Singapore’s financial services companies are increasingly bringing their offshored operations back to the city-state as companies are being affected by rising costs and a growing skills shortage in offshore regions, potentially leading to more jobs in the financial services sector, according to new independent research commissioned by specialized recruiter Robert Half.
With Singapore ranking as the world’s No 3 financial center, the research has found almost half (44%) 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% who have decreased their onshoring activities.
A further 50% 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 59% point to the skills shortage in offshore regions – indicating a financial and manpower motive.
In terms of the quality of their operations, 48% further cite service complaints in offshore regions and 43% identify the lack of efficiency as one of the key reasons for transferring offshored business operations back to Singapore.
“Singapore’s financial services sector operates within a highly competitive global market with companies being under increasing pressure to maximize cost effectiveness, efforts only aggravated by a growing regional skills shortage,” says Matthieu Imbert-Bouchard, Managing Director at Robert Half Singapore.
“With the lack of skills in the offshore regions driving Singaporean financial services organizations 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%) CFOs within financial services would consider shutting down offshore activities and return their operations to Singapore if the specialized skills they require would be available locally.
Onshoring can result in tangible benefits for Singaporean companies. Almost half (47%) 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%), greater customer responsiveness (44%) and an increase in cost efficiency (39%).
“While a lack of skills in offshore regions are pushing certain financial services organizations to onshore their activities back to Singapore, there are still local financial services organizations 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 Imbert-Bouchard.