A very rapid change
With technology advancing rapidly and many people now able to work ‘hybrid’, it matters very little where the outsourced data/IT function is located geographically, for example. Or where the marketing and production agency you use is located. The same applies to many services provided by law firms, as well as HR support, payroll services, financial services, systems support, etc.
Major price advantages
Hiring lawyers located in metropolitan areas can be relevant when you need a specific specialism. But buying legal business services in Stockholm, Gothenburg or Malmö is of course just economically stupid. The price difference is often so great that it makes a difference of several 1,000s of kronor/hour.
The difference is not as great when it comes to production agencies or financial services. Nor for data/IT services. But, of course, there is easy money to be saved even in these areas.
Never simpler services in the big cities
A basic rule is that, regardless of whether you employ staff or outsource all or part of a function, when it comes to services that can be performed remotely, never let anything other than pure specialised services take place in major cities. In other words, services that are simply not available outside the metropolitan regions.
The right thing in the right place when it comes to finance
When it comes to the finance function of the organisation, the strategy should be broken down as follows:
Day-to-day accounting, reconciliations, monthly accounts, reporting and payroll services are increasingly being outsourced outside the big cities. In cities such as Örebro, Jönköping, Karlstad, Halmstad, etc. to get the same service but at a lower price.
And then there are still many who are not even aware that staff turnover is often clearly lower in the smaller towns. The customer’s ability to maintain good contact channels therefore increases at the same time.
On the other hand, when it comes to, for example, the role of HR support, controller or finance manager, the right skills are often as important, or even more important, than cost (up to a certain level).
On some occasions, geographical location can also play a role, but it is quite rarely the deciding factor. Many organisations have operations in different locations and do well with, for example, a CFO located in HQ or one of the other offices. Same with HR. If, on the other hand, most of the staff are stationed in one office, there may be advantages in having the HR function also in that office. Even if the cost would then be higher.
Why Stockholm went away
The above reasoning was something that a CEO of a Stockholm company recently realised. That it is not justifiable to have an outsourced finance and payroll function in the Stockholm area. The price tag on salaries, office space, travelling time and ancillary services simply makes the services too expensive. Instead, they chose Nya Ekonomikompetens with staff in Karlstad and Örebro.
