Outsourcing. Off-shoring. The demographic "time bomb." Financial services staffing needs are changing: Is your firm prepared for the new competitive framework? Consolidation and globalization among providers and the revolution in technology have caused major shifts in workplace staffing. We see evidence of those shifts every day. For example, companies no longer need to be centrally located to efficiently provide products and services to different markets. In addition, technology allows them to produce and deliver those products and services in a variety of ways that were impossible only 20 years ago.

These shifts have led to new staffing models that determine a company´s sustainability and profitability. HR professionals who understand how the changing environment will impact their firms´ workforce requirements can give their companies a strategic advantage. This introductory article identifies five major trends that have broad implications for financial services staffing; forthcoming articles in this series will discuss each trend and its potential impact in greater detail.

Outsourcing HR Functions
Fidelity Investments surveyed finance executives and HR/benefits decision makers at 190 large companies to learn about the extent of outsourcing HR and benefits functions. Seventy-two percent of the respondents reported that they outsourced at least one HR/benefits function. Over 93 percent of the respondents were satisfied with outsourcing´s results, and more than one in four said they were "very satisfied."

And, HR-outsourcing is moving beyond payroll systems, retirement plans, and general benefits administration. As companies continue to embrace outsourcing, we anticipate that more firms will begin to outsource recruitment and staffing services, including permanent recruitment. These changes will lead increasingly to a new definition of HR´s role within the enterprise, as HR professionals transition from administrative roles to serving as staffing strategists who are part of the broader economic discussions within their companies.

The Focus On Offshoring
Offshoring is a subset of outsourcing that has received substantial coverage in the news media lately. While estimates vary as to the extent of offshoring, the interest is substantial: Gartner Research reports that 80 percent of U.S. firms have considered using some form of offshore information technology (IT) services. The trend is projected to accelerate in the next decade, with an estimated 3.4 million U.S. jobs moving offshore to low-wage countries by 2015.

Offshoring offers opportunities for significant cost savings, but we believe HR professionals should consider the process within a strategic framework. There are numerous jobs within financial services that for one reason or another are not suitable positions to move overseas. There are intellectual property concerns in some cases, while in others there may be potential problems with service or oversight. Evaluating each process within a broader context can avoid the disruption and cost of going offshore and then ultimately deciding to bring the process back on-shore or in-house. Near-shoring to Canada or Mexico, for example, is an alternative to traditional overseas outsourcing that a growing number of companies are evaluating.

Strategic Call Center Management
Call center capabilities continue to be important for financial services firms because their personal response capability helps retain clients and increase the company''s share-of-wallet. Call centers are very expensive to operate, however. As a result, HR professionals constantly seek the most efficient ways of deploying their call center capabilities. These efficiencies include flexible workforce solutions that focus on staffing, training, and retaining quality call center personnel.

Flexible employment in particular will continue to make call center positions more attractive for prospective employees who may be in different stages of their lives, such as students, seniors, or persons who have some other need for flexibility. Flexibility also benefits employers, because it can help them attract higher quality-and ultimately more productive-employees. As companies move to flexible hiring arrangements, though, they need to tailor their benefits and systems to the changing workforce. A call center also is an area where strategic offshoring is worth considering, although a company must evaluate its appropriateness to determine where it works and doesn´t work.

Smoothing the Hiring Cycle
The U.S. financial services industry has long had a reputation for "hire-and-fire" policies that coincided with the investment markets'' performances. For example, during the recent bear market, employment in the securities industries fell from a peak of 841,000 in May 2001 to a low of 794,000 in May 2003, a drop of almost 6 percent.

A closer look at the data reveals that the industry''s overall employment level has been relatively steady since January 2002, however, primarily because financial services companies are being circumspect about filling positions with permanent hires. Part of the solution to the volatile hiring cycle that we see emerging is a more flexible staffing approach. This method allows sophisticated HR professionals to consider workforce niches and decide which functions may be better served by temporary hires or more flexible solutions than permanent hires. Another trend is temp-to-hire or flex-to-hire strategies: Companies will hire someone as a temp or for a trial period before making a permanent hire. That is a more conservative but potentially very appealing approach that we believe will gain in popularity both for the job candidate and the hiring organization.

Demographic Time Bomb: Fact or Fiction
News media reports have made much of the forecasted U.S. labor shortage that will occur when the baby boom generation begins to retire. The statistics vary with the forecast horizon, but the Bureau of Labor´s estimate that the number of open jobs will exceed available workers by 15 million in 2015 is a widely cited example.

We recognize the difficulty of forecasting demographic trends, but we are skeptical about the projected labor shortage for the following reasons:

• Baby boomers have longer life expectancies than previous generations and many of them plan to keep working past the traditional retirement age of 65.

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• The "baby bust" generation (those currently ages 23 to 37) will be followed by a larger cohort, namely the baby boomers'' children. That younger generation, combined with an increasing number of immigrants, should ensure that the U.S. population continues to grow.

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• The productivity of U.S. workers continues to increase.

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• Offshoring will help absorb at least part of excess demand for workers.