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    Research Reveals CFOs Prefer the ‘Cloud’ Over Offshoring

    May 18, 2011
    Ovum research firm released its findings on chief financial officers’ views of the risk of cloud computing and using offshore services. According to an eweek Europe article, Ovum found that 29% of CFOs in the UK and the United States view cloud computing as “posing an unacceptable risk” for finance and accounting systems, but 38% expressed even stronger concerns over outsourcing to India.

    Ovum research firm released its findings on chief financial officers’ views of the risk of cloud computing and using offshore services. According to an eweek Europe article, Ovum found that 29% of CFOs in the UK and the United States view cloud computing as “posing an unacceptable risk” for finance and accounting systems, but 38% expressed even stronger concerns over outsourcing to India.

    The research showed that many CFOs worry about the risks of cloud computing initiatives, but also see offshoring their financial processes as being more dangerous. The study revealed that not only are they cautious of outsourcing to India, 44% of those surveyed were bothered by the thought of outsourcing to South and Central American countries.

    According to the article, India proved to be the most popular country for those practicing financial offshoring, but it also rated as the lowest for satisfaction. On a scale of one to four, Asia-Pacific was at the top with a rating of 3.78, the UK was second-to-last with a rating of 3.61, but India was a distant last with a lower rating of 3.08.

    “The fact that India received the lowest satisfaction ratings of any region, and by some distance, indicates there is a very real trade-off in terms of satisfaction versus cost. India is known to produce some of the lowest-priced accounting staff in the world but it would seem that, in many instances, vendors are cutting corners as well as costs,” stated Peter Ryan, Ovum lead analyst.

    The article noted that CFOs were skeptical that outsourcing within their own country would even be worthwhile. The respondent group that is currently outsourcing felt that the processes of outsourcing had become more efficient than in-house operations. On a rising scale of satisfaction from one to four, the average rating for outsourced processes was 3.28, compared to 3.22 for in-house operations.

    It was also noted that 44% of CFOs expressed that one of the main obstacles to financial off shoring was loyalty felt towards existing staff.

    “We don’t know if this is due to a sense of responsibility for their staff,” Ryan said, “or a desire to keep their skills – but it is likely to be a combination of the two. Concerns over losing control, which is traditionally seen as the biggest barrier, was pushed into joint second place with the worry that it would not save enough money to be worthwhile (31%),” he continued.
     
    According to the article, the lure of a 20% cost reduction still would not tempt the resistant CFOs to move operations offshore, but the more adventurous outsourcing group could be lured to switch suppliers for a reduction of just 15%.

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