Hong Kong’s financial services companies are bringing their offshored operations back to the city as companies are being affected by rising costs.
- 53% of Hong Kong’s CFOs within financial services have increased their level of onshoring in the last two years.
- 66% cite rising costs and 58% refer to service complaints as the main reasons to increase onshoring.
- 51% say if Hong Kong’s skills shortage was alleviated, they would consider shutting down an offshore activity and return it to Hong Kong.
- The top benefits of increased onshoring are: increased cost efficiencies (44%), increased productivity (43%) and increased customer responsiveness (39%).
New independent research commissioned by specialised recruiter Robert Half has found Hong Kong’s financial services companies are increasingly bringing their offshored operations back to the city as companies are being affected by rising costs and lackluster service in offshore regions. With Hong Kong ranking as the world’s No 4 financial centre , this increased level of onshoring could potentially lead to more jobs in the financial services sector.
The research has found more than half (53%) of Hong Kong’s financial services CFOs have increased their level of onshoring – transferring offshored business operations back to Hong Kong – in the past two years, compared to 9% who have decreased their onshoring activities. A further 57% have increased their level of nearshoring – transferring operations to a nearby country in preference to a more distant jurisdiction – in the past two years.
When asked why they have increased their level of onshoring, 66% of CFOs within financial services refer to the rising costs and 58% refer to service quality complaints – indicating a cost and quality factor in determining operations being brought back to Hong Kong. A lack of efficiency (43%) and skills shortage in the offshored regions (38%) are further cited as key reasons for transferring offshored business operations back to Hong Kong.
Adam Johnston, Managing Director at Robert Half Hong Kong said: “Operating within a global trading and financial hub, Hong Kong’s financial services companies are increasingly under pressure to remain competitive by maximising performance and decreasing costs. In order to do so, many organisations are increasing their level of onshoring and bringing key business operations back to Hong Kong, potentially leading to an increase in local employment for financial services professionals.”
In an indication that offshoring is not just a cost decision, but also a matter of dealing with the skills shortage in Hong Kong, more than half (51%) of financial services leaders would consider shutting down offshore activities and return their operations to Hong Kong if the specialised skills they require would be available locally.
Onshoring can result in tangible benefits for Hong Kong companies. Almost half (44%) of Hong Kong’s financial services leaders who have returned business activities to Hong Kong say it has resulted in increased cost efficiencies, followed by increased productivity (43%), greater customer responsiveness (39%) and an increase in service quality (33%).
“To fully leverage the advantages from onshoring key business activities back to Hong Kong, organisations need a functioning workforce equipped with the right skills. While the skills shortage in the offshored regions is a key reason to bring back activities, the lack of skilled talent on a local level is simultaneously hindering other companies from onshoring their business operations back to Hong Kong. The right staff can mean the difference between companies operating at peak performance and returning lackluster results.”
“To combat the local skills shortage and have their workforce operating at an optimal level, financial services companies need to invest in adequate staff development programs to remedy any critical skills gaps. When it is not possible to upskill existing staff with business-critical skillsets, employers need to recruit qualified professionals – on either temporary or permanent basis to meet strategic and operational objectives,” Adam Johnston concluded.
About the research
The annual study is developed by Robert Half and was conducted in January 2017 by an independent research firm, surveying 100 Chief Financial Officers (CFOs) and Finance Directors within financial services in Hong Kong. This survey is part of the international workplace survey, a questionnaire about job trends, talent management and trends in the workplace.
- 99% of Hong Kong CFOs have hired an employee that did not meet expectations, primarily because of underqualified candidates (48%), a mismatch of skills (39%) and candidates found to be lying on their CVs (28%).
- 41% had to let the employee at hand go, while 33% respectively re-started the recruitment process and partnered with a staffing agency to secure a replacement.
- Employers cite increased workload for colleagues (53%), increased stress on colleagues and managers (39%), and higher recruitment costs (33%) as the biggest consequences of a bad hire.
New independent research commissioned by specialised recruiter Robert Half shows the majority (99%) of Hong Kong CFOs have hired an employee that did not meet expectations, and more than one in three (37%) took just two weeks to discover that they have hired the wrong person.
According to the study of 150 CFOs, 37% typically realise within a fortnight that a new hire is not meeting expectations. The most common reasons given were underqualified candidates (48%), a mismatch of skills (39%) and candidates found to be lying on their CVs (28%).
What to do with a bad hire?
When asked what steps they took to address the poor hiring decision(s), 41% of CFOs say they terminated the employee contract, whilst 33% respectively re-started the recruitment process from scratch and partnered with a staffing agency to secure a replacement. Close to one-third (31%) of finance employers decided to deal with the matter internally by looking for an internal vacancy the candidate would be better suited for and 30% developed a training program to develop the employee’s skills to the desired level. Still less than one in four (23%) adopted a ‘wait and see’ approach to see if the employee’s performance would improve.
The cost of a bad hire
Hiring the wrong person for the job can significantly impact the organisation. The top three consequences of a bad hire according to finance employers are increased workload for colleagues (53%), increased stress on colleagues and managers (39%) and higher recruitment costs (33%). Other cited negative consequences include increased workloads for managers (27%), lost productivity (26%) and low staff morale (23%).
Bad hires can be highly costly for companies, though many Hong Kong companies struggle with accurately calculating the cost of hiring the wrong person. While 11% say they don’t track these costs, almost half (47%) fail to compile all the data in a single overview. Almost three in 10 (29%) say some costs are not accurately measurable and 9% admit they have not looked at doing it. Merely 3% say they do not find it challenging.
Adam Johnston, Managing Director of Robert Half Hong Kong said: “Businesses go to great lengths to find the right candidate, but the cost of not hiring an adequate employee can be significant. Whether organisations decide to terminate their employment or invest in additional training, it will impact the company financially and can cause significant disruption and stress to the existing workforce, indicating the importance of getting it right.”
“While some factors, such as cultural fit, attitude, or even the credibility of candidates’ qualification or experience, can be challenging to account for in an interview; an experienced interviewer and a rigorous hiring process can prevent a wrong hire to take place, such as by asking the right questions, thoroughly testing skills and meticulous reference checking. Employers would benefit from reviewing their hiring policies to ensure they strike the right balance between efficiency and rigour,” concluded Adam Johnston.
About the research
The annual study is developed by Robert Half and was conducted in December 2017 by an independent research firm, surveying 150 CFOs in Hong Kong. This survey is part of the international workplace survey, a questionnaire about job trends, talent management and trends in the workplace. >
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