Research predicts finance is offshoring’s next big thing

Research predicts finance is offshoring's next big thing

Discussions about whether to outsource, offshore, co-source or avoid any of these business tactics have eaten up plenty of time in boardrooms for years.

Should your business send its IT function to a shared services centre in
Mumbai, or operate a call centre in Glasgow? Releasing the company from the
burdens of IT or other transactional processes has tended to be the limit of
conversation.

But finance and accounting offshoring is finally about to step out of the
shadow of more popular forms of outsourcing strategy.

A survey by Everest Research Institute has highlighted the offshoring of
finance and accounting services as the biggest growth market for the global
outsourcing industry.

Stephen Dunn, Everest managing principal for Europe, said customers were
finally catching up with the benefits of offshoring F&A. ‘IT outsourcing
around the time of Y2K was executed well,’ explained Dunn.

‘Companies then commoditised call centres, but F&A has always been viewed
as the lifeblood of the company.’

Dunn said that business process outsourcing in general had taken a
‘tremendous leap forward’ in terms of being viewed as a value proposition by
businesses.

F&A’s predicted offshoring growth is part of a wider trend in business
process outsourcing. Everest found that the global BPO marketplace, worth
$12bn-13bn (£6.9bn-£7.4bn) in 2004, will grow to $33bn-$36bn by 2007.

The largest third-party outsourcers, such as IBM Global Services, Accenture
and EDS have all increased their employee capacity offshore over the past three
years to cope with demand. Long-standing offshorer providers, such as Infosys
and Wipro, have followed suit.

The report found accounts payable processing could be slashed from three or
four days to 24 hours using offshorers to provide the service, while labour
costs were reduced – freeing up local finance staff to provide more value-added
services.

‘Accountants doing transaction work have been freed up into more valuable
work,’ said Dunn.

Dunn said that these providers often ran IT offshore facilities for clients,
which has led them to consider adding the F&A function layer as an extra
service.

The report suggested that Eastern European offshore locations could prove
popular for F&A outsourcing, due to a better cultural fit than more
established setups in India and Asia.

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