By Matt Wood.
Economic uncertainty in the U.S. is now higher than it was during the pandemic, as businesses face a shifting mix of geopolitical, market, and inflationary concerns. Many employers have already paused hiring to avoid additional costs, and CFOs are reviewing further options for cost control. Because labor is one of the most immediate and flexible levers in a typical organization’s cost structure, headcount is usually one of the first areas CFOs evaluate.
This time, unlike uncertain economic times in the past, technology advances give finance leaders an opportunity to rethink not only who does the work but how it gets done. CFOs are increasingly looking to AI-driven automation to address labor costs, often in tandem with outsourcing, which 65% of finance and accounting organizations already use. Together, AI automation and outsourcing can form the pillars of strategy that reduces costs in the near term, delivers scalable efficiency gains over the long term, and improves financial planning and analysis.
Combining outsourcing and AI-powered automation
Taking a toolbox-style approach to labor cost controls allows the CFO to deploy a customized mix of outsourcing and AI-powered automation to optimize processes while preserving the organization’s focus on its business goals. The exact strategy will vary by industry, company, and role. But in general, the goal is to reduce some labor costs as quickly as possible while also setting the stage for more process improvements to reduce labor costs more over the long term.
This focus on streamlining operations can apply to processes along a continuum of complexity. For simple processes like invoice data extraction and email approvals, automation is an ideal solution to reduce manual errors and costs. This type of operational improvement can be a good place to start picking off low-hanging fruit in terms of efficiency gains and labor cost controls. There are usually plenty of simple processes to choose from: a 2024 survey found that even business decision-makers waste about a dozen hours a week on repetitive tasks.More judgement oriented, complex or exception-laden processes —such as month-end close, audit preparation, or reconciliations involving multiple data sources—are notoriously difficult to automate. . . These require contextual understanding and human expertise, making them better options for outsourcing. Companies that leverage this lower operational costs, and give more time back to their internal teams to focus on analysis, forecasting, and strategic growth initiatives.
Improving financial planning and analysis
In addition to making processes more efficient, one of the follow-on benefits of automation using AI is the ability to collect and analyze process data faster. Better efficiency and analytics allow businesses to close their books quickly and accurately so they can use that data to make better business decisions faster. Shortening the time to data-driven decisions is an important capability in any economy, especially an uncertain one that may require multiple pivots in a short time. For example, it’s easier to create more accurate financial planning models for the next quarter, year, or longer when you have more data available sooner.
FP&A processes can also benefit from process optimization. Bringing in data from multiple platforms requires a complex integration strategy similar to that for other processes, in order to unify data for more comprehensive analytics and more detailed modeling. The result can be better visibility into which teams, processes, and strategies are worth continued investment and which need to be changed or eliminated.
Implementing a cost-savings strategy for uncertain times and beyond
What can it look like when a company uses all of these levers to manage talent and operations costs? As an example, let’s consider a company that’s grown through acquisitions and has a patchwork of legacy and bespoke processes. The organization is under increasing margin pressure. The CFO knows there are cost savings to be had through standardization and automation, but the technical requirements are beyond what the company can handle in-house.
The first step the company takes is to audit its current processes and identify which are best suited for each solution.. Because automation takes longer to implement, outsourcing can reduce some of the short-term margin pressure while the company works with a technology partner to identify processes that can be optimized and automated. This step is a longer-term project that can allow the company to reduce its outsourced headcount over time as process automation comes online.
As more processes are automated using AI, the company has more data available for more precise forecasting and planning, which can help align cost control and strategic planning. The result of using outsourcing and AI automation together in this way is immediate savings plus longer-term scalable savings and better insights into where to invest. Together, these strategies allow the business to reinvest in its core functions and most profitable initiatives without expanding headcount. This is a valuable capability in any economic scenario, but especially when there’s unpredictability in any aspect of the economy. Rethinking talent and operations now can help organizations weather current conditions and come out better prepared for whatever comes next.
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Matt Wood is the Global Head of Finance and Accounting Outsourcing at Personiv, responsible for delivering exceptional finance and accounting solutions to clients worldwide.
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