Suncorp (ASX: SUN) may soon be known as Australia's number one offshore employer as it plans to increase its number of full-time overseas employees to 1,500. Currently around 1,400, the company hopes to increase the number of full-time staff it employs through offshore employers by August this year.
According to The Australian Financial Review, the jobs will account for more than 8.25% of all employees. Sydney-based outsourcing advisor Sri Annaswamy said that Suncorp's number of overseas staff is higher than ANZ's (ASX: ANZ) 7.45%, Westpac's (ASX: WBC) 6.05% and QBE's (ASX: QBE) 4.29% of total employees. The increased number of foreign services is an attempt by Suncorp to grow revenues whilst maintaining low costs, primarily through its HR, IT, insurance claims and accounting departments.
The moves are attributed to Suncorp's business process offshoring launched back in 2011 that sought to cut costs of up to $50 million annually. It is rumoured that Suncorp's chief, Patrick Snowball, has been able to draw on past experiences in offshoring to make the transition possible.
Suncorp is not the first to offshore staff in the insurance sector. Insurance giant QBE has also decided to offshore up to 700 jobs to the Philippines in a pure cost-cutting strategy. However Mr Annaswamy believes Suncorp's strategy and implementation is much more sensible and doesn't detract away from the long term value of the company. Its strategy is not only for cost cutting but for improving customer service and revenue.
He went on to say that the strategy will add "serious long-term value to its actual businesses, customers and share-holders in terms of cost, revenue and capital efficiency outcomes".
Foolish takeaway
Investors know that companies as big Suncorp and QBE will have difficulty making the huge profit gains they did in the past. Both companies are actively searching to lower costs and increase efficiency in a hope to return to shareholders. At current prices, both companies look expensive but are also set to report strong gains in their next annual report. History has shown that companies who report stronger profit in their annual reports will increase in share price not only when the reports are released but in the 12 months following.
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Motley Fool contributor Owen Raszkiewicz owns shares in ANZ.
