Increase in number of companies keeping finance and technology operations closer to home

US companies are increasingly considering basing their finance, technology and other business services operations in mid-size US cities instead of India and other offshore locations, according to new research by The Hackett Group.

The Hackett Group’s Global Business Services Executive Advisory programme provided results and ranked more than 30 cities in the US which included Syracuse, New York, Atlanta, Georgia and Tampa, Florida.

The research found that proximity to customers, greater business knowledge and lower turnover rates are encouraging more and more businesses to move to a US location, especially those that handle difficult and higher-value processes.

Jim O’Connor, The Hackett Group Principal and Global Finance Executive Advisory Practice Leader, said that the US is becoming a practical choice for many businesses. “Labour and operating costs are still high in the US compared to Eastern Europe, Latin America, and Asia. But the gap is shrinking, and there are significant other benefits. In more and more cases, those benefits outweigh the additional cost. In addition, the public response to offshoring has made keeping jobs “at home” an attractive option for US companies,” Connor said.

Connor continues: “Even if companies are using offshore centres, the US is an essential part of almost any service delivery network for American companies, particularly when the work is complicated, knowledge-based, or requires a high level of communication with customers and internal clients, or when fast turnaround or extensive collaboration is a critical element.”

American broadband and telecommunications company Verizon is one of the companies that has located its business services operations in the US and have now consolidated around 1,500 finance operations staff from more than 300 locations into two US service centres over the past two years.

Verizon’s director of corporate finance restructuring Karen Mehra says that the company has benefited from basing their operations in the US. “By keep our finance operations in the US, we’ve derived an array of benefits. By staying domestic, we got instant buy-in from both our clients within Verizon and throughout the finance organisation itself. We have also been able to maintain complete control over our finance operations and processes, which can be difficult to do when you move offshore,” Mehra said.