Australian IT companies planning software development projects next year, when a predicted skills shortage begins to bite and wages escalate, will find a silver lining if they embrace the right outsourcing strategy.

Mike Page, vice president of software development for Mitrais was commenting on the findings of an IDC Australia report released this week.

The report predicts a shortage in skilled IT labor due to a decline in the number of foreign workers on 457 visas, combined with a low level of student enrolments in tertiary IT education courses.

“Australian IT companies should use the opportunity to explore the outsourcing of software development to Indonesia to avoid the impact of escalating salaries which will result from this shortage, as well as the two obstacles to successful outsourcing - distance and cultural differences,” Mr. Page said. 

The ability to recruit and train top quality graduates from Indonesia’s specialized IT universities is a critical factor in the decision of many Australian companies to outsource software development

Mr. Page said while cost remains a major driver in decisions about where to outsource, the quality of the labor pool is gaining importance as companies view the labor market through a global lens driven by talent shortages at home, particularly in higher, valued-added functions.

Indonesia rose a further step up the ladder of most attractive outsourcing destinations to enter the top five according to global management consulting firm, A.T. Kearney’s latest Global Services Location Index (GSLI).