The Hackett Group - Research Alert: The Hackett Group Estimates that by 2017, 3.7 Million Back Office Jobs Will Disappear from

  The Hackett Group - Research Alert: The Hackett Group Estimates that by
  2017, 3.7 Million Back Office Jobs Will Disappear from North America and
  Europe Due to Offshoring and Technology

Business Wire

MIAMI & LONDON -- September 10, 2013

Large companies in North America and Europe are now losing over 250,000 jobs
each year in IT, finance, and other key business services areas, due to the
combined impact of offshoring, technology-driven productivity improvements,
and the low-growth business environment, according to a new research update
from The Hackett Group, Inc. (NASDAQ: HCKT). While the number of jobs being
lost annually will decline over the next few years, The Hackett Group now
estimates that by 2017 nearly half of all back office jobs at these companies
that existed in North America and Europe in 2002 will have disappeared -- a
total loss of 3.7 million jobs.

But even this assessment could be optimistic, as it factors in job creation
due to economic growth. The IMF and others are now looking at shrinking
short-term global growth projections, and more than half of the European Union
countries have returned to recession in early 2013. So even the modest job
creation assumptions in the Hackett model may prove to be overly optimistic.

While the total labor demand continues to shrink, The Hackett Group's research
also sees the "war for talent" entering a new phase, driven in part by the
further globalization of business. The need for transactional staff is
decreasing dramatically, while the demand for knowledge-centric staff is
increasing. The Hackett Group finds a critical talent shortage, most clearly
for knowledge-centric staff with the skills to help enable global business
operations.

"For many people in North America and Europe seeking jobs in corporate
finance, IT, or other business services areas, our research offers a bleak
picture to be sure," said The Hackett Group President of Advisory and Research
Sean Kracklauer. "The evolving offshore job market and the maturing of Global
Business Services operations has simply eliminated many of the jobs that used
to exist in IT, finance, and other business services areas. But at the same
time, new opportunities are presenting themselves. Staff that can develop the
knowledge-centric skills that companies need to support their companies' shift
to Global Business Services, and overall globalization goals, will find
themselves in great demand."

The Hackett Group's research estimated that 265,000 business services jobs
will disappear in North America and Europe in 2013, in the tail end of a spike
in job losses which began with the recession in 2008. In 2009 alone nearly
750,000 jobs were lost, and an average of 365,000 jobs have been lost each
year since 2008. In 2014 and moving forward, The Hackett Group estimates that
job losses will continue, but will shrink each year, declining to 133,000 jobs
lost in 2017.

Of the baseline of about 8 million business services jobs that existed in
North America and Europe in 2002, The Hackett Group's research estimates that
46 percent, or 3.7 million jobs, will have disappeared by 2017, including 1.4
million jobs in corporate finance and 1.5 million jobs in corporate IT. All
these estimates incorporate jobs lost due to offshoring and productivity
improvements (which have remained stable at about 3 percent each year), offset
by jobs created due to economic growth.

Even these job loss estimates could be conservative, The Hackett Group's
research explained, given that economic uncertainty remains exceptionally
high. European Union (EU) statistics published this past May indicated that
nine out of the thirteen EU countries using the euro returned to recession in
Q1 of 2013. The International Monetary Fund has also repeatedly made downward
adjustments to its short-term growth projections, which have dropped by more
than a third over the past two years. In addition, the main engine of growth
has clearly shifted from developed markets to emerging markets in Brazil,
Russia, India, China, and elsewhere. While corporate profitability is at
historically high levels, companies are focused on reducing fixed costs,
further impacting on job creation.

The Hackett Group's research details how a major factor in the offshoring of
business services and the overall job losses is the expanded use of Global
Business Services (GBS) organizations, an evolution of the shared services
approach. Unlike most shared services operations, which focus on a single
function, GBS organizations strive to support an array of business services,
including finance, IT, procurement, and human resources, in an integrated
fashion. As GBS organizations expand and mature, many companies have found
they can dependably be used to drive both cost and productivity improvements
year after year. Typical companies see an average of 20 percent cost savings
in their first year of GBS operations, and 6 percent savings annually
thereafter. They also see 7 percent improvements in quality and customer
service, as well as a 9 percent improvement in productivity.

According to The Hackett Group, the employment numbers are also tied to a
fundamental shift in the nature of business services work and skills. Over the
past decade there has been a dramatic reduction in the need for
transaction-oriented jobs in these areas, and a commensurate increase in
demand for knowledge-centric positions. The Hackett Group sees a significant
talent shortage emerging in specific classes of knowledge-centric roles,
including those that: support the strategic transformation and globalization
of business services; enable global business operations; and support the
transition from a transactional business services model to one focusing more
on partnership.

In finance, The Hackett Group's research finds that by 2017, half of all jobs
will be knowledge-centric, an increase of over 40 percent since 2003. In
procurement, the trend is even more pronounced, with over three quarters of
all jobs classified as knowledge-centric by 2017, an increase of over 46
percent since 2003. The Hackett Group's research finds that acquiring,
developing, and retaining talent in these areas will be a major challenge for
many companies over the next few years.

The Hackett Group's complete research insight, "The End of Offshoring As We
Know It and The Beginning of Global Operations," is available as a
complimentary download, following registration, at:
http://www.thehackettgroup.com/research/2013/offshoring-pr/

About The Hackett Group

The Hackett Group (NASDAQ: HCKT), a global strategic business advisory and
operations improvement consulting firm, is a leader in best practice advisory,
business benchmarking, and transformation consulting services including
strategy and operations, working capital management, and globalization advice.

Utilizing best practices and implementation insights from more than 8,400
benchmarking studies, executives use The Hackett Group's empirically-based
approach to quickly define and implement initiatives that enable world-class
performance. Through its REL group, The Hackett Group offers working capital
solutions focused on delivering significant cash flow improvements. Through
its Archstone Consulting group, The Hackett Group offers Strategy & Operations
consulting services in the Consumer and Industrial Products, Pharmaceutical,
Manufacturing, and Financial Services industry sectors. Through its Hackett
Technology Solutions group, The Hackett Group offers business application
consulting services that help maximize returns on IT investments. The Hackett
Group has completed benchmark studies with over 3,500 major corporations and
government agencies, including 97% of the Dow Jones Industrials, 84% of the
Fortune 100, 87% of the DAX 30 and 48% of the FTSE 100.

More information on The Hackett Group is available: by phone at (770)
225-7300; by e-mail at info@thehackettgroup.com.

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Contact:

The Hackett Group
Gary Baker, 917-796-2391
Global Communications Director
gbaker@thehackettgroup.com
 
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