Forget AI: offshoring is the real threat to Australian jobs

Australians are constantly being told to fear artificial intelligence, with almost every discussion about the future of work eventually turning to predictions about AI replacing employees, eliminating professions and fundamentally reshaping the labour market. While AI will undoubtedly transform the way we work, I believe our obsession with the futuristic threat of machines replacing people is distracting us from a much more immediate change that is already gathering pace across Australian workplaces.

The greatest immediate threat to many Australian jobs isn't necessarily artificial intelligence; it is a skilled person sitting in another country who can increasingly perform the same role, use the same systems, attend the same meetings and communicate with the same customers for a fraction of the cost.

Offshoring has changed enormously over the past decade and the outdated image of large corporations sending basic call-centre work overseas no longer reflects what is happening. Australian businesses can now build sophisticated international teams containing accountants, software developers, executive assistants, marketers, graphic designers, customer-service specialists, recruiters, payroll staff, sales-support teams and IT professionals who can operate as integrated members of the organisation.

They can attend meetings through video conferencing, work inside the same cloud platforms, communicate directly with Australian customers and collaborate with locally based employees throughout the working day. Improvements in technology have made international teams considerably easier to establish and manage, and the commercial implications of this change are becoming impossible for Australian businesses to ignore.

The economics are becoming impossible to ignore

Running a business in Australia has become extraordinarily expensive because the cost of employing someone extends well beyond their salary. Businesses also face superannuation, workers' compensation, leave entitlements, recruitment expenses, equipment, technology, office space, utilities, insurance, training, management overheads and, where applicable, payroll tax.

At the same time, customers remain extremely price sensitive and many businesses are finding it increasingly difficult to pass their rising costs on to consumers. Employees understandably need wages that allow them to meet their own rising living expenses, while business owners are simultaneously confronting increasing rent, energy, insurance, financing and compliance costs, leaving many caught between protecting their workforce and protecting the viability of the business itself.

Depending on the role, country and structure involved, moving appropriate functions offshore can potentially reduce overall operating costs by as much as 60 per cent, and the competitive consequences of savings of that magnitude are enormous. A company operating with a substantially lower cost base can potentially reduce prices, increase its marketing, invest in technology, expand more rapidly or simply withstand difficult economic conditions for longer than a competitor carrying significantly higher employment and operating costs.

Once one company within an industry establishes an effective offshore workforce and gains a significant cost advantage, its competitors inevitably have to consider how they will respond. This is why offshoring should no longer be regarded simply as an operational decision made by individual businesses; it is becoming a much broader structural change in the Australian employment market.

If your job can be done from a laptop, you are increasingly competing globally

There is an uncomfortable question every Australian white-collar worker should consider, which is whether their job genuinely needs to be performed in Australia.

If somebody can perform their entire role using a laptop, internet connection and cloud-based systems, there is a growing possibility that another suitably qualified person could perform much of that work from Manila, Kuala Lumpur, Jakarta, Fiji or another international location. This does not mean every Australian job capable of being performed remotely is going to disappear, but it does mean Australian workers are increasingly participating in a global labour market whether they recognise it or not.