| SYDNEY/WELLINGTON, Sept 18
SYDNEY/WELLINGTON, Sept 18 When Australian
customers of Quickflix ring the online video rental and
streaming service's support centre, the voice at the other end
of the line sounds reassuringly familiar.
That's because the person speaking is not in Manila or
Bangalore, but Auckland, New Zealand, where call centres have
been steadily gaining clients from neighbouring Australia.
While it costs more to operate in the South Pacific island
nation than the Asian centres that dominate the industry,
Australian firms hurt by a slowing economy can still save some
30 percent by moving roles across the Tasman Sea.
"A few years ago Australian companies wouldn't even consider
outsourcing work to New Zealand," said John Chetwynd, managing
director of Telnet, which operates Quickflix's call centre.
"This is a window of opportunity to grow our business based
Telnet's work from Australia has doubled this year to
roughly 20 percent of its total business, as more firms shift
support centre operations to New Zealand, attracted by lower
costs, a convenient time zone and a shared culture.
The trend highlights one of the risks facing Australia's
economy, where firms are increasingly finding that rising wages
during a long boom, inflexible labour laws and red tape have
blunted their competitive edge on the global stage.
Figures from the Organisation of Economic Co-operation and
Development show unit labour costs in both Australia and New
Zealand rank in the top five among OECD countries, but costs in
Australia climbed 7.8 percent between the first quarters of 2009
and 2011, much faster than 4.4 percent growth over the same
period in New Zealand.
Mininum wage costs alone are higher in Australia, at A$16.37
for most adults in the country, compared with a minimum wage of
around A$12.00 in New Zealand.
"Offshored" jobs are adding fuel to New Zealand's economic
growth and reversing the historical migration to much more
populous Australia just as it prepares for an economic slowdown.
Australia may have gone 22 years without a recession, but
growth has sputtered as its China-led mining boom tapers.
In contrast, New Zealand's economy is on the up due to
earthquake reconstruction projects in the Canterbury region of
the South Island, while its high-tech manufacturing and IT
sectors are expanding strongly.
That has been reflected in the New Zealand dollar's climb to
a five-year high against its Australian counterpart.
But despite the exchange rate, industry sources say Australian
companies still stand to save around one-third in costs by
shifting to New Zealand.
CROSSING THE DITCH
Another sign is a marked slowdown in "kiwis" leaving for
Australia so far this year, New Zealand government data shows,
stemming a two-year exodus during which New Zealanders decamped
to their bigger neighbour for better jobs and pay.
Now, more Australians are considering heading over "the
ditch", said Pete Macauley, regional director of recruitment
company Michael Page New Zealand, as more job losses push
Australian unemployment to a four-year high.
"We are talking to a lot more Australians looking to New
Zealand for their next career move," he said, citing demand from
across the job spectrum, from mining to financial services.
While New Zealand has traditionally been relegated to
"little brother" status against Australia, the two are major
trading partners, closely linked through geographical proximity.
Companies including Australia and New Zealand Banking Group
Ltd, Australia's third-biggest bank, and Fairfax Media
, which publishes some of Australia's leading
newspapers, have moved roles to New Zealand.
In June, Michael Stutchbury, Editor-in-Chief of the
Financial Review Group at Fairfax, told readers in an email,
"there's nothing wrong or new with offshoring", after the
Financial Review moved copy sub-editing to Auckland.
"The strong dollar, digital disruption and changed consumer
behaviour - are forcing just about every traditional company in
Australia to reassess its business plan," he said.
Last year, food giant H.J. Heinz Co. moved some production
from Australia to New Zealand, partly to become more
Only two years ago Lion Food and Beverage Company, owned by
Japan's Kirin Holdings Co, and other big firms were
moving jobs the other way to capitalise on Australia's stronger
economy. Gary Ivory, M&A partner at KPMG in Auckland says this
traditional shift "has definitely stopped".
Australian firms, able to deal with demands of its
relatively strong unions when flush with cash, are reconsidering
in a weaker economy, he said.
"What's affecting Australian companies is their cost
structure. Now that things have slowed down, they're realising
that they're uncompetitive," Ivory said.
A recent World Economic Forum survey on global
competitiveness showed New Zealand outranking Australia for the
first time, while Australia fell from the top-20 due to tight
labour laws, government red tape and high tax rates.
Notoriously rigid labour laws put Australia near bottom of
the 148-country list for wage flexibility and hiring and firing,
while New Zealand ranked 10th for wage flexibility.
This may prompt more firms to consider New Zealand, where
unions relations are warmer and a right-of-centre government
since 2008 has fostered a business-friendly environment.
"Australian companies complained of hiring and firing
practices along with a highly regulated labour market and the
cost of employing people, whereas in New Zealand that wasn't an
issue," said Oliver Hartwich, executive director of the New
Zealand Initiative think-tank, which contributed to the survey.
"As long as Australia doesn't tackle these problems, New
Zealand has a chance to outcompete," he said.
While many experts anticipate more Australian companies will
shift jobs to New Zealand as the Australian economy slows, once
things improve they say flows of migration and jobs will likely
reverse, given Australia's economy is roughly six times bigger.
For now, firms in New Zealand can capitalise. And not just
through cost savings - Australian customers of Quickflix and
other companies can ring up operators who have similar accents
and shared sense of humour.
"There's surprisingly little cultural stress, or tension -
apart from when the rugby's on," said Dan Turner, chief
executive of Unity4, an outsourced contact centre services
provider that opened in New Zealand about six months ago. "It's
a sibling rivalry."