Michael Gallagher, Former Managing Director & Strategic Growth Leader, CBIZ

Invest: spoke with Michael Gallagher, former managing director and strategic growth leader of CBIZ, about the strength of Houston’s business environment, the demand drivers shaping CBIZ’s work, and what makes Houston stand out as a unique market. “Right now oil and gas run the world, and that business is headquartered in Houston,” Gallagher said.

How would you describe the overall business environment in Houston today, and what changes over the past year have had the biggest impact on your operations?

The overall business environment in Houston is extremely strong. Recent instability in the oil and gas business has also created a great deal of revenue and opportunity. Houston is a large, diversified metropolitan area, but it is still the largest oil and gas town in the world. We are the global headquarters for that business, so spikes in commodity prices and continued investment in infrastructure have created a strong environment.

There is also a lot of investment in technology, particularly technology tied to those industries, and that is helping drive business activity. Our healthcare industry is thriving as well. A lot of that strength is still predicated on the robust nature of the oil and gas business and the broader industries across the state.

What key trends are shaping demand for your advisory, tax, and risk services right now?

We serve the middle market, who come to us as their trusted advisor to help them through significant moments in time, like we face today. Commodity prices are creating havoc with logistics, which then affects a company’s ability to invest, whether in capital, people, or expansion into new locations.

That uncertainty is creating opportunity for us. We are seeing a comeback in outsourced and co-sourced services, which CBIZ provides across a range of offerings, from accounting, tax, advisory, benefits, insurance, and technology. Companies would rather outsource certain functions than make major commitments to infrastructure and staffing when the outlook is uncertain. That has been advantageous for us. We are seeing a pickup in that activity, so uncertainty is actually driving economic opportunity for our business.

As Houston continues to diversify beyond oil and gas, how is that shift showing up in your client base?

We are still thriving in our core services. I work in advisory services, and we continue to see significant capital and investment going into younger companies, whether that is software-as-a-service businesses in Austin and Central Texas, manufacturing and infrastructure tied to oil and gas in Houston, or financial services in the Dallas metroplex.

Before these companies make major commitments in fixed infrastructure and staffing, they want to outsource and co-source functions, and that is where we are seeing strong demand.

What risks or challenges are your clients most focused on managing today, and how are you advising them?

We have quite a bit of new business in the IPO readiness space. There are companies, especially technology businesses with a strong Texas presence, that want to position themselves to become large, complex public companies. We are seeing a resurgence in that demand, and on the advisory side, we are gearing our practice around it.

CBIZ has well-structured industry verticals that allow us to go to market in a focused way. That includes verticals like energy, technology and life sciences, and financial services, among others. That structure helps us bring the right specialists and products to clients as they prepare for growth and more complexity.

How are AI and automation changing both your services and what clients expect from you?

We see it on two fronts. At CBIZ overall, and within our practice, we are redefining how we utilize AI and technology. We are using AI to enhance efficiency and ultimately deliver better service to our clients.

Additionally, in our client service delivery models, we are bringing more efficiency and profitability to the solutions we provide. Both of those things are happening at once. CBIZ recently announced that Peter Scavuzzo was elevated to be in charge of not only the IT infrastructure side of the company but also our technology service line. Having one executive running both areas says a lot about where the company is going.

Every client service delivery practice is reacting to this. In our space, whether it is internal audit, financial compliance, or related work, we are trying to find ways to do things faster and more accurately for clients. That is happening across the service lines, and it is also happening at CBIZ.

How has demand in cybersecurity and compliance evolved recently? Are companies becoming more proactive?

They are becoming more proactive, but not as proactive as I wish they would be. I am still surprised by the number of companies that take a wait-and-see attitude. The reality is that every tool we are talking about, whether it is AI, bots, analytics, or broader computing power, the bad guys have it too.

Cyber threats and cybercriminals are using the same tools to get better at what they do. That makes cybersecurity as big a problem as it has ever been. Every advance that helps companies do their jobs better and run their operations more effectively also increases the threats on the other side. Technology can be used for good or for harm, and that is exactly what is happening. Cybersecurity has never been a bigger risk or a bigger challenge for companies.

What makes Houston stand out as a unique market within CBIZ’s footprint?

First, we are in Texas, and Texas has a business-forward environment. From the state constitution to current laws and regulations, the environment is far more business-focused than many competing states or countries.

On top of that, Houston is diverse. It may have an image of being a cow town, but in reality, it is one of the most culturally diverse cities in the world. Communities in Houston speak more than 160 languages. Add to that a positive business climate, no state income tax on wages, a pro-business regulatory environment, a strong education system, and a deep labor base, and it creates an attractive place for companies.

Our proximity to Mexico is also important. Texas works closely with Mexico, and that connection matters. We also have one of the largest ports in the country, which connects us to the world. Then there is the fact that our biggest industry is one product no one can live without, and that is oil and gas. Right now oil and gas run the world, and that business is headquartered in Houston.

What are your top priorities for the Houston office over the next two to three years?

One of the big priorities is integration and growth. We just completed our move out of the legacy CBIZ offices and consolidated with our colleagues from Marcum into one office. That is a major step for us, and I am excited to see how it improves the way we work together.

We are going to have close to 100 team members here, which is a bigger presence than we have had in Houston in my entire career with CBIZ. When I started, I was the fifth person in Houston. So for me, this is really exciting.

What I also like is that our leadership, both regionally and nationally, has committed to making Texas a focus. We now have a meaningful audit, tax, and advisory presence in Houston, and we are working to build the same kind of presence in Dallas, Austin, and other places where it makes sense. Growth is important for us as a company, and I cannot think of a better place to focus on than Texas.