In the post-pandemic era, it’s crystal clear that “business as usual” will never be the same. And as the economic landscape shifts, even previously hesitant companies are reconsidering Accounting Business Process Outsourcing as they scramble for innovative ways to overcome a severe labor shortage, adjust to a new remote workforce, and confront other unprecedented challenges.
While cost savings traditionally have been the main motivation for outsourcing, that’s no longer the case. New and pressing business drivers have forward-thinking finance leaders taking a fresh look at outsourcing to accommodate their organization’s needs in 2021 and beyond.
Before the pandemic, more than 90% of North American CFOs struggled to find qualified staff to fill jobs. Now, as organizations ramp back up from pandemic layoffs, a perfect storm of events is brewing that makes it harder than ever to find talent.
F&A roles like accountants, auditors, and financial analysts rank 5th out of the 10 hardest-to-fill areas at U.S. organizations, according to a CPA Practice Advisor report. In fact, while the national unemployment rate hovers around 5%, financial analysts reported a staggering unemployment rate of 1.1% in September.
Qualified finance and accounting staffing is essential to helping companies regain their footing after COVID and navigate an uncertain future. About a quarter of CEOs have had to cancel or delay a key strategic initiative in the past 12 months because the right people weren’t available to execute it, CPA Practice Advisor states.
To say it is a competitive job market is an understatement. The F&A labor shortage is largely driven by a “silver tsunami” of Baby Boomers retiring or receiving incentives to retire during the pandemic - and graduate classes of new F&A professionals too small to make up the difference.
The Controllers Council asserts that some F&A roles suffer a “branding” problem among young adults in the U.S. Case in point: the number of students taking the CPA exam has significantly declined over the past 10 years. Many American Millennial workers also consider transactional F&A tasks beneath them, which impacts retention and the quality of work they provide.
At the same time, extended unemployment benefits and national relief checks enabled people with lower-level jobs to make more selective career decisions and delay their return to the workforce.
Not surprisingly, the finance and accounting talent shortage is forcing CFOs to significantly overpay for low-value work. With multiple jobs offers typically on the table, companies are forced to tempt top candidates by increasing salaries, benefits, and perks.
Bloomberg reports that low-level jobs saw wage growth outpace overall pay in June, with some corporations even offering signing bonuses to entry-level workers.
Pent-up demand for opportunities during COVID is also expected to trigger a “turnover tsunami” as the pandemic ends – with as many as half of workers looking for new jobs, the Society for Human Resource Management (SHRM) reports. Eight in 10 finance leaders ranked turnover as a top-of-mind concern in the 2021 Robert Half Accounting & Finance Salary Guide as well.
In fact, 80% of U.S. workers say they would turn down a job that doesn’t allow remote work.
The data-intensive nature of finance and increasing use of technology to digitize and automate processes renders physical location irrelevant for many F&A functions.
The pandemic also erased lingering hesitation about the ability of remote teams to deliver exceptional work. Nearly 95% of employers said productivity levels remained the same or higher after shifting all departments to a Work From Home model, according to a Mercer survey.
Employers reap the benefits of a remote workforce as well, reducing real estate costs with smaller office spaces. Organizations can even potentially relocate from high-cost urban environments if they no longer need to be near the deepest job markets.
Nearly 90% of executives expect to change their real estate strategy over the next 12 months, PwC reports.
The ability of finance leaders and their teams to act with flexibility, agility, and innovation has never been more important than it is today.
Traditionally, finance leaders have turned to accounting business process outsourcing for two reasons: cutting costs and focusing internal teams on core competencies by offloading the transactional tasks consuming 75% or more of their time.
But while these factors remain important, they are rarely today’s sole business drivers. “Standardization and process efficiency” ranked as the top outsourcing objective in 2021 – dropping cost savings to the #2 spot, states Deloitte’s Global Shared Services and Outsourcing Survey.
When COVID changed work patterns and consumer behavior virtually overnight, many finance leaders tapped FAO partners to manage the forced digital transformation of critical business processes on the fly.
Now, CFOs are realizing they can weather the convergence of the labor shortage and other evolving market conditions by leveraging nearshore outsourcing to cost-effectively rebuild and modernize their teams.
With IT’s attention diverted across a myriad of issues, many finance leaders find it easier, faster, and more cost-effective to bring automation and optimization through an outsourcing provider. CFOs are also looking for outsourcers with the business expertise to do more than process transactions – supporting the organization with better insights, support, and analytics that deliver tangible business value.
In today’s new normal, more than half of enterprises plan to outsource more business processes than they keep internally. Respondents to Deloitte’s survey had already moved 60% of their finance FTEs to a shared services or outsourcing provider in 2021.
As comfort levels and necessity prompt finance leaders to increasingly hire remote workers in other markets, exceptional nearshore partners can offer a better alternative: a one-stop source of proven resources that serves as an extension of your in-house team.
High-quality nearshore partners can deliver customized solutions that prioritize agile, real-time communication with U.S. staff - capitalizing on the shared or similar time zones and westernized culture of Latin American markets.
Top nearshore locations like Costa Rica and Colombia provide instant access to a deep, world-class talent pool with strong English fluency from two of Latin America’s best educational systems. Such quality comes with significant cost savings: Costa Rica’s average labor arbitrage for finance roles is 30%-50% and Colombia’s is often greater.
Exceptional partners have best practices and tech-like automation already in place to help you wipe an antiquated slate clean, replacing inefficient, manual processes with streamlined, modernized operations. They also enable you to react quickly to today’s fast-changing business environment by scaling teams up and down as needed.
Nearshoring helps North American companies avoid many of the pain points that plague Asian-based offshoring solutions as well. That includes the difficulty of doing business across faraway time zones, language and cultural barriers, and “black box” operating models that offer clients little visibility or control.
COVID proved that reporting, invoice processing, and other F&A processes that were once exclusively onsite can be completed just as efficiently – and often, more so – by remote teams.
And that creates an unprecedented opportunity for finance leaders to redefine “business as usual” – overcoming modern challenges like the finance and accounting staffing shortage by leveraging the strategic capabilities of an exceptional nearshore outsourcer.