Outsource to tackle affects of recession and oil price hikes

The weakening dollar and the recent rise in price of oil, surpassing 100$ a barrel for the first time, along with evident signs of the prices reaching new highs in the future, has made the global financial market worried about the fate of the dream American economy.

It comes at a time when prime mortgage crisis is dragging the economy into a possible recession and that too in an election year.A situation of "stagflation," similar to that in the 1970s when OPEC tripled the price of oil, may well be around the corner even though the Bush government denies it.

"We are in a danger zone," says Nariman Behravesh, chief economist at Global Insight Inc. and a former Federal Reserve economist. "It would take two shocks to bring the economy to its knees. We got one shock in the form of the credit crunch. Oil could be the second shock."

In an article by Kate O'Sullivan on CFO Magazine it was said that more than half of finance executives say the United States is now in a recession and another quarter say the country will be in recession by the end of the year.

The rising jet fuel prices have also been hitting the airline industry with most airline companies curtailing their expansion plans. The industry has recently witnessed closing down of some major international airlines owing to present economic conditions.

This has mostly affected the CFOs who have to steer through these tough times as they are in constant look out for clearer and calmer waters where they can dock their ship till the financial storm passes away.

Speaking at CFO's annual CFO Rising conference last month, veteran finance chief Jerry York said, "It's going to be a very bad recession, perhaps the worst I've seen in the 46 years I've been working."

Optimism among finance executives reached a new low in this quarter's Duke University/CFO magazine Global Business Outlook Survey, with 72 percent of CFOs more pessimistic about the economy than they were last quarter.

With this backdrop, the CFOs are focusing on finding ways to cut down costs at every possible way in their business setup. "I think every company is keeping a careful eye on its cash balance. Companies are going to be conserving resources," says Jim Frates, CFO and treasurer at biotech firm Alkermes, based in Cambridge, Massachusetts.

But with a stable financial management system handled by experts in the finance fields, the CFOs can tackle the situation with much ease.

One of simple ways of cutting down costs can be outsourcing the finance functions to countries like India. If you are visionary in your approach, you can take a step ahead and outsource the work to companies like TA who not only takes care of various finance functions using latest software and technology in the respective fields also faithfully assists the CFO in tracking and monitoring status of the finance organization and business operations through various customized reports and dashboards.. This would help a CFO be clear about the true picture with regard to the financial status of his company.

At times when the economic stability in America might take quite some time to steady down, it would largely depend on CFOs to take balanced and quick decisions to keep their businesses floating while saving on costs.