Australians may think of New Zealand as their little sibling, but there are big benefits which Aussie businesses can gain from outsourcing across the Tasman. Let’s look at the top 10 benefits relevant to two specific areas of outsourcing: contact centres and shared services.
25-30% Cost Savings
Aside from exchange rates, which go up and down, there are a number of explanations for New Zealand’s consistently attractive cost base:
- Salary on-costs (superannuation, payroll tax, workers compensation). On-costs in Australia are almost 17%, while in New Zealand they are just 3.8%, due to staff superannuation contributions being optional, and payroll tax being non-existent! In dollar terms, this equates to a A$1.5 million saving for a 200-FTE operation.
- Office costs. 2017 saw an 8% vacancy rate in commercial real estate in the capital, Wellington. For the same space and quality of facility, companies can enjoy a 50% or more reduction in office costs in New Zealand versus Australia. Again, for a 200-FTE operation, this represents approximately a A$500,000 saving.
- Salaries are lower in the major cities of New Zealand versus capital cities such as Sydney and Melbourne, exemplified in the below comparison chart for an array of key roles:
|Inbound Sales & Service representative||45K||50K|
|Contact Centre Manager||100K||120K|
Source: The 2017 Hays Salary Guide
In a 200-FTE centre, the salary cost savings would be in the vicinity of $1.5 million. With people costs accounting for 60-70% of front and back office operations, the financial advantage of the New Zealand workforce could not be clearer.
But outsourcing to another country is not all about cost, and if it was, everyone would be moving their operations to countries such as India. It’s also about the value New Zealand brings in other areas which make it such a compelling “end-to-end” business case.
Time Zone Advantage
For companies operating on a global scale, it should be noted that New Zealand is the first country in the world to wake up – two hours ahead of Sydney and four ahead of Perth – catering perfectly to the night hours in the Northern Hemisphere. For example, 8pm in London is 8am in Wellington.
Further, due to more flexible working arrangements and lower after-hours costs, contact centres in New Zealand operate 24×7 at around twice the rate of centres in Australia.
Favourable labour and tax environment
The labour market in New Zealand is more deregulated, flexible and less unionised than Australia. It ranks in the top 10 countries in the world for efficiency. Sick leave is 5 days a year versus 10 in Australia, while the top personal tax rate is 33% for incomes over NZ$70K. Corporate tax is also lower than Australia at 28%, and capital gains tax is limited.
No accent in Anglosphere is closer to Australian English than New Zealand English. And with more than 650,000 New Zealand citizens living in Australia, New Zealand English is a very familiar and accepted accent. It carries none of the negative connotations of accents in some other countries where Australian companies outsource their customer service. Accents which are unfamiliar or difficult to understand correlate strongly with customer dissatisfaction and poor service experience, which should be quantified in dollar terms when building a business case for different locations.
As the famous saying goes, “culture eats strategy for breakfast”, and even with the best offshore strategy on paper, implementations fail time and again due to failure to address cultural gaps. This problem doesn’t present itself with New Zealand due to the cultural similarity with Australia. Both countries share a British colonial heritage, with English the first language of the majority of residents. There is a common passion for sports such as cricket and rugby – even if it is based on strong rivalry! On the real battlefront, Australian and New Zealand soldiers have fought together against common enemies, such as in Gallipoli. The list of commonalities is long, providing an easy cultural affinity between the two nations’ peoples.
New Zealand is closer to Sydney or Brisbane than Perth, just a few hours away via regular direct flights with a choice of multiple airlines. This makes it more accessible than all other offshore destinations. Travel time is an important consideration due to the lifestyle implications for employees involved in transitioning an operation – from specialists to managers and senior executives.
Strong Business and Economic ties
From the Free Trade to the Open Skies agreements, the economic convergence of the two countries is only increasing. In business law, customs, taxation and social security, there is collaboration between the respective governments at nearly every level.
The country’s largest city, Auckland, is a melting pot of language speakers from many countries, catering to the needs of companies looking to establish a multilingual Asia-Pacific hub. And according to the NZTE Regional Profile, 54% of all school leavers in a city such as Wellington achieved university entrance, and 28% of all residents hold a tertiary qualification. This makes New Zealand’s workforce highly educated, and there is in fact a surplus of skilled labour. The creative, digital and technology sectors are particular strengths, and there is a strong pool of experience in the contact centre and shared services arena. Many Australian organisations have already placed their operations in New Zealand, either directly, or with outsourcing companies.
The speed and reliability of New Zealand’s telecommunications infrastructure is world-class, as are data security and risk management frameworks.
Ease of doing business
The World Bank rated New Zealand as the “easiest country to start a business” in its 2017 “Doing Business Report”, and the second most competitive of all 34 OECD countries in 2017. The New Zealand government invests heavily in supporting Australian businesses in the research, planning and implementation phases of doing business in the country.