Outsourcing the CFO's Job Overseas?

Jeremy -- you're a genius! No, really, it's a fantastic idea.

--j. (bit scared by the idea of MS' CFO being named "John Connors" btw.)

Um, yeah, outsource one of the top executive positions overseas. How stupid. Gezus.

While I'm all for outsourcing the accounting side of this position, I don't think that outsourcing the entire CFO job would really work. Since the Enron/Worldcom/etc. fiascos, CFOs have new responsibilities for signing off on the accounting statements that corporations publish. Would you want some minimum wage worker in another country responsible for this aspect of a company that you hold stock in? I certainly wouldn't. I want this guy to be close to the other execs. I want them all to know exactly what's going on with my company.

"Offshoring" is another word for age discrimination.

CFOs make a name for themselves by building themselves up and by doing so they are building investor relations and trust in them. I don't trust to invest in a random-someone I don't know and other big(ger) investors and companies won't invest without knowing their good track record either.

Jeremy,
I thought you did not care about politics! Wait a second I guess you do now. Well, take a look at my blog on this issue. I think as IT workers we are resposible on letting general public know what is the implication of outsourcing Information.

My two cents, Maxim

It's not really that naff of an idea, when you get right down to it.

I can't see C-level positions, but it's possible a wider slice of professions besides manufacturing, IT and call center could start moving including management positions.

http://www.ensight.org/archives/2003/12/09/outsourcing_clevel_positions.html

You are a little slow in noticing this trend towards outsourcing top management. It has been several years since the Presidency and Vice Presidency were outsourced to Enron and Haliburton. We should just cut out the middlemen and outsource our government directly to the House of Saud.

why stop at CFOs? Why not go the whole hog and outsource the entire United States..?

Heh, luckily for me it's not 'just bean-counting' :p Most of my revenue right now comes from small companies who hire me to do CFO type stuff. All of them would never want to outsource to India or somewhere like that. I always work very closely with the owners of the companies, and being able to work face to face with their finance guy is crucial. It might work for some companies, but I've never been involved with one that doesn't at least want monthly face-to-face contact.

Any C-level executive should be doing more than just one job function. A CFO who's merely a bean counter should be fired and replaced with someone else. CFOs should most likely be spending most of their time with customers, suppliers, analysts, large investors, the board of directors, and the other senior executives, actively being involved with the running of the company, and acting as a representative of the company to the outside world. You can't separate the roles either; you can't effectively be a good C-level exec w/out covering all the aspects of the job.

You're definitely onto something here. But first we're going to need to outsource all the expensive domestice management consultants to cheaper offshore firms. ;-)

-rhs

I'm not sure why everyone decided to jump down your throat on this, since you were obviously trying to make a point and many of your readers interpreted the thought literally.

CFOs tend to decide what kind of beans to be in the business of, rather than spend time counting them. There are other high-ranking positions though, that it might make sense to outsource along with some of those you mentioned. Controller, for example.

It's also strange that someone pointed out that having a foreign, "minimum wage worker" would be a bad idea for an important, high-ranking finance job. I'm not sure when salary and integrity became symbiotic. The same person cited Enron is his comment, which is clearly the best counterexample for the hypothesis he made later.

Although America's economy has, overall, lost jobs since the start of the decade, the vast majority of these job losses are cyclical in nature, not structural. Now that the economy is recovering after the recession of 2001, so will the job picture, perhaps dramatically, over the next year.

CFO's position is wider, deeper and proactive: The nation state in which it is available, the responsibility that is a kind of intrapreneurship for the entity, the cultural, social and environmental objectives of the Company and many other issues that need to be addressed by a CFO make the position surely a counterpart of CEO.

Outsourcing all activities to support a CFO is possible and not the CFO post itself. It is possible for a great consultant to support with analytical and objective information support from outside the Company. In one way this improve the objective evaluation of issues more meaningful. The experienced middle management experts can be outsourced to English speaking intelligent country like India.

Here are some advantages of Outsourcing maybe this will change your mind and outsource your business:

1. Focus On Core Activities
In rapid growth periods, the back-office operations of a company will expand also. This expansion may start to consume resources (human and financial) at the expense of the core activities that have made your company successful. Outsourcing those activities will allow refocusing on those business activities that are important without sacrificing quality or service in the back-office.

Example: A company lands a large contract that will significantly increase the volume of purchasing in a very short period of time; Outsource purchasing.

2. Cost And Efficiency Savings
Back-office functions that are complicated in nature, but the size of your company is preventing you from performing it at a consistent and reasonable cost, is another advantage of outsourcing.

Example: A small doctor’s office that wants to accept a variety of insurance plans. One part-time person could not keep up with all the different providers and rules. Outsource to a firm specializing in medical billing.

3. Reduced Overhead
Overhead costs of performing a particular back-office function are extremely high. Consider outsourcing those functions which can be moved easily.

Example: Growth has resulted in an increased need for office space. The current location is very expensive and there is no room to expand. Outsource some simple operations in order to reduce the need for office space. For example, outbound telemarketing or data entry.

4. Operational Control
Operations whose costs are running out of control must be considered for outsourcing. Departments that may have evolved over time into uncontrolled and poorly managed areas are prime motivators for outsourcing. In addition, an outsourcing company can bring better management skills to your company than what would otherwise be available.

Example: An information technology department that has too many projects, not enough people and a budget that far exceeds their contribution to the organization. A contracted outsourcing agreement will force management to prioritize their requests and bring control back to that area.

5. Staffing Flexibility
Outsourcing will allow operations that have seasonal or cyclical demands to bring in additional resources when you need them and release them when you’re done.

Example: An accounting department that is short-handed during tax season and auditing periods. Outsourcing these functions can provide the additional resources for a fixed period of time at a consistent cost.

6. Continuity & Risk Management
Periods of high employee turnover will add uncertainty and inconsistency to the operations. Outsourcing will provided a level of continuity to the company while reducing the risk that a substandard level of operation would bring to the company.

Example: The human resource manager is on an extended medical leave and the two administrative assistants leave for new jobs in a very short period of time. Outsourcing the human resource function would reduce the risk and allow the company to keep operating.

7. Develop Internal Staff
A large project needs to be undertaken that requires skills that your staff does not possess. On-site outsourcing of the project will bring people with the skills you need into your company. Your people can work alongside of them to acquire the new skill set.

Example: A company needs to embark on a replacement/upgrade project on a variety of custom built equipment. Your engineers do not have the skills required to design new and upgraded equipment. Outsourcing this project and requiring the outsourced engineers to work on-site will allow your engineers to acquire a new skill set.

Thanks for a very interesting article. I think that there are top position being outsourced because they believe that there should be someone who will be able to know what is going on.