Financial Function Slowly Returns to the U.S.
After a decade of “offshoring,” financial executives are making the decision to bring some work home.
Cities like Hyderabad and Bangalore being replaced with more familiar names like Syracuse and Jacksonville as more companies bring finance jobs back to the states after a decade of “offshoring.”
Mid-size U.S. cities are becoming attractive alternatives to offshore locations as companies consolidate finance and other business services, according to a new survey from The Hackett Group.
Some regions of the country do particularly well in finance, especially in areas that focus on “high end work,” says Penny Weller, senior director and North American Advisory Practice Leader for Global Business Services at the Hackett Group. “They are not only looking at purchase to pay, accounts payable and the whole end to process, but also business analytics where they focus on center of expertise.”
According to the survey, the top ten U.S. cities in the new on-shoring push are: Syracuse, NY; Jacksonville, FL; Tampa, FL; Lansing, MI; Grand Rapids, MI; Atlanta, GA; Allentown, PA; Green Bay, WI; Richmond, VA; and Longmont, CO.
There are several reasons for the new push to bring finance function roles back to the U.S., including cheaper labor costs, lower turnover rates, greater “business knowledge” and state tax incentives, according to the survey. CFOs are also focusing on bringing back more “complex” duties, according to the research.
“Some of the higher valued-added processes that are closest to the businesses are making the transition, and not just the transactional or rule based responsibilities like payroll and general ledger,” Weller adds. “Some outsource providers are getting mid-level work.”
The survey cited Verizon Communications’ recent decision to consolidate 1,500 finance operations staff from more than 300 U.S. locations into two U.S. service centers — rather than offshoring those jobs — as part of the trend.
“By staying domestic, we got instant buy-in from both our clients within Verizon and throughout the finance organization itself,” the survey quoted Karan Mehra, Verizon’s director of corporate-finance restructuring. “We have also been able to maintain complete control over our finance operations and processes, which can be difficult to do when you move offshore.”