Research commissioned by specialised recruiter Robert Half has found Singapore’s financial services companies are increasingly bringing their offshored operations back to the city-state. The reasons behind this move include rising costs and a growing skills shortage in offshore regions, potentially leading to more jobs in the financial services sector.
With Singapore ranking as the world’s No 3 financial centre , the research has found almost half (44 per cent) of Singapore’s financial services CFOs have increased their level of onshoring – transferring offshored business operations back to Singapore – in the past two years, compared to 10 per cent who have decreased their onshoring activities. A further 50 per cent 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 per cent of CFOs within financial services refer to the rising costs and 59 per cent point to the skills shortage in offshore regions – indicating a financial and manpower motive. In terms of the quality of their operations, 48 per cent further cite service complaints in offshore regions and 43 per cent identify the lack of efficiency as one of the key reasons for transferring offshored business operations back to Singapore.
Matthieu Imbert-Bouchard, managing director at Robert Half Singapore said: “Singapore’s financial services sector operates within a highly competitive global market with companies being under increasing pressure to maximise cost effectiveness, efforts only aggravated by a growing regional skills shortage. With the lack of skills in the offshore regions driving Singaporean financial services organisations to bring back activities to the city-state, this could potentially boost local employment within the financial services sector, resulting in an improvement in Singapore’s competitive position within the region.”
In an indication that offshoring is not just a cost decision, but also a matter of dealing with the skills shortage in Singapore, more than four in 10 (43 per cent) CFOs within financial services would consider shutting down offshore activities and return their operations to Singapore if the specialised skills they require would be available locally.
Onshoring can result in tangible benefits for Singaporean companies. Almost half (47 per cent) of Singapore’s financial services leaders who have returned business activities to Singapore say it has resulted in increased productivity, followed by an increase in service quality (44 per cent), greater customer responsiveness (44 per cent) and an increase in cost efficiency (39 per cent).
“While a lack of skills in offshore regions are pushing certain financial services organisations to onshore their activities back to Singapore, there are still local financial services organisations with similar aspirations that are feeling hindered by the skills shortage in Singapore. The lack of local talent in key functional areas within financial services needs to be addressed as it can potentially lead to more operations finding their way (back) to Singapore, with positive knock-on effects for employers and the economy,” concluded Matthieu Imbert-Bouchard.