A Melbourne-founded company is pioneering a new model of outsourced IT support while the nation's digital ambitions far outstrip its workforce capacity. Here's what the data actually tells us about the shift transforming how Australian businesses build technology.

Australia will need 1.3 million technology workers by 2030. Right now, it has just over one million. That's a gap of roughly 300,000, and closing it means adding about 52,000 new tech professionals every single year. The nation produces around 7,000 IT graduates annually. Enrolments have dropped 10% since the pandemic peak. The maths doesn't work, and it's precisely why IT outsourcing has gone from a cost-cutting exercise to something far more fundamental for Australian businesses trying to build and ship technology at pace.

Globally, the IT outsourcing market sits at around US$600 billion and is growing at 6–8.5% annually through 2030, according to Statista, IMARC Group and Precedence Research. In Australia, the outsourcing segment alone is on track to hit US$21.26 billion by 2029 at an 8.41% clip. The broader IT services market, valued at US$33.3 billion in 2024, could approach US$90 billion by the early 2030s. Federal technology allocations north of US$2.8 billion for the 2024–25 period, covering more than 110 active digital projects, are fuelling a significant part of that trajectory.

Gartner puts Australia's total IT spending at AU$147 billion in 2025, up 8.7% year-on-year. Worldwide IT spending is set to blow past US$6 trillion by 2026. The demand is there. The people to deliver it aren't.

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A $3.1 billion talent problem, and it's getting worse

The Australian Computer Society's Digital Pulse 2024 report, authored by Deloitte Access Economics, confirmed what most hiring managers already knew: the tech workforce crossed the one million mark, but the country still needs another 300,000 workers by 2030 just to keep pace with current demand. Not future demand. Current.

Where it hurts most is predictable. Artificial intelligence needs 129,000 skilled workers, advanced data analytics 134,000, and cybersecurity 48,000. These are also the roles with the steepest salary inflation.

A senior software engineer in Australia commands AU$130,000 to $185,000. Cloud architects pull AU$190,000 to $210,000. AI specialists sit a further 20% above those numbers. Then there are recruitment agency fees, typically 15–25% of base salary, and the not insignificant cost of actually getting someone productive, which takes 12 to 16 weeks on average. Add it all together, superannuation, office space, the works, and a five-person development team costs between AU$656,000 and AU$809,000 a year.

The numbers tell the bigger story. Eighty-five per cent of hiring managers say the shortage is directly hitting organisational performance. Some 72% of Australian employers have given up trying to fill roles locally and turned to international talent sourcing. According to RMIT Online and Deloitte Access Economics, the annual cost of digital skills gaps across Australian businesses sits at AU$3.1 billion, and that figure is only heading in one direction.

Here's the thing, though. More than half of business leaders, 53%, name digital transformation as their biggest challenge, while nearly 60% of SMEs still rate themselves as "traditional" or "emerging" in their digital maturity. So the organisations that need technology most are the ones least equipped to access it. That's the paradox driving so much of the outsourcing conversation right now.

What businesses actually want when they search for IT outsourcing

Something significant has shifted in why companies outsource. Deloitte's 2024 Global Outsourcing Survey, covering 500-plus executives, found that access to specialised talent (42%) has overtaken cost reduction (34%) as the primary driver. Back in 2020, cost cutting was the motivation for 70% of companies. Whitelane Research backs this up, with talent access at 51% and scalability at 50% now leading across mature markets.

When an Australian CTO or operations lead types "IT outsourcing" or "outsourced IT support" into a search bar, they're generally weighing up five things. Can an external partner actually fill roles faster than the domestic market, which currently takes three to four months? What does the total cost really look like once you factor in recruitment fees, onboarding time and employee turnover in a market where everyone is competing for the same people? Can the provider meet compliance standards under the Essential Eight and the Security of Critical Infrastructure Act, given that 43% of cyberattacks target small businesses? Is there genuine timezone overlap, because research shows misalignment adds roughly 20% to project timelines? And finally, what role does AI play in what that outsourced team can actually deliver?

The engagement models have caught up. Dedicated offshore teams on monthly retainers, fixed-price project work, staff augmentation for niche skills, hybrid setups with onshore leadership and offshore execution. The bigger shift, though, is toward outcome-based contracts where providers are accountable for results like time-to-market improvements or customer engagement gains, not just hours logged. Sixty-seven per cent of organisations use these models now, up from 45% two years ago.

Why Indonesia, and why now

For Australian businesses weighing up where to source outsourced IT support, Indonesia presents something different from the traditional offshore playbook. It's not India, with its 10-plus-hour time zone gap. It's not Eastern Europe, with cultural and communication barriers that tend to compound over time. Indonesia is one to three hours ahead of Australian time. That means real-time collaboration during normal business hours, not midnight standups.

