Gary Tidd took a hard look at the overhead costs of the company where he serves as CEO, storage-analytics software maker Estorian in Bellevue. His conclusion: With just $3 million in sales, the company really couldn't afford its full-time chief financial officer. But venture-backed Estorian still needed expert financial guidance, including the preparation of quarterly reports for investors.

The solution? Tidd laid off the company's CFO and outsourced the job, hiring a CFO he pays by the hour from a national firm, Vcfo, which has a local office in Bellevue.

"We figure we'll save at least $70,000 a year," he says. "And we're getting all the services we need."

Tidd's solution is part of a growing trend toward outsourcing the CFO job at small and medium-size companies, both public and private. A combination of market forces has created high demand for outsourced CFOs and other financial executives, especially controllers. Managers at local outsource companies think growth will continue, despite the threat of an economic downturn.

TACKLING TURNOVER

The whole financial job market has changed since passage of the Sarbanes-Oxley Act of 2002, which demands additional financial accountability from public companies. Two things have happened since then to spur growth in rent-a-CFOs, says Tom Broetje, founder of the oldest local CFO-outsourcing firm, CFO2Go in Bothell.

First, the CFO job got a lot more stressful and less desirable, particularly at publicly traded companies, where CFOs must swear out affidavits attesting to their numbers' accuracy. Pay increased as companies tried to hold onto their CFO talent.

But turnover still grew. Locally, in the past year, public companies including HouseValues, Blue Nile, Zumiez, Starbucks, Weyerhaeuser and drugstore.com saw their CFOs depart. A report from Atlanta-based outsource provider Tatum LLC notes, "What was once an attractive career destination and a prestigious senior management position has degenerated significantly. ... Intensifying performance pressure within both public and private companies is forcing an evolution of the position, rendering the job virtually impossible for one person to do."

Turnover of public-company CFOs shot up more than 30 percent from 2005 to 2007, according to data from Liberum Research of New York. About three-quarters of the turnover took place at smaller public companies, with revenues under $1 billion. Forbes magazine recently estimated the average CFO lasts just 30 months.

Meanwhile, the major accounting firms found themselves with a larger workload as their clients began complying with Sarbanes- Oxley. Broetje says the big accounting firms began holding onto more of their freshout- of-college hires and paying them more, increasing retention.

"There was this big sucking sound of the firms hanging onto more talent," Broetje says. "So that made it consistently harder for people to find full-time financial managers."

With fewer trained CPAs leaving the big firms to become controllers at small private companies, and eventually, CFOs, as they had in years past, smaller private companies were hard-pressed to find anyone willing to take those slots at any price.

Filling the gap are the outsource firms. Last year, Texas-based chain Vcfo opened an office here. Atlanta firm Tatum opened a Northwest practice in 2001, which has grown to a staff of 47 financial executives.

PROS OF GOING TEMP

With 15 CFOs, bookkeepers and controllers, Broetje's CFO2Go is going full steam ahead.

"This is the highest point we've been at with staffing," he says. "I just did a survey, and we're full up. I have no capacity. I'm looking to hire."

While Tatum has a specialty in helping public companies find temporary CFOs while they search for a full-time replacement, most of the local companies specialize in helping companies like Estorian, the smaller, entrepreneurial start-up that's growing fast but can't yet afford a full-time CFO.