Problems With Cost Effectiveness in Offshoring Financial Jobs
PricewaterhouseCoopers (PwC) recently conducted a study on the effectiveness of offshoring financial functions on 127 European and United States companies. The results were mixed, but the outlook was eye-opening:
- only 3% said they have saved a great deal
- 44% said they have saved a moderate amount
- 31% said they have saved only a little
- 9% believe they are breaking even; and
- 4% believe they are losing money
Much of the loss was attributed to poor planning and foresight. "Preparation is vital," as the title of this Silicon.com article declared.
Dan DiFilippo, performance improvement analyst at PwC, said in a statement: "Many multinational companies that outsource financial functions do not find it to be cost-effective. Companies that turn to outsourcing for cost savings should conduct comprehensive feasibility studies to better understand their potential return on investment. Many companies enter outsourcing arrangements without conducting a proper cost-benefit analysis."
However the losses don’t seem significant -- or else the beneficial side of offshoring continues to take the spotlight. It appears that many corporations are not ready to abandon their current outsourcing schemes.
Nearly 75 per cent of American and European corporations that use outsourcing to support their financial functions will continue to do so over the next two years, according to the survey. About 29 per cent of these companies expect to increase their use of outsourcing of financial functions, with spending likely to be 16 per cent higher than present levels, the survey found.
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