The paper "Assessment Information Strategic Management" Is a great example of a Management Case Study. Offshoring is a phrase that has become famous in the last century. There is a common belief that offshoring has a negative effect on the economy (Mankiw and Swagel, 2006). Off-shoring is termed as the replacement of domestically sourced labor with imported labor. Many companies prefer to use foreign labor in place of domestic labor as a strategy to save on cost. Companies today prefer to send jobs offshore in order to save on labor costs.
The benefits of moving some activities offshore are potentially significant. According to Mankiw and Swagel (2006), offshoring is able to save between 40-70% labor costs. There are additional benefits beyond cost-saving. Companies often enjoy the advantages o scale since most offshore workers are large scale. In addition, labor that is offshored from developing countries is productive and value work more (Woodhead, 2006). The loss of jobs in Australia due to offshoring has been an issue for many years now. Many companies in Australia have moved its activities offshores which has affected the economy of the country. This report will analyze the external and internal issues that have affected ANZ and have driven it to move jobs offshore.
It will also identify the major stakeholders of ANZ and how the decision to offshore activities will affect them. It will also explain why some jobs will still be based in Australia and its related implications. Overview of ANZ Offshoring Activities The Australia New Zealand bank is the fourth largest bank in Australia and offers its products and services on the basis of commercial and retail banking.
The bank offers online banking services to its customers (ANZ, 2007). It uses the B2B and B2C digital commerce models and takes advantage of technological advancement and computer based information systems. It established an offshoring center in India in 1989. In 2005, ANZ Bank decided to off-shore IT work, business processes, and software development work to workers in India and Bangalore (ANZ, 2007). In addition, the bank has also offshored other functions such as call centers, account maintenance, and financial forecasting work. However, direct customer contact function was maintained in Australia.
The decision of ANZ to move some jobs offshore was a primary goal of doubling profits and reducing labor costs. In addition, the decision was made in order to free up the staff in Australia in order for them to focus more on the customers (ANZ, 2007). India is considered to have a lower labor cost compared to Australia. The country has also a younger workforce and a large employment pool of educated individuals. Currently, the Australia New Zealand Bank has employed a total of 4800 IT employees in Australia and New Zealand and more than 2000 in India (ANZ, 2007).
The bank is also in the process of offshoring more workers from China. Australia has an IT skill shortage which has contributed to the decision of ANZ to offshore IT jobs. Nevertheless, although the bank has benefited from offshoring, there are a number of challenges that the bank faced in its quest to offshore jobs. For instance, offshoring jobs in India have exposed ANZ to political, regulatory, and legal risks. In addition, cultural and language barriers interfered with the offshoring plan (ANZ, 2006).
Australian and New Zealand Bank 2006, Corporate Responsibility Report. available at http://www.anz.com/aus/CorporateResponsibility2006 [Accessed Jan. 10th 2017]
Australian and New Zealand Bank 2007, Information of ANZ in Bangalore, India. available at http://www.anz.com/aus/aboutanz/facts/anzblore.asp [Accessed Jan. 10th 2017]
Autor D. H., F. Levy, and R.J. Murnane, 2003, The Skill Content of Recent Technological Change: An Empirical Exploration. Quarterly Journal of Economics, Vol. 118, No. 4, pp. 1279-1333.
Avinash D., and G. Grossman, 2005, “The Limits of Free Trade,” comment in Journal of Economic Perspectives, Summer, pp. 241-242.
Bato, V 2003, Application of E-Commerce in Banking Industry. Harvard Business Review. pp. 23-54.
Bernard, A. B., Jensen, B., Redding, S. J. and P. K. Schott 2007, Firms in International Trade. Journal of Economic Perspectives, 21(3), pp. 105-130.
Bhagwati, Jagdish, Arvind Panagariya and T.N. Srinivasan 2004, The Muddles Over Outsourcing, Journal of Economic Perspectives. vol. 18 (Fall), pp. 93-114.
Chena, Y. J. Ishikawab and Z. Yuc 2004, Trade Liberalization and Strategic Outsourcing. Journal of International Economics, vol. 63, no. 2, pp. 419-436.
Chou, Y., Chiwei, L and Jianru, C 2004, Understanding m-commerce payment systems through the analytic hierarchy process. Journal of Business Research, Vol 57, No 12, pp. 1423–1430.
DiGregorio, D., Musteen, M. & Thomas, D.E 2009, Offshore outsourcing as a source of international competitiveness for SMEs. Journal of International Business Studies, vol. 40, no. 6, pp. 969–988.
Farrell, D., Laboissiere, M.A. & Rosenfel, J 2006, ‘Sizing the emerging global labor market: rational behavior from both companies and countries can help it work more efficiently. Academy of Management Perspectives, vol. 20, no. 4, pp. 23-34.
Hirschheim, R., Heinzl, A. & Dibbern, J 2009, Information systems outsourcing : enduring themes, global challenges, and process opportunities, Berlin Heidelberg, Springer.
Kehal, H & Singh, V 2006, Outsourcing and offshoring in the 21st century: a socio-economic perspective, Hershey, PA: Idea Group Pub.
Luce, E. and K. Merchant, 2004, The logic is inescapable’: why India believes commercial imperatives will help it beat the offshoring backlash, Financial Times, 26th January, p. 11.
Mankiw, N.G. & Swagel, P 2006, The politics and economics of offshore outsourcing. Journal of Monetary Economics, vol. 53, no. 5, pp. 1027-1056.
Nicholson, B., Jones, J. & Espenlaub, S 2006, Transaction costs and control of outsourced accounting: Case evidence from India. Accounting Research, vol. 17, no. 3, pp. 238-258.
Samuelson, A 2004, Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization. Journal of Economic Perspectives, Vol. 18, No. 3, pp. 135-146.
Woodhead, B 2006, Offshoring to bring jobs home, The Australian (IT section) August 1.