Ex-Centrebet MD bets on job outsourcing to continue (Australian Financial Review Article – 30 September 2014)

michael

Former Centrebet managing director Michael McRitchie has struck out with a new business to help companies to set up offshore teams in the Philippines so they can better compete against rivals with lower costs.

But his latest bet – that the high cost of doing business in Australia will underpin more outsourcing – is unlikely to please unions and workers, who lament the flow of jobs to foreign countries where companies can pay lower wages.
Mr McRitchie said he is “100 per cent” sure that more outsourcing of jobs, especially in call centre and back office roles, is inevitable.

“Whilst we’ve got great talent . . . the cost of doing business in Australia ¬relative to other markets is too high,” he said. “For companies to compete, they need to look at other options.”

Just over a year ago, Mr McRitchie began his business Satellite Office, to act as a middle man for companies wanting to set up their own offshore teams.

He chose the Philippines because its citizens are strong English speakers, have high levels of education and because it is in the same time zone as Perth.

Satellite Office has a wholesale agreement with a large company that provides serviced offices, recruitment, technology and other administrative support. Companies pay Satellite Office a monthly management fee, once they have their offshore team set up.

Mr McRitchie said after a year in business he has signed up clients from a wide range of industries, like energy, e-commerce and online education, but declined to disclose a revenue figure.

SAVINGS OF DOLLARS

He said the cost to an Australian business of a customer service team leader based locally would be about $70,000 to $75,000 when costs like workers compensation and payroll tax were included.

A similar role based in the Philippines, including all overheads and his firm’s management fee, would cost the company $20,000 to $25,000.

The idea to set up Satellite Office came during a one-year stint between 2012 and 2013 when Mr McRitchie was the chief executive of online retailer Deals Direct. The company set up a 40-person customer service team in the capital of the Philippines, Manila. “What we saw from that team was not just a saving of dollars per ¬person, but an actual improvement in performance relative to the team we built in Australia,” he said.

Mr McRitchie, who ran Centrebet for almost eight years until 2011, said there was an opportunity to get business improvement from outsourcing, as opposed to just cutting costs. “Australian firms are competing against larger international players,” he said. “To compete, you need to be cost effective and make improvements.”

Companies that outsource jobs often face strong community and media backlash, as big brands like Telstra, Qantas and QBE can attest. This makes Mr McRitchie’s new enterprise a potentially controversial one.

“If you’re building offshore teams the stigma is that it is impacting Australian roles,” he said. “Another way to look at that is for an Australian company to compete in the global market you need to improve your business.”

Source: Jessica Gardner & Sarah Thompson “The Australian Financial Review”
http://www.afr.com/Page/Uuid/4d2e4a7a-444f-11e4-b2d7-890475c72403

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