Today’s F&A outsourcing initiatives differ from those of the past in the breadth of the scope of services being put out to bid and is not restricted to single functions such as payroll or benefits administration, however, the FAO market reaching towards the saturation point sends out a strong signal for stirring up the vendors that they need to increase mastery of more specialised finance and accounting services and expand global offerings.
CFOs are seldom concerned only about cost cutting in the present scenario. Since the economic crisis a few years ago, they are exercising extreme caution to be efficient to balance cost pressures against business outcomes. The traditional FAO model of ‘as is’ used by corporations reaping benefits of lower cost through labour arbitrage, increased core competency focus, and access to talent are no longer sufficient as in the process, the process defects also get transferred in their transition phase. This is where the “partnership model” within transition will help the vendors. By implementing this model, outsourcing companies will be able to transfer the lift off benefit of as much as 10-15% to customers during the transition phase itself.
Companies are compelling their vendors to streamline financial processes and reduce cycle times as well as improve quality and accuracy simultaneously – drawing on Lean Six Sigma