Offshoring Chops Away at U.S. Corporate Finance Jobs

Hackett estimates 543,000 finance jobs lost since 2000; sees another 381,000 disappearing by 2014.

U.S. job growth won't be getting much of a boost from hiring for finance and other administrative positions at big companies, according to a recent report by the Hackett Global, a strategic advisory firm. And while IT has seen the brunt of the job destruction resulting from offshoring and automation over the last 10 years, Hackett expects increasing pressure on finance jobs in coming years.

U.S. companies with annual revenues in excess of $1 billion have 2.8 million fewer full-time employees in the areas of finance, IT, HR and procurement than they did in 2000, the Hackett report says. It estimates such companies will lose another 1 million jobs in those areas by 2014.

Job losses were concentrated in IT initially, but finance jobs have been disappearing at an increasing pace since the recession began.

Hackett calculates that 147,000 finance jobs at big companies disappeared between 2000 and 2007. Finance job losses accelerated to 103,000 in 2008, 211,000 in 2009 and 82,000 in 2010. The firm is forecasting that another 381,000 finance jobs will disappear over the next four years.

The offshoring trend got off to a faster start in the IT area in part because of Y2K, says Michel Janssen, Hackett's chief research officer. But he adds, "The finance jobs are almost catching up to the IT jobs in terms of the percentage of folks going offshore.

"AP and AR is where it started, a lot of the people making $50,000 and less," Janssen says. "Going forward, I think it's going to have an impact on the higher-end [finance] jobs as well."

While the higher-end jobs are fewer in number, the dollars involved are much larger, he says. Janssen cites jobs such as controller and financial planning and analysis positions that he says involve a lot of transactional reports.

"Somebody who spends all their time creating reports, that kind of job doesn't have to be done in a high-cost location," he says. "It's very viable to move that offshore, to low cost. You take the skill sets that you absolutely have to have on shore."

If the work can be split, the repetitive reporting chores can be done at considerably lower cost offshore and U.S.-based finance employees have more time for value-add work like working with the businesses. But that requires a cultural change, Janssen says. "How do you change the focus of those jobs, so they're not focused on the transactional reports?"

Hackett's research incorporates the IMF's estimate of 2.4% annual global growth over the next four years, and the report says job losses could be worse if growth is weaker than expected.


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