Developing: Tech CFOs Cautious on Outsourcing

Image via Flickr by Dick Johnson

Technology companies in the United States are pulling back or eliminating operations in foreign markets, according to research from accounting firm BDO USA LLP. The findings reveal that only 5 out of 100 technology CFOs intend to outsource in the following year, a steep drop from last year’s 16 percent and the 20 percent who said yes in 2012. From back office operations to manufacturing processes alike, tech CFOs are collectively souring on outsourcing.Economic disruptions and environmental disasters coupled with rising labor costs overseas is causing tech CFOs to reexamine their outsourcing strategies. Of the tech companies currently outsourcing, the survey revealed that 29 percent intend to bring some of those services back to the United States. Emil Nilsson, old CFO of Sandvik, an engineering group in tooling and materials, states, “You can’t outsource responsibility.”

Hospitals, Healthcare Providers Consider Outsourcing

As technology companies pull back on outsourcing, the medical community eyes outsourcing HR departments. For the healthcare industry, outsourcing HR is considered a strategic move that allows the health system to stay nimble and save money. Since there are so many stringent requirements in the healthcare industry, outsourcing HR departments actually simplifies internal processes and reduces health coordination issues.

Healthcare CFOs consider the:

  • Opportunity costs. By outsourcing HR, the hospital and health system have more time to focus on strategic aspects of running the facility, improving services, and growing the practice.
  • Cost savings. Most hospitals spend $1,400 to $2,000 per employee when payroll, workforce administration, and other HR duties are done in-house. Outsourcing prevents the hidden reality of payroll and administration costs from hitting hard.
  • Legal obligations. Since legislation surrounding healthcare is consistently evolving, outsourced HR departments make it easier to adhere to new updates without wasting internal time and manpower.

As other industries continue to outsource, tech CFOs are overwhelmingly skittish, partially due to international outsourcing in locations like China and Taiwan. Tech companies mostly outsource manufacturing processes, research development, and IT services. As financial directors look to drive down operating costs and improve shareholder value, the importance of understanding the value, risks, and considerations of outsourcing has never been more vital.