Is Your Finance Job Recession-proof?

Sarbanes-Oxley. 404. IFRS. AS5. Proxy compensation disclosure. PCAOB. You might not have liked your job much recently, but if there was one silver lining to the years of post-Enron reforms and regulatory pressure, it was the near-guarantee of employment for anyone with accounting or finance skills.

But is that one solace now also in jeopardy? Turmoil in overseas markets on Martin Luther King Day had the Fed on a hair trigger to drop rates 75 basis points almost as soon as U.S. markets reopened Tuesday. With a recession increasingly likely, CFOs will be looking for cost cuts — and possibly leading by example.

And, ironically, the same regulatory pendulum that caused finance folks so much professional grief could now affect their job security as it swings the other way. The SEC, the Treasury Secretary, and yes, even FASB itself, have been loudly promising to battle "complexity" in financial reporting. That was all well and good when there was plenty of work to go around. But will eliminating complexity eliminate finance jobs too?

In light of those concerns, CFO.com asked several experts to predict what they see as the potential impact of a recession on each finance function: tax, internal audit, treasurer, and controller, as well as the prospects for finance employees in general, and, yes, for the CFO.

Their predictions — which appear below — may come as a surprise to some. After all, finance employees can be forgiven for feeling fairly sanguine about their job security. Two years ago, half of CFOs were saying it was getting hard to find qualified finance staff, and were scouting and wooing soon-to-be accounting grads as if they were potential NBA stars.

By last fall, they were complaining bitterly that they couldn't even retain inexperienced staff. And just last year, the PCAOB was so hard up for talent that it took out ads in The Wall Street Journal promising retired accountants they could work part-time for the regulator without cutting into their golf game.

But if that makes all finance jobs seem secure, consider this: Among companies benchmarked by The Hackett Group, the average cost of finance has risen 12 percent over the past three years, to 1.24 percent of revenue. With a recession looming and the initial pain of Sarbanes-Oxley largely over, CFOs will be under pressure to resume the steady downward trend that characterized pre-Enron finance costs.

"I think recession is going to drive a bright focus within the walls of the [finance] organization for opportunities" to reduce costs, says Bryan Hall, finance practice leader at Hackett. For him, that means "performing the non-core work in an appropriate low-cost location." Hall sees shared-service organizations springing up in Poland, Prague, Budapest, and, of course, India. Charles Eldridge, a managing director at Korn/Ferry International, agrees, citing the same locations. "I see finance functions increasingly looking at ways to cut costs and that may mean going overseas," he says.

While the trend is still small and hard to quantify, it appears that offshore locations are often captive, as opposed to outsourced, entities. Nonetheless, collectively they represent a skills creep that may give many American finance workers, well, the creeps.

Past surveys by CFO have shown outsourcing or offshoring of finance to be done by only a small minority of companies. But Hall predicts that the actual outsourced functions will expand beyond the traditional ones: accounts payable, travel-and-entertainment expense processing, and accounts receivable.

"Where we find opportunity is expanding that further into transactional accounting such as journal entries," says Hall. "Some very aggressive organizations have moved planning and reporting into the shared-service organization." Penske Truck Leasing Co. is an example of a company that was aggressive about sending accounting and finance operations overseas. As CFO Frank Cocuzza explained, Penske hired India-based Genpack to handle some 40 different finance processes for Penske, including collections, various accounting and financial-reporting activities, and even on-demand data analysis for business units.

Shared services, Hall predicts, "ultimately is going to cover a vast portion of the finance dollar sent. As we look at things that can be performed in low-cost locations, the great majority of finance is eligible."

Tax
If death and taxes are certain, then a pulse would seem to guarantee work for a tax expert. After all, while a number of Republican presidential candidates are currently promising tax cuts, only one, Mike Huckabee, has a proposal (replacing income tax with a national sales tax) that might actually cut the tax code itself.

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