Australia's Tech Market This Week: Offshoring Climbs as AI Spending Surges

It has been a telling week for anyone watching how Australian businesses build and run their technology. Two themes stood out. Large employers are sending more tech and back office work offshore, and at the same time the country is pouring serious money into AI infrastructure. Here is a quick, sourced roundup of what moved and what it might mean for SMEs and startups planning their next build.

Offshoring is back in the headlines

Woolworths began consultations with affected staff on 10 June about moving hundreds of corporate roles, with the IT division expected to bear much of the change. The work is set to shift to the company's existing global hubs in India and the Philippines, part of a wider cost reduction drive (Information Age, 2026). The Conversation framed the broader trend as a risk to Australia's "corporate brain" as high value roles head overseas (The Conversation, 2026).

Just a week earlier, Officeworks confirmed it was moving hundreds of tech, analyst and customer service roles to Bengaluru and Manila, citing rising costs and greater use of AI and automation (Information Age, 2 Jun 2026). Two of the country's best known retailers making the same call in the same month is a clear signal that offshore delivery is now a mainstream operating choice, not a fringe one.

Hiring cools, but the skills gap stays wide

The hiring backdrop is softer. SEEK job ads slipped 4.5 percent in May and were down 17.9 percent compared with a year earlier (Staffing Industry Analysts, 2026). Yet the structural shortage has not gone away. Industry analysis continues to cite a gap of more than 60,000 technology professionals, with demand concentrated in cybersecurity, cloud, data and AI roles (Flexisource IT, 2026). The result is a market that is cautious on headcount but still short of the right people, which is exactly the pressure that pushes work to capable offshore partners.

AI infrastructure spending keeps building

While companies trim operating costs, capital is flowing hard into AI. Microsoft is investing A$25 billion in Australian digital infrastructure, security and skills through to the end of 2029 (Microsoft, 2026). Westpac analysis describes a data centre build out worth around $155 billion that could add roughly $75 billion to GDP and support hundreds of thousands of jobs as it rolls out (Westpac IQ, 2026). The pattern is consistent. Spend less on routine operations, invest more in AI capability.

Policy is catching up

Government is moving in parallel. New mandatory requirements for responsible AI use across federal agencies took effect on 15 June, with the remaining requirements due in December (Digital Transformation Agency, 2026). This month the government also published its expectations of data centre and AI infrastructure developers, covering community engagement, coordination with states and local jobs (Department of Industry, Science and Resources, 2026). For any business selling into or partnering with the public sector, responsible AI is becoming a baseline requirement rather than a nice to have.

What it means for SMEs and startups

Read together, the week points to a few practical takeaways:

• Offshore delivery is normal. If the largest retailers are doing it openly, smaller firms can use the same model with far less risk than a few years ago.
   
• Choose on quality, not just price. The talent gap is about finding people who can build and govern modern systems. Reliability, clear communication and time zone overlap matter as much as the day rate.
   
• Budget for AI capability. The money is going to AI. Teams that can ship AI features responsibly will have an edge as that investment works through the economy.
   
• Build governance in early. With responsible AI rules now live in government, expect enterprise clients to ask the same questions. Document how your AI is used and tested.

At Glinteco we work with startups and SMEs across the US, Australia and Europe, and Australia is our focus for 2026. If you are weighing up how to scale your engineering or ship AI features without blowing out cost, we are happy to talk it through.