Resource sector may outsource finance functions to Asia
Angela Macdonald-Smith
Outsourcing basic financial functions to Asian countries such as Malaysia, Thailand
or the Philippines is one of the tactics that struggling Australian energy and resources
companies are expected to call on this year to see them through the prolonged slump
in commodity markets. Doing more for less will be a key theme for 2016 and beyond
as companies seek to unearth pockets of cash in their businesses to improve liquidity
management and reduce funding costs, said Lance Kawaguchi, head of the resources and energy group at HSBC's payments and cash management division. The strategies are more than Band-Aid solutions for the downturn, but will also stand companies in good stead longer term, he said. "Australia has done a good job in driving costs down, but that can only take you to a certain point."
Outsourcing common in Europe, US
He said that establishing shared service centres in locations such as Manila or Kuala Lumpur to centralize functions such as accounting, payroll and procurement had become a common strategy for European and US companies to lower costs further.
"I haven't seen that yet with the Australian corporates but I know that they are looking at that," Mr Kawaguchi said, pointing to potential changes to regulations in Thailand offering tax breaks for providing financial management services to foreign companies.
He said the impact on jobs in Australian resources companies would be relatively modest.
"Would there be some potential losses in the lower functions? Yes, but from the overall corporate perspective, when you are trying to keep the bottom line positive, if you can get efficiencies, free up liquidity and make your overall organization more efficient, then net-net that's going to be better for everyone, the shareholders and also the company."