The quarterly survey, carried out with BSI Global Research Inc, took the views of chief financial officers and managing directors from 127 European and 151 US multinationals and found that 75% of respondents now use outsourcing or shared services to support their companies' financial functions.
The survey reveals that 72% of European multinationals have outsourced financial functions over the past two years compared with 77% in the US, and that 71% of European companies and 78% of US companies are planning to use these services in the next 12-24 months.
Product sector companies (80%) are more focused on using these services over the next one to two years than service companies (63%) and, overall, 29% of US and European companies expect to increase their use of outsourcing of financial functions - with spending expected to be nearly 16% higher than current levels, says PwC.
However, the survey reports a mixed response when it comes to the effectiveness of outsourcing. Thirty-one percent of respondents admit to finding limited or very little cost benefit in the process, 9% feel they are breaking even and 4% believe they are actually losing money, but say they are achieving other benefits.
On the other hand, nearly half (47%) reported that their companies have been saving either a moderate amount (44%) or a great deal (3%).
"Many multinational companies that outsource financial functions do not find it to be cost effective," said Dan DiFilippo, PwC's Global Leader for Performance Improvement and US Leader for Governance, Risk and Compliance.
"Companies that turn to outsourcing for cost savings should conduct comprehensive feasibility studies to better understand their potential return on investment. Many companies enter outsourcing arrangements without conducting a proper cost-benefit analysis," he warned.
Thirty-eight percent of Europeans report the benefits their company derives from outsourcing are better than initial expectations, 46% rate them about on par, while only 8% rate them worse, says the survey. Twenty percent of US executives believe the benefits are better than expected, 61% rate them on par, and 10% consider them worse.
"US and European executives have contrasting views when it comes to the types of financial functions they look to outsource," said Andrea Samaja, European Performance Improvement Leader, PwC in Italy. "Far fewer European companies outsource benefits and claims administration than US companies."
The survey shows a marked difference in the financial functions that these multinationals have, or are planning to outsource, within the next 12-24 months. For example, in the US, the top two outsourced financial functions are: payroll/billing/accounts payable (74%) and benefits/claims administration (70%).
In Europe, however, the top two functions are: IT/systems support (70%) and tax services (59%), with payroll/billing or accounts payable services trailing (48%).
Overall, use of IT/systems support is higher in Europe than in the US, as are accounting services and human resources/hiring. European companies, however, make far less use of most other outsourcing services, including payroll/billing/accounts payable, benefits/claims administration, internal auditing, and risk management.
At the same time, the European and US executives disagree on which financial functions have reaped the greatest benefits from outsourcing.
A majority of Europeans gave ratings of "highly effective" for the following attributes: security/privacy; timing/timeliness; advisory competencies; competence of outsiders; control and compatible IT/systems support. But only 40% described cost savings benefits as "highly effective," versus 38% "mixed," and 9% "less than effective."
A majority of US executives rated security/privacy; control; timing/timeliness and ability to deal with compliance issues as "highly effective." Yet overall quality and cost-saving benefits received predominantly mixed ratings.