Hackett: Extended Jobless Recovery Likely for the Back Office; 1.4 Million Jobs in IT, Finance, Other Areas Face Elimination ...
December 03 2009 - 9:30AM
Business Wire
Nearly 1.4 million back office jobs will be lost at the world’s
largest companies between 2008-2010, according to a new study from
The Hackett Group (NASDAQ: HCKT). These losses are just part of a
longer-term trend that started in 2001 and will result in nearly
3.6 million general & administrative (G&A) jobs being
eliminated by 2014.
According to Hackett, more than 630,000 G&A jobs are
expected to be lost in 2009 alone, over three times the average
number of jobs lost annually from 2000 to 2007. This dramatic spike
is likely to lead to an extended jobless recovery in IT, Finance,
Procurement, HR, and other G&A areas. Hackett’s research found
that the increase in job losses is being driven by a number of
factors, including: the lack of economic growth, deep cuts in
response to budget pressures, improvements in productivity and
automation, and the increased use of offshore labor resources.
The scope of this Hackett study included 4,000 global companies
in North America and Europe, all with over $1 billion in revenue.
Hackett found they have made significant G&A cost reductions
since 2000. These cost reductions have had a positive impact on
bottom line performance, but they have also involved elimination of
jobs.
Hackett’s research recommends that companies take action now to
avoid allowing G&A costs to rise as economic conditions
improve. Companies should rethink the delivery model of their
G&A services, focus on process redesign and adoption of best
practices that eliminate and streamline their operations, improving
productivity through workflow automation and executing activities
in low-cost/high skill regions. Hackett believes that companies
which fail to do so risk losing any efficiencies they gained
through downsizing their G&A staff during the economic
downturn.
“Unemployment rates are now at their highest levels in 26 years,
and may continue to rise. But several factors have come together to
increase the likelihood of a jobless recovery across the corporate
back office,” said Hackett Chief Research Officer Michel Janssen.
“The economic growth we’ve seen since 2000 has vanished, and will
be slow to resume. At the same time, we’re seeing acceleration in
offshoring of services combined with continued productivity
improvements."
“Moving forward, it’s also clear that for many companies, a
substantial part of top-line revenue growth will come from emerging
markets,” said Mr. Janssen. “Hackett believes that for most
companies, if and when they do start to restaff in IT, finance, and
other functions coming out of this recession, the large majority of
the jobs they create will be in India and other low-cost labor
markets. Companies need to understand this, and adapt their
strategies accordingly.”
About The Hackett Group
The Hackett Group, Inc. (NASDAQ: HCKT), a global strategic
advisory firm, is a leader in best practice advisory, benchmarking,
and transformation consulting services, including shared services,
offshoring and outsourcing advice. Utilizing best practices and
implementation insights from more than 4,000 benchmarking
engagements, executives use Hackett's empirically-based approach to
quickly define and prioritize initiatives to enable world-class
performance. Through its REL brand, Hackett offers working capital
solutions focused on delivering significant cash flow improvements.
Through its Hackett Technology Solutions group, Hackett offers
business application consulting services that helps maximize
returns on IT investments. Hackett has worked with 2,700 major
corporations and government agencies, including 97% of the Dow
Jones Industrials, 73% of the Fortune 100, 73% of the DAX 30 and
45% of the FTSE 100.
Founded in 1991, The Hackett Group was acquired by Answerthink,
Inc. in 1997. Answerthink was renamed The Hackett Group, Inc. in
2008. The Hackett Group has global offices in the United States,
Europe and Asia/Pacific.
More information on The Hackett Group is available: by phone at
(770) 225-7300; by e-mail at info@thehackettgroup.com; or on the
Web at www.thehackettgroup.com.
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