Forget AI: offshoring is the real threat to Australian jobs

Geography once provided Australian workers with a considerable degree of protection because when a Melbourne company needed an accountant, administrator, marketing employee or customer-service specialist, it generally recruited someone who lived within reasonable commuting distance of Melbourne. Technology has progressively dismantled that geographical barrier, with video conferencing, cloud computing, cybersecurity platforms, online project-management tools and digital workforce systems making it possible to manage somebody thousands of kilometres away almost as easily as somebody working from home in another Australian suburb.

The widespread adoption of remote working also demonstrated to businesses that many roles did not require employees to be physically sitting inside an office every day. One of the unintended consequences of that transformation is that employers have also discovered that if the work can be performed effectively outside the office, the person performing it does not necessarily need to be located in Australia.

The human factor could make offshoring more powerful than AI

The intense focus on AI also overlooks another important reality about consumer behaviour, because despite extraordinary advances in automation, people still frequently want to deal with other people when they have complicated questions, complaints or urgent problems.

Many consumers are already frustrated by automated menus, chatbots and systems that repeatedly send them in circles without resolving the issue they originally contacted the business about. What they often want is a capable human being who listens carefully, understands the problem and has sufficient knowledge and authority to solve it.

This is where offshoring becomes particularly powerful because it can allow a business to preserve human interaction while dramatically changing the economics of delivering that service. Instead of replacing a customer-service employee entirely with artificial intelligence, a business may employ a skilled person overseas who uses AI to work more efficiently, manage more customers and deliver greater output at a considerably lower overall cost.

The future workforce disruption may therefore not involve AI replacing every human employee, as some of the more dramatic predictions suggest. It may instead involve skilled offshore employees using artificial intelligence alongside their professional capabilities, potentially creating a significant productivity and cost advantage over businesses relying exclusively on higher-cost local workforces.

Australian employees could therefore find themselves competing not simply against technology, but against technology-enabled workers from around the world.

Business owners are responding to commercial pressure

It would be easy to portray businesses that move roles offshore as companies simply looking for cheaper workers, but that interpretation ignores the commercial pressures confronting many Australian employers.

Most business owners I speak with are not looking at their workforce and searching for people they can replace; they are examining their accounts and trying to determine how they can keep their businesses viable, remain competitive and protect organisations they may have spent decades building.

When wages, superannuation, insurance, rent, energy, interest costs, technology expenses, compliance requirements and other overheads continue increasing while customers resist price increases, businesses have a finite number of options available to them. They can absorb those additional costs and accept lower margins, increase their prices and risk losing customers, automate certain functions, leave positions vacant, restructure their operations or investigate whether some work can be undertaken more economically elsewhere.