Today's organizations are continually exploring new strategies to attract and retain talent. With the onset of COVID-19, the geographical boundaries once constraining the talent pool have essentially vanished. This shift in talent accessibility has created a ripe opportunity for accounting and finance firms to tap into global talent, thus transforming their organizational structures and delivery models.
The truth is, the race to secure top talent is intensifying. As organizations worldwide vie for the best minds to propel their growth, the outsourcing model has proven to be a valuable ally. However, the landscape of talent acquisition and management is no longer what it once was.
Traditional third-party models are undergoing a seismic shift, evolving beyond their conventional boundaries. These models are now embracing transformative technologies like artificial intelligence and leveraging data-driven insights to revamp both business and IT processes. This integration is not merely an optional upgrade; it's fast becoming a necessity for companies aspiring to remain competitive.
The Unprecedented Global Talent Hunt
According to the 2022 Deloitte Global Outsourcing Survey, the post-COVID-19 era marked a turning point in the approach to talent acquisition. Over half (53%) of the surveyed executives reported an increase in staff levels over the past two years. This augmentation was not arbitrary; instead, it was a strategic move aimed at bolstering the pursuit of key organizational priorities. The implementation of remote work strategies during the pandemic has further catalyzed this shift, enabling organizations to tap into a vast global talent pool unrestricted by geographical boundaries.
However, one in two executives, regardless of their industry or function, identified talent acquisition as their top internal challenge. This pressure is not a transient wave but rather a persistent tide. As many as 71% of CEOs foresee this global talent shortage extending into the next year. This statistic underscores the urgency of addressing this issue and the necessity for businesses to arm themselves with innovative strategies to navigate the increasingly competitive talent market.
While these statistics highlight the challenges, they also shed light on the immense potential for growth and innovation. Organizations that can successfully adapt to this changing landscape, by reshaping their talent acquisition strategies and overcoming these hurdles, stand to gain a significant competitive advantage in the post-COVID-19 era.
The Shift towards Global In-house Centers (GICs)
As organizations navigate the new realities of a globally accessible talent pool, the previously conventional third-party delivery models are no longer the only solution for a holistic ecosystem. The same report indicates a shift in interest toward global in-house centers (GICs). GICs offer a unique advantage as they leverage low-cost locations while ensuring high-quality services, innovation, and effort. However, setting up a GIC can be a complex undertaking, especially when vying for attention among other high-priority goals within the organization.
What is a Global In-house Center?
A Global In-house Center (GIC) is an offshore subsidiary or branch of a company that is located in one or more different countries. This structure is often established to take advantage of cost efficiencies, while the work is performed by the company's own employees, maintaining control over operations and quality.
GICs can execute a wide variety of tasks, ranging from straightforward tasks such as customer support or data entry to more complex functions like IT services, research, and development, or financial services. For many years, to have a GIC structure meant having subsidiaries offices in one or two countries. With remote work taking over after COVID-19, GICs have become fully digital which means companies can leverage cost-effective employment all across the globe.
The primary advantage of GICs is that they allow companies to access lower operating costs and a large talent pool overseas while retaining a greater degree of control over their business processes. Hence, GICs have been gaining popularity among organizations looking to strike a balance between cost efficiency and operational control in their global strategy.
Reassessing Geographic Preferences for GICs and Outsourcing
While India was for many years the traditional hub for outsourcing, executives are beginning to feel over-reliant on a single region. Increased global talent access and rising competition have led firms to explore alternative geographies. Europe, particularly Eastern Europe, Latin America, Asia-Pacific nations (excluding India), and even North America have all emerged as viable options for outsourcing efforts.
The same Deloitte report indicates the standout among these is South America, which is rising rapidly as a popular destination for GICs and outsourcing services due to its wealth of business and technology talent. The main advantage of South American talent seems to be enhanced by a significant time zone and cultural overlap with North America.
Considerations for Implementing GICs and BOTT Models
In implementing these models, firms need to consider a variety of factors. From understanding local market conditions and talent availability to regulatory environments, and operational costs, careful consideration is required.
Identifying The Right Talent
Finding the right talent is the cornerstone of any successful GIC. Skillsets required for each project may vary, but common themes of demand include accounting professionals with experience in regulatory reporting, financial analysts, risk management professionals, and more. Companies need to invest time and resources into understanding the local talent market, assessing the availability of required skills, and crafting attractive value propositions for potential hires.
Ensuring Regulatory Compliance
Operating in different geographies comes with its unique set of challenges, one of which is understanding and complying with local regulations. Firms must acquaint themselves with the legalities of employing staff, corporate taxation, and regulatory bodies in the host country.
Balancing Quality and Cost
While leveraging low-cost locations is an attractive proposition, firms should be wary of compromising on service quality. They should consider the total cost of operation, not just salaries, and balance this against the expected level of service quality and efficiency.
Maintaining Organizational Culture and Brand
While setting up a GIC, firms need to ensure they are maintaining their organizational culture and protecting their brand. This means the GIC should align with the overall organization in terms of ethics, communication, and work environment.
Diversifying Geographical Concentration Risk
As firms consider multiple locations for their GICs or outsourcing operations, they can effectively manage their geographical concentration risk. Over-reliance on a single region can be a significant risk, particularly given the uncertain political and economic global landscape. By diversifying their geographical reach, firms can distribute this risk and create a more resilient operation.
The Future of Global Talent Sourcing
The landscape of global talent sourcing is rapidly evolving. As firms continue to leverage GICs models, they need to stay agile and responsive to the changing dynamics of the talent market and the global economic environment.
Accounting and finance firms must realize it's no longer a question of ‘to source or not to source,’ but rather what can organizations keep in-house and how can they construct and manage ecosystems of third-party vendors to improve their organization. The key lies in the strategic blend of in-house capabilities, efficient outsourcing, and the effective use of models like GICs. Firms that succeed in navigating these complex landscapes will undoubtedly emerge stronger and more competitive in the global arena.
Firms need to stay adaptable and continually evaluate their sourcing strategies, ensuring they are leveraging the global talent pool effectively while maintaining their core competencies.
Kevin Mitchell, CPA
Senior Manager and CPA with over 20 years of experience in accounting and financial services, specializing in risk management and regulatory compliance. Skilled in managing audits and leading teams to deliver exceptional services. Proud father of two.
Reference
Global Outsourcing Survey 2022. (2022, December 20). Deloitte United States. https://www2.deloitte.com/us/en/pages/operations/articles/global-outsourcing-survey.html
