A lot of airlines can’t be really said to be in the airline business at the moment, and they are certainly rationalising their workforce to get through these troubled times.
Recently one of the major Australian airlines made the news as they axed another 2,400 jobs by outsourcing all of its ground handling work at Australian airports.
The airline in question said it could save $100 million a year by shifting baggage handling, aircraft cleaning and ground support work to a third-party aviation service provider at 11 airports. They already outsource the ground work at 55 smaller airports around the country.
The comment was that third-party operators could do the same work at a 40 per cent lower cost because they serviced multiple airlines at the one airport, thereby utilising efficiency of labour.
Outsourcing the work would also avoid $100 million in capital spending on things such as ground handling equipment over the next five years.
As expected, there is considerable resistance from the Unions.
The outsourced offshore model the future winner of the full move to cloud
However, looking at this business situation in terms of Australian compliance, there are many parallels.
In the offshore outsourced model, there is resistance to change, not from the unions in this case, but from the Australian accounting firm owners who are worried what their clients will think, though in reality provided the quality work is done offshore, and reviewed by the Australian tax agent onshore, then the client would be happier with lower prices.
We’ve seen several Australian accounting firms approach that prickly question of where the work is done in this way: Ask the client if they’d like to pay $1,000 with the processing done offshore for a tax return, or $2,000 when the processing is done onshore. As the dearth (and death) of Australian manufacturing has already shown, Australian consumers will pick a cheaper product when there is no real perceivable difference in the quality of the work done.
And whilst Australian accounting firm owners might feel an accounting business needs staff in order to show successfulness of the business, the reality is that the fixed employee labour model doesn’t match with the services required. In the same way every airlines have rationalised their staffing to match the resource requirements, Australian accounting firms are starting to match jobs (the output) with a flexible labour force (the inputs) and flexible work areas (working from home).
And in terms of ad-hoc flexible labour, this model seems to be gaining traction from quality offshore providers.
If you need assistance with your ad-hoc work then drop us a line. We’ll be happy to assist.