The cost equation is still compelling. Indonesian developers earn US$6,700 to $32,000 annually at the median, with outsourcing rates ranging from $18 to $40 an hour, compared with $100 to $190 in Australia. But the argument has moved well past pricing alone.

Indonesia's developer ecosystem has hit real scale. There are 3.1 million contributors on GitHub now, the third-largest base in Asia Pacific, and generative AI project contributions grew 213% in 2023, according to GitHub's State of the Octoverse. The country turns out more than 300,000 STEM graduates a year. Its digital economy, projected to reach US$ 180–360 billion by 2030, according to Google, Temasek, and Bain & Company's e-Conomy SEA 2025 report, is already the largest in Southeast Asia and is approaching US$100 billion in GMV by 2025. Government-backed initiatives like "Making Indonesia 4.0", a Digital Talent Scholarship programme targeting nine million trained workers by 2030, and Microsoft's US$1.7 billion cloud and AI infrastructure commitment all point in the same direction.

The institutional scaffolding is coming together, too. The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) covers digital trade provisions and enables 1,500 reciprocal professional placements in each direction through 2028. The ASEAN Digital Economy Framework Agreement, substantially concluded in 2025, establishes regional governance for cross-border data flows, cybersecurity, and AI standards across a combined digital economy now exceeding US$300 billion in GMV.

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AI isn't killing outsourcing. It's making the contracts bigger.

There's a persistent narrative that AI will gut the outsourcing industry. The data tells a different story. Traditional IT maintenance contracts ran US$5–50 million. AI-led transformation engagements are landing at US $100–500 million under outcome-based structures. IDC projects 60% of new IT services contracts in 2026 will include an AI component.

AI-powered automation is certainly absorbing routine work, infrastructure monitoring, first-level support tickets, and repetitive testing. But that's generating demand for roles that didn't exist five years ago: AI governance, complex system architecture, strategic oversight. These are precisely the roles Australia can't fill domestically at the scale required. Industry projections indicate that 40% of routine outsourcing tasks will be automated by 2030, but the human roles replacing them command higher rates and greater expertise.

What analysts are calling "agentic AI", semi-autonomous systems that can execute complex task sequences, is increasingly being paired with human strategic oversight. This "human-in-the-loop" model is shaping the next generation of outsourced IT support, where value creation shifts from labour cost arbitrage to intelligent collaboration between people and machines.

A Melbourne case study in how it actually worksUpscalix

A Melbourne case study in how it actually works

Upscalix was founded in 2018 by Roderich Hartono and Tuan Nguyen out of Melbourne's Docklands. It started as a two-person freelance operation. Today it runs offices across Melbourne, Semarang, Yogyakarta and Bogor, working with clients in manufacturing, healthcare, real estate and e-commerce.

The model is built around three things that address why outsourcing relationships fail at such high rates, somewhere between 20% and 50% industry-wide according to Dun & Bradstreet. All developers work Australian business hours, 9am to 6pm AEDT. Only the top 3% of candidates clear technical and English assessments from a pool of over 1,000 pre-screened Indonesian developers, the company says. And Upscalix reports developer churn below 2%, well under typical tech sector turnover, which matters because every departure takes project knowledge with it.

The results are tangible. A digitised manufacturing project for JMAX moved paper-based systems to real-time monitoring with full project completion. An AI consultation platform for Consultnote AI improved efficiency by 30%. A residential property app hit 90% tenant adoption. Rates sit at US$25–49 an hour against AU$100–190 locally, which translates to roughly AU$123,000–$180,000 for a five-person team versus AU$656,000–$809,000 if you hired the same capability in Australia.

"Simply put, the old-fashioned way of recruiting locally doesn't scale anymore," says Hartono, who holds a Master's in IT from the University of Sydney. "We're witnessing a structural shift where the distinction between onshore and offshore teams is becoming obsolete. By the end of this decade, the successful firms will be those that have mastered the integration of AI-augmented development with top-tier Southeast Asian talent. We're not helping companies survive the talent shortage, we're empowering them to lead digital transformation across the Asia-Pacific region."

In a market where IT spending runs at AU$147 billion a year and the talent pipeline can't scale fast enough to meet it, the proposition is straightforward: Australian-quality outcomes, offshore efficiency, AI-augmented capability and genuine timezone alignment. That's the direction IT outsourcing is heading. The businesses that work this out first will be the ones still leading in five years.

Upscalix

Level 11/580 Collins St, Melbourne VIC 3000, Australia

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Website : https://upscalix.com.au/

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