CFOs, in other words, are in the uncomfortable position of telling Americans that they are truly competing for jobs with the rest of the world, including countries where people are college-educated, creative, ambitious, smart, and willing to do the job for less than half the pay.
“Right now, no one is talking, because it’s such a politically sensitive issue,” says Garcia. “But now is the time to get the message right. Soon, [offshoring] will be ubiquitous, and anyone who’s not doing it will be off the competitive map.”
Kris Frieswick is a senior writer at CFO.
Will CFOs find themselves outsourced someday? Already 21 percent of companies that offshore (or plan to do so) send finance functions overseas, and that number is growing. General Electric, long a leader in offshoring, has some 2,000 finance workers in India. Some of them even write parts of the management discussion and analysis for GE’s annual reports, said CFO Keith Sherin at the CFO Rising conference in March.
Chicago-based NutraSweet Co. recently domestically outsourced almost all of its finance staffers (the CFO was spared), while accounts-payable positions were sent overseas. “Offshoring is a nonissue because we’re a global company,” declares CFO Jim Stanley. He says that NutraSweet is not actively seeking to offshore any more of the finance functions, but “we’re always reviewing those sorts of things.”
“A lot of my peers would say, ‘I’d never offshore general ledger or accounting,’” adds Len Rinaldi, CFO of Lucent Technologies’s EMEA division. But if policies and procedures are sufficiently standardized, he says, there’s no reason those functions couldn’t be “regionally deployed,” although he stresses he has “no current plans to do so.”
Offshoring is increasingly common in the tax and accounting world. Clarence Schmitz, chairman and CEO of Outsource Partners International, says his company’s offshore employees are on tap to process about 12,000 to 15,000 tax returns this year. “As those people become more comfortable and knowledgeable with tax returns, they want to take on more responsibilities,” says Schmitz. “As long as they’ve gone through two or three tax seasons, they’re ready to take on more-complicated tax returns. After four or five seasons, they’re the equivalent of a Big Four tax manager. At that level, you’re going to have huge labor arbitrage.”
Still, Rinaldi is emphatic that the CFO function itself cannot be offshored. “I don’t see my job [being offshored],” he says. “Accounting functions can get more efficient, but business finance is a consultant role, and that’s where it should stay.”
But while the current generation of CFOs is unlikely to find itself outsourced, the movement of finance functions overseas does raise the question of where the next generation will come from. The loss of an apprentice system is an often-overlooked issue in the offshoring debate. Even Schmitz, a strong proponent of outsourcing, agrees. “When I look back on my career as a CPA, there was a rite of passage. You prepared tax returns, then became a reviewer, then a strategist, then a partner. If that lower level of job training is wiped out by going offshore, it’s a real problem.” —K.F.