VP of research speaking at the Microsoft CLOUD Summit in Sydney, the Cloud is “a style of computing where scalable and elastic IT-related capabilities are provided as a service to customers using internet technologies”. Interestingly he said that Gartner Australian research showed that in 2009 “The Cloud” was number 16 on the CIO priority list; however it had catapulted into the number-two position in 2010. Mr. Prentice indicated that it was the marketing departments that were leading the push for organisations to adopt the cloud, not the IT departments.

Prentice argues that there will be a shift from end-user licenses to service-level agreements: in other words from a capex to opex environment with all of the tax benefits that that brings. There is no doubt that as the new year unfolds, Cloud IT will have an impact on BPO. So looking ahead it appears that we are in for another interesting year.

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