The McKinsey Global Survey of Business Executives : Confidence Index, January 2007

Compared with responses three months ago, however, executives in the Asia-Pacific region say that a smaller share of these new hires will be for new jobs and that more will be replacements for jobs in existing business units. Executives in China and India-whose companies are likelier to hire than those anywhere else in the world-indicate the opposite. At these executives' companies, the share of employees hired for new jobs in existing business units will increase significantly, likely reflecting that these countries are enjoying continued strength in traditional outsourcing industries (Exhibit 3).

Respondents from India are also much likelier than they were three months ago-42 percent compared with 30 percent-to say that their new jobs will be in a different country from the corporate headquarters. This pattern may mirror the growing global footprint of many Indian companies.

Globally, 61 percent of all executives say the majority of their hiring will take place in the same country as corporate headquarters, little changed from three months ago. However, executives are notably likelier than three months ago to say that new hires working in a different country from headquarters will perform functions identical to those performed at home-perhaps indicating year-end assessments of efficiencies and costs (Exhibit 4).

Getting more out of offshoring the finance function

The quality of offshore providers of finance and accounting services has never been higher. Many have made significant investments in the control and monitoring mechanisms needed for high-end functions, regulatory requirements, and complex finance processes such as valuation reviews, legal-entity control, and tax preparation. Some have even hired risk-and-control officers to deal with Sarbanes-Oxley, Basel II, and SEC reporting.

More sophisticated vendors enable companies to cut their labor costs by as much as 30 to 70 percent for offshored functions, to raise productivity by at least 5 percent a year, and to improve their control and risk management. What's more, these vendors offer people-constrained finance operations flexibility-the ability to meet proliferating business needs quickly by tapping into a highly skilled workforce. Offshoring can also play an important role in even more comprehensive efforts to streamline the finance function (see sidebar, "Getting started and staying with it").

Yet very few companies have come close to capturing the full potential of offshoring finance operations. Indeed, a majority of the companies that have offshored some of them did so only in the past 24 months and are thus just getting past the start-up stage. In our experience, the problem is the faulty assumptions that companies make about what gets sent offshore to whom-and when. Rethinking key design decisions can therefore begin to deliver some of the untapped value.

And they should be rethought, because we continue to find that companies make suboptimal design choices when crafting offshoring programs. Some lack awareness of the vendors' capabilities or feel pressure to capture near-term cost benefits without thinking through a two- or three-year plan strategically. Others have preconceived notions about what they must keep close at hand. Certain design components are unique to individual companies, of course, but a number are common to almost all offshoring efforts. These components are the cornerstones of any offshoring-enabled transformation of the finance function.

Page 1, Page 2, Page 3, Page4