Hackett’s assessment jibes with what finance executives say in our recent survey on the topic. Among the two-thirds who have reduced finance staff in the past two years, 82% say they have coped by consolidating jobs among remaining staff, and 47% say they have increased the use of automation, both of which contribute to higher productivity. Interestingly, fewer than 10% have increased their use of outsourcing or offshoring, and only a handful have compensated for cuts to full-time staff by using more consultants or contract workers.
Although often little-noticed, automation continues to reshape finance departments in ways that may not be dramatic, but which, in the aggregate, greatly reduce the number of jobs. At Gemvara, for example, Sockol plans to rely heavily on free, Web-based tools. “Whereas you might have had a couple of people [in finance] doing reports for managers, now a finance person helps the functional managers set up a Google analytics tool, and then Google actually cranks it out every month.” He sees little reason to ever go back to hand-tooled reports. “I’d much rather have things automated, because it’s easier to scale up.”
Burger King, the $2.5 billion hamburger chain that was recently purchased by Brazil-based private-equity firm 3G, has a similar story. Over the past two years, CFO Ben Wells has been on a mission to consolidate and standardize a variety of processes including accounts payable, accounts receivable, T&E expense management, and costs related to fixed assets. He chose not to outsource or offshore any positions but rather consolidate them at a shared-services center in Miami, believing that it made more sense to fix processes and reap the savings internally.
That move reduced the size of Wells’s finance department by close to 20%, a cut made possible, in part, by upgrading accounts-payable technology so it could handle handwritten invoices that persist from vendors like local plumbing shops. “Originally when we did invoice scanning, these tools required a lot of human interaction,” notes Burger King senior director of accounting operations Jorge L. Rodriguez. “Now Kofax [the document-management software that the company uses] has algorithms that can handle the old-school bills with minimal staff intervention.”
Newer business models, like the e-commerce retail system that Gemvara employs, also shift work to customers. Sockol notes that online selling can, in general, eliminate the need for both accounts-receivable invoice managers and collections staffers, since customers enter their own orders and pay instantly by credit card. Many businesses are moving other finance tasks, particularly employee-related ones like expense-report submissions, to self-service models as well, eliminating the need for staff.
Indeed, for those reasons and others, staff in accounts payable, accounts receivable, and general-ledger accounting have been cut the most in the past two years, according to CFO’s survey. Among the least-affected are internal-audit, tax, and treasury staff.
Abroad, but Still Aboard
Offshoring, of course, has taken its toll, particularly on lower-level finance jobs in the United States. According to Hackett, 17.3% of finance roles for U.S. and European companies have moved offshore, a ratio that is expected to increase to 24.4% over the next two years. One reason is obvious: salaries for such workers, particularly in India, can be as much as 80% lower than for an equivalent worker in the United States. That move hasn’t necessarily cut overall finance head count for companies, since many prefer to hire workers as overseas-based full-time employees, but it does affect U.S. hiring to a substantial degree.