Hiring delays cost Australian firms customers: report

ConnectOS has published research showing that hiring delays are costing Australian businesses and customers. The findings point to a broader workforce problem that extends beyond recruitment.

Its State of Offshoring Report found that one in three employers had experienced reduced service quality because they could not fill critical roles, while 32% said they had lost customers. Nearly one-third missed project deadlines, 27% lost or delayed contracts, and 26% said they had to decline new business because they could not secure the required skills.

The figures suggest labour shortages are affecting day-to-day operations as well as growth plans. Rather than remaining a hiring issue for human resources teams, the shortages are showing up in customer service, delivery schedules, and revenue.

According to the research, 60% of employers took between 30 and 60 days to fill critical onshore positions before turning to offshore staffing. Skill shortages and wage inflation were the two main factors shaping workforce decisions, each cited by about 39% of employers.

That points to a market in which employers are struggling both to find suitable candidates and to manage rising employment costs. For some, offshore hiring is less a cost-cutting measure than a way to secure skills that are proving difficult to source locally.

Steve Evans, Founder and Chief Executive Officer at ConnectOS, said the impact of unfilled roles now stretches far beyond recruitment.

"HR leaders are under enormous pressure to help their organisations grow while operating in one of the tightest labour markets we've seen in years.

"When organisations can't access the skills they need, the impact doesn't stop with recruitment. It affects customers, revenue, employee wellbeing and ultimately business performance."

Integrated teams

Offshore teams are increasingly being used to complement Australian workforces rather than replace them. Organisations are using these teams to access specialist skills, ease pressure on existing staff, and maintain service levels where local recruitment has become harder.

That shift also appears in the type of work being sent offshore. While customer support remains the most common function, employers are extending offshore roles into technology, engineering, data and analytics, finance, cybersecurity, marketing, and human resources.

Among employers surveyed, 34% said offshore work had become more specialised over the past three years, while 21% said it had become more strategic and knowledge-based. The findings indicate a shift from transactional support work to roles that require greater technical and functional expertise.

Evans addressed the debate over the effect of offshore hiring on domestic jobs.

"This isn't about replacing Australian workers. It's about Australian businesses struggling to access enough of the skills they need. Organisations are increasingly building integrated onshore and offshore teams to fill capability gaps, support local employees, and create the capacity required to continue growing."

Retention focus

The research also examined employee sentiment among businesses using offshore workforce arrangements. It found that 84% of surveyed employees said they were proud to work for their organisation, while 86% expected to remain with their employer for at least the next 12 months.

Nearly 73% said they expected to stay for at least three years. About three-quarters had already been with their employer for more than one year, and 69% said they rarely thought about looking for another job.

Those responses challenge a common assumption that offshore teams are more transient or less engaged than onshore staff. They also reinforce the importance employers are placing on retention at a time when replacing experienced workers has become more costly and difficult.

The report found a strong link between engagement and organisational results. Some 93% of respondents agreed that happy employees deliver better customer outcomes, while 84% said high morale contributes to stronger team performance.

Evans said retention is becoming more valuable as roles become more specialised and organisations introduce new technologies.

"As recruitment becomes more difficult, retaining experienced employees becomes one of the most valuable advantages an organisation can have. Stable teams preserve organisational knowledge, reduce recruitment and training costs and allow people to build deeper expertise in the business. That's becoming increasingly important as Australian organisations introduce AI, automation and more specialised roles."

AI training gap

The report also highlighted the role of human resources leaders in preparing staff for artificial intelligence tools. Two-thirds of employers said they were already using AI, while 79% said their offshore teams were adopting AI at the same pace as, or faster than, onshore employees.

Yet formal training appears uneven. Only 29% said they currently provide ongoing AI training to offshore employees, while 32% said training is delivered on an ad hoc basis and 28% said they provide no AI training at all.

That gap suggests businesses may be adopting AI faster than they are building the workforce skills needed to use it effectively. Employers also identified AI enablement, talent development, and cultural alignment as the most important qualities in offshore workforce partners, ahead of cost leadership.

On the role of training, Evans said organisations need to match technology investment with workforce development.

"Technology alone won't deliver productivity gains. Organisations also need to invest in developing people. HR leaders have a critical role to play in helping employees build the confidence and capability to work alongside AI while ensuring learning opportunities are available across both onshore and offshore teams."

The employer survey covered 214 organisations using or considering offshore arrangements, with 98% of respondents headquartered in Australia. A separate employee survey included 495 respondents across offshore, hybrid, and onshore teams.