Jobs losses in the finance sector in Australia may accelerate if employers step up the "offshoring" of work in line with projections modelled on behalf of two industry unions.
The National Institute of Economic and Industry Research estimates that 24 per cent of jobs in finance and insurance are "at risk" of being sent offshore, albeit over an extended time-frame of two to three decades.
In a report commissioned by the Finance Sector Union and the Australian Services Union, the consultants estimate that 97,000 jobs, or more than 3000 jobs a year, may be contracted to offshore suppliers over the next 20 to 30 years.
NIEIR said that three quarters of finance and insurance industry occupations were in the top one third of occupations at risk of off-shoring, while more than one third of jobs were in the top 10 per cent.
Occupations at most immediate risk are call or contact centre workers, general bank workers (who represent 17 per cent of finance industry jobs) and software and applications programmers.
Employment in financial services fell between 2007 and 2012, though it increased by four per cent over the last two years, according to the Australian Bureau of Statistics.
NIEIR first modelled the prospects of offshoring by finance sector employers in 2008. In that report the consultants "predicted that the pace of offshoring was likely to continue to grow as new technology made new forms of remote work possible."
"In 2012 there is evidence that that is the case. The pace at which jobs have been moved offshore has been roughly in line [with the 2008 NIEIR base case]."
NIEIR argues that the high exchange rate is increasing the rationale for employers to offshore, though it said the long term costs of this may be greater than those making the decisions think they will be.
The consultants argue that the policy issue is "not just for the jobs being lost but a vicious cycle of offshoring jobs, losing skills and competencies from the domestic economy and as a result losing more jobs off-shore" and this might "become institutionalised".
The consultants contend that "the consequence for Australia would be that transfers to other countries [would] offset price benefits to Australian customers from lower cost services."
Discussion of the likelihood of job losses through offshoring may be adding to the prospect of even more offshoring by acting as a brake on vocational training.
Clive Whincup, chief information officer at Westpac, told the Australian Computer Society Young IT conference in Sydney yesterday that "the paradox is, because we are doing it, because the media and some elements of society are fixated with the fact this is happening for cost reasons, it's actually becoming a self-fulfilling prophecy."
"People are forming the view there are no IT jobs in Australia, and will therefore, not put their children in technology-related degree courses."
"That is the logic we have to cut off."
ZDNet reported on Whincup's speech to the conference.