There has been a noticeable run of Australian businesses announcing changes to their technology operating models over the past six months, with offshore delivery and vendor partnerships featuring heavily.
Bendigo Bank has entered long-term partnerships with Infosys and Genpact as part of a broader overhaul of its technology and business operations, with around 188 technology roles reportedly impacted in the first round of changes. Officeworks announced plans to move hundreds of roles from Australia to India and the Philippines, Woolworths has confirmed similar changes across corporate functions including technology, and NAB has continued to restructure locally while creating roles offshore. More recently, Coles has reportedly expanded its relationship with Accenture, with technology among the functions affected.
Cost is obviously part of the story. Bendigo Bank expects its broader changes to deliver annual run-rate savings of around $65–75 million by FY28, and it would be difficult to imagine cost isn't a significant consideration for others making similar decisions. Australian businesses are being asked to deliver more from technology while managing costs, so access to large global talent pools at a different price point is always going to be attractive.
But I don't think this is purely another cycle of sending technology jobs offshore.
What's more interesting is how businesses are starting to think about which technology capabilities they actually need to own.
For a long time, the debate around technology operating models has tended to swing between insourcing and outsourcing. Organisations build large internal teams, decide they've become too expensive or difficult to scale, outsource parts of them and, occasionally, bring capability back in when the model hasn't worked as intended.
What we're seeing now feels more nuanced. Technology functions have become incredibly broad. Cloud, cyber, data, AI, engineering, architecture, platforms, digital products and transformation can all sit somewhere within a CIO or CTO's remit, and building deep internal capability across every discipline is both difficult and expensive.
At the same time, the vendor market has matured considerably. A partnership with a global provider isn't necessarily just access to cheaper labour anymore. Bendigo Bank, for example, specifically referenced access to software engineering, digital and AI capability as part of its partnership with Infosys.
So the question for technology leaders becomes less about whether outsourcing is good or bad, and more about where internal capability genuinely creates value.
There will be areas where owning the capability makes complete sense, particularly where technology is central to competitive advantage or where deep organisational knowledge is important. There will be others where a specialist partner can provide better capability, greater scale or a more flexible cost base than an organisation could realistically build itself.
The challenge is making sure that in moving delivery elsewhere, businesses don't also lose the capability to understand and challenge what is being delivered.
That's particularly interesting from a talent perspective; if more execution moves to offshore teams, vendors and specialist partners, the capability required internally changes with it. You may need fewer people performing certain tasks, but the people who remain need to be very good at setting direction, making decisions and managing increasingly complex technology ecosystems.
Architecture becomes important. So does commercial and vendor management, governance and the ability to translate between technology and the business. Technology leaders need enough technical depth to challenge a recommendation without necessarily having hundreds of engineers sitting underneath them. Essentially, organisations still need to be intelligent customers of technology.
There is a risk otherwise that short-term efficiency comes at the expense of long-term capability. If too much organisational and technical knowledge sits with external providers, changing direction or changing partners becomes considerably harder. The economics of outsourcing may look attractive on paper, but the quality of the internal capability retained around it matters just as much.
AI adds another dimension to this because some of the work historically considered a natural candidate for offshore delivery may itself change considerably over the next few years. As automation becomes more capable, the question isn't necessarily ‘where’ a piece of work should happen; in some cases, it will be whether people need to perform that work in the same way at all.
That makes technology operating-model decisions particularly interesting right now. Organisations aren't simply deciding between an Australian employee and a lower-cost offshore resource. They're deciding what should sit internally, what belongs with a specialist partner, what can be bought as a platform and what could increasingly be automated.
We suspect the answer for most businesses will be a mixture of all of them.
What that mixture looks like will depend enormously on the organisation, but it does suggest the shape of internal technology teams will continue to change. We're likely to see leaner teams in some areas, greater use of global delivery capability and partners, while organisations retain or invest more heavily in the people who own strategy, architecture, governance and the capabilities that genuinely differentiate the business.
It also means the profile of technology leadership continues to evolve. Running a large internal function is very different from leading an ecosystem of employees, offshore teams, SaaS providers, consultants and strategic partners, particularly when AI is starting to sit across all of them.
For technology leaders, deciding what to build, what to buy and where to partner has always been part of the job. Looking at what's happening across Australian businesses at the moment, it feels like that decision is becoming a much bigger part of it.
