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Half of all Australian businesses will look offshore for suppliers and customers as the cost of doing business grows

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More than half of Australian businesses (51 per cent) would look to source more suppliers and customers overseas within the next 12 months, according to new research released by Money Transfer Comparison.

As the cost of doing business in Australia increases, 85,686 businesses closed their doors permanently between March and June 2023. The highly competitive and costly Australian market could force SMEs to seek resources or customers offshore for business success or survival. The research comprised of a survey of 202 independent business owners and decision-makers across the full SME spectrum, commissioned by comparison service Money Transfer Comparison.

With the rising operating costs business owners face, one-third have already reduced spending on non-essentials and are making cost-saving adjustments for their businesses.

Money Transfer Comparison’s research found that 51 per cent of businesses are willing to seek resources and customers or clients from overseas within the next 12 months as a response to the escalating costs of operating a business in Australia.

One-third of the respondents (33 per cent) indicated that they would choose an offshore supplier instead of a local one, and 18 per cent would seek customers or clients from overseas. “There are a number of benefits to outsourcing, such as saving on labour and supplier costs, entering less competitive markets and increasing a business’s customer base,” says Money Transfer Comparison spokesperson Russell Gous. Across the major states, West Australian businesses are the most likely to source overseas resources and customers or clients in the next 12 months at 68 per cent. Queensland businesses are the least likely to make the switch from local to international suppliers and customers or clients (60 per cent).  Analysing the choices of different business sizes across the SME spectrum, 60 per cent of medium-sized businesses would look offshore. In comparison, only a quarter of micro-businesses (25 per cent) would investigate overseas options.  Russell believes the new findings indicate that business owners are adapting to the rapidly changing financial climate in Australia:

“Businesses are proactive in finding solutions to maintain their competitive edge and financial security. Outsourcing could be a short or long-term solution for businesses mitigating increasing costs, as well as to solve the skills shortage,” he said.  Tech industry the most sought after for SMEs looking to outsource The survey asked respondents which category Australian businesses would look at sourcing cheaper overseas products and services, with tech-related products and services being most likely, specifically software (38 per cent) and IT hardware (31 per cent). A significant proportion of businesses would also source manufacturing (30 per cent), labour (29 per cent), shipping and logistics (27 per cent) and research (15 per cent) offshore.  “The data provides a comprehensive picture of how Australian SMEs will lean on offshore outsourcing to mitigate some local challenges,” he said.

“The significant trend points towards the need for outsourcing within the next 12 months, and the preference towards the tech industry reflects Australia’s shortage of skills in this area.” The full survey results, including breakdowns across different business sizes and States, can be found here: https://moneytransfercomparison.com/australian-business-supplies-overseas/ 

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