Executive Briefings

Acceleration of Offshoring Costs Millions Finance, IT Jobs in U.S. and Europe

There's no end in sight for the jobless recovery in business functions such as corporate finance and IT, in large part due to the accelerated movement of work to India and other offshore locations, according to new research from The Hackett Group. The dramatic job losses seen by U.S. and European companies in 2008 and 2009 are expected to continue through 2014, according to The Hackett Group.

The research found that close to 1.1 million jobs in corporate finance, IT and other business functions were lost at large U.S. and European companies in 2008 and 2009 due to a combination of offshoring, productivity improvements, and lack of economic growth. Over 1.3 million additional jobs will disappear by 2014, with offshoring becoming a larger and larger factor each year. These figures represent annual job loss rates of close to twice those seen from 2000 to 2007.

Corporate finance in particular is now seeing an acceleration of this offshoring trend. While IT dominated the mix of business function jobs lost to offshoring since 2000, growth in IT offshoring is now leveling off. By contrast, the total number of jobs lost to offshoring in corporate finance is expected to grow by a compound annual rate of about 20 percent between 2010 and 2014. In 2014, the annual number of finance jobs lost to offshore will be higher than the IT figure for the first time.

The Hackett Group's latest Book of Numbers research, "Global Business Services (GBS): Redefining the Enterprise Engine," finds that companies are looking at their overall service delivery models and recognizing that the challenging economic times have presented them with a compelling environment to make change that will enable their business to compete globally for the long term. According to The Hackett Group's analysis, one of the most important of these changes is the offshoring trend, which is being accelerated by the fact that many companies are now creating their own GBS organizations in India and other low-cost labor markets.

GBS organizations embrace both outsourcing and their own internal offshore operations, which remain owned and operated by the companies, to enable a broad array of functions to be moved to low-cost labor markets and managed in an integrated fashion. Over the past few years, many companies have become more mature in their use of GBS organizations, expanding them beyond a basic shared services approach to manage operations in multiple functional areas such as IT, finance, procurement, and human resources. By offering economies of scale, scope and skill, this approach enables companies to drive cost reductions and lower headcounts. Companies are also looking to enable global enterprise operating standards that will streamline their businesses and drive better overall results.

A Research Insight offering key findings from The Hackett Group's GBS Book of Numbers is available free, with registration, at this link (http://bit.ly/gVrkmH).

Source: The Hackett Group

There's no end in sight for the jobless recovery in business functions such as corporate finance and IT, in large part due to the accelerated movement of work to India and other offshore locations, according to new research from The Hackett Group. The dramatic job losses seen by U.S. and European companies in 2008 and 2009 are expected to continue through 2014, according to The Hackett Group.

The research found that close to 1.1 million jobs in corporate finance, IT and other business functions were lost at large U.S. and European companies in 2008 and 2009 due to a combination of offshoring, productivity improvements, and lack of economic growth. Over 1.3 million additional jobs will disappear by 2014, with offshoring becoming a larger and larger factor each year. These figures represent annual job loss rates of close to twice those seen from 2000 to 2007.

Corporate finance in particular is now seeing an acceleration of this offshoring trend. While IT dominated the mix of business function jobs lost to offshoring since 2000, growth in IT offshoring is now leveling off. By contrast, the total number of jobs lost to offshoring in corporate finance is expected to grow by a compound annual rate of about 20 percent between 2010 and 2014. In 2014, the annual number of finance jobs lost to offshore will be higher than the IT figure for the first time.

The Hackett Group's latest Book of Numbers research, "Global Business Services (GBS): Redefining the Enterprise Engine," finds that companies are looking at their overall service delivery models and recognizing that the challenging economic times have presented them with a compelling environment to make change that will enable their business to compete globally for the long term. According to The Hackett Group's analysis, one of the most important of these changes is the offshoring trend, which is being accelerated by the fact that many companies are now creating their own GBS organizations in India and other low-cost labor markets.

GBS organizations embrace both outsourcing and their own internal offshore operations, which remain owned and operated by the companies, to enable a broad array of functions to be moved to low-cost labor markets and managed in an integrated fashion. Over the past few years, many companies have become more mature in their use of GBS organizations, expanding them beyond a basic shared services approach to manage operations in multiple functional areas such as IT, finance, procurement, and human resources. By offering economies of scale, scope and skill, this approach enables companies to drive cost reductions and lower headcounts. Companies are also looking to enable global enterprise operating standards that will streamline their businesses and drive better overall results.

A Research Insight offering key findings from The Hackett Group's GBS Book of Numbers is available free, with registration, at this link (http://bit.ly/gVrkmH).

Source: The Hackett Group