The tension between the United States and parts of the Middle East has been making headlines around the world. Even though Australia and the Philippines are far from these conflicting nations, global events such as this have ripple effects. This can affect business, cost, outsourcing, and even hiring trends.

The issues on oil supply, global trade, and currencies have also affected business confidence among companies. 

In fact, according to the World Bank, geopolitical tensions such as what is happening right now have led to increased volatility in global markets, affecting fuel prices and hiring decisions. 

If you are currently outsourcing your business, or still thinking of hiring and outsourcing, you need to know how this will affect you. 

You also need to know what to do. 

To give you some light on the current global conflicts, here are the things that you need to know that can affect your business and what you should do about it. 

Impact of the US-Middle East tension to Australian Businesses

1. Increasing oil prices are increasing business costs

The war between the US and some Middle East countries has affected the supply and prices of oil. And the rise of oil prices has created a domino effect on everything, especially on business costs. 

Did you know that the Middle East accounts for about 30% of global oil production, and when conflict disrupts supply, oil prices can spike quickly? 

During the past weeks, oil prices have surged by 20% or more. This led to world wide increase in transportation and logistics costs.

For Australian businesses, what this means is increased delivery and freight costs, higher electricity and operational expenses, and more pressure on profit margins. 

If you are currently outsourcing your business in the Philippines, it means you have reduced overhead costs, you maintain productivity, and you still stay profitable despite the rising expenses. 

Even though economic stability is unclear with this global tension, it is still a wise business move to outsource during this time. 

Thus, if you are planning to expand your business through in-house teams, you may want to start looking for more cost-effective options like outsourcing in the Philippines. 

2. Businesses become more careful with spending

With the surge oil prices affecting everything, it creates uncertainty. Thus, most businesses shift into “protection mode”. 

In fact, according to Deloitte, during this period of economic uncertainty, 70% of businesses delay hiring. They even reduce capital spending, and they prioritise efficiency over expansion. 

But businesses need to continue. 

That is why for now if you are trying to hire full-time employees, you may want to consider outsourcing some roles, hiring virtual assistants, and even using flexible staffing solutions. 

What’s good about outsourcing is that you can stop when it is not working for you or when you need to be in “protect mode” during this economic uncertainty. 

On the other hand, you can continue if it works for your business without spending too much. 

With outsourcing, you get lower labor costs, no long-term commitments, and scalable workforce options. 

This is not just a cost-saving business strategy but outsourcing is a smart business strategy.

3. Currency fluctuations affect outsourcing costs 

Another effect of this global conflict is unstable currency exchange rates. 

For example, the Australian Dollar (AUD) can fluctuate depending on global market confidence. With this, exchange rates with outsourcing countries like the Philippines greatly shift. 

If AUD is strong, it makes outsourcing in the Philippines cheaper. On the other hand, if AUD is weak, there will be a slight increase in outsourcing costs. But it still remains more affordable than local hiring. 

Right now, AUD is strong, making outsourcing affordable in the Philippines. That is why this is the best time to outsource and expand your team through offshoring. 

4. Supply chain disruptions push businesses to adapt

This global conflict also disrupts global supply chains. The COVID-19 pandemic already showed how fragile supply chains can be. Now, due to geopolitical tensions, businesses are now facing shipping delays, increased freight costs, and limited access to goods. 

Did you know that according to McKinsey, supply chain disruptions can reduce company revenue by up to 45% over time if not managed properly?

If you are a business operating during this global economic tension, instead of scaling physical operations, focus on your core business activities and outsource your non-core tasks. 

With outsourcing, you can keep your operations lean. It also makes your business more flexible. And lastly, you support your business stability and continuity. 

This is the reason why, despite this global conflict, Australian businesses are looking at outsourcing as a smart alternative in growing their business. 

5. The shift toward remote work accelerates

This global instability only pushes businesses toward digital solutions. 

Since the pandemic in 2020, remote work has grown rapidly. And as we go back to the new normal, people are starting to go back to the office and face-to-face work. But with this global conflict, it pushes the efficiency of remote work again. 

In fact, according to Statista, over 28% of employees worldwide now work remotely. And this is expected to increase with this global conflict and uncertainty. 

This means businesses are more open to hiring remote teams, working with offshore staff, and using digital collaboration tools. 

Thus, this will create huge demand for virtual assistants, customer service teams, and IT and Technical Support.

6. Talent shortages make outsourcing essential

Australia continues to face talent shortages in several industries. 

According to Jobs and Skills Australia, many sectors are experiencing critical skills shortages, especially when it comes to admin, information technology, and customer support. 

But hiring locally can be expensive. Plus, recruitment can take time. And skilled workers are a bit limited in the country. 

That is why outsourcing in the Philippines is a smart business move as it offers access to a global talent pool, fast recruitment of skilled professionals, at a fraction of cost. 

Turning uncertainty into opportunity

If you are a business owner and a bit anxious of what this global conflict can do to your business, don’t be scared. 

During this time of global uncertainty, there are opportunities that we can take advantage of. And outsourcing can be a great opportunity that can help you reduce costs, stay flexible, access global talent, and even continue operating smoothly even during these uncertain times. 

If you are still unsure if outsourcing is for you, we offer a business consultation so you know what to do and what options you have. 

Just contact us so we can help you build a smarter, more resilient business – no matter what’s happening in the world.