‘Outsourcing’ needn’t be a dirty word

All businesses will undergo digital transformation at some point in order to be 21^st Century-fit. Outsourcing arrangements can be mutually beneficial if the focus is on acquiring critical IT skills rather than securing cheap labour, writes Ben Rose, especially in New Zealand where the talent shortage is a massive barrier for businesses.

For as long as I can remember, outsourcing has been synonymous with cheap, exploited labour in third world countries. Poor people working long hours in factories with low standards of health and safety, and few rights. And of course, we know that places like this exist and that in the past, some New Zealand companies have engaged in this exploitative behaviour. They should be roundly condemned.

But there is another side to outsourcing that gets little acknowledgment. Many developing countries are home to highly skilled senior IT professionals of a calibre we are very short on in New Zealand. If companies are prepared to think more strategically about outsourcing, and use a more collaborative and professional approach, one that focusses not on cheap labour but more on accessing skills, these arrangements can be highly beneficial to both parties.

Others might have reservations due to cultural differences, time-zone clashes and a lack of clear communication due to language barriers – even outright xenophobia. But it cuts both ways. Where companies have failed to make a success of an offshore arrangement, it has often been because they don’t want to invest in their own capability to leverage it, or they haven’t thought about creating the right work environment for offshore workers, who are an extension of your team and want to feel like it.

While supporting local is admirable and often preferable, in a country the size of New Zealand, which has a serious IT talent shortage, this attitude by itself can be a barrier to success. All organisations have either gone through or are undergoing digital transformation, which has rapidly accelerated in the Covid era.

Yet in 2019, the country had less than 2,000 IT degree enrolments. NZ Tech says the country needs 5,000 new digital technology professionals every year to keep up with demand. So the idea that outsourcing is sending IT jobs offshore doesn’t make sense.

It is now normal to employ people who work from home in other parts of the country and it’s no longer seen as crucial that all staff come into the office every day. For better or worse, we’ve gotten used to Microsoft Teams and Zoom meetings, and they have enabled many businesses to stay afloat and keep staff connected where bricks and mortar business could not.

Keep up or get left behind, as they say. Countries like Vietnam and many others can offer both the skills and scale required to help businesses keep developing. A blended model of outsourcing talent but maintaining the continuity of New Zealand business culture in overseas offices is one way forward – this approach can be revolutionary, and New Zealand businesses shouldn’t fear it.

In fact, more and more businesses are beginning to get on board with this 21^st Century way of working. Distributed teams provide both skills and convenience, and it’s likely to become a more prominent trend.

Customers and shareholders alike are increasingly demanding more functionality, smoother experiences, more instant access to information, especially among larger corporates. In some cases, businesses may simply be forced to adapt to the digital transformation wave. One way or another, they will need skilled IT professionals to enable the transition.

Outsourcing makes a world of sense right now for a country like New Zealand. That doesn’t mean we shouldn’t be training more people in core IT skills – almost everyone needs the basics today – or not investing in our own IT infrastructure. But by using a blended model of outsourcing, New Zealand businesses can future proof themselves for what looks to be a period of increasing uncertainty, at least for the medium term.

Ben Rose (pictured) is CodeHQ’s chief commercial officer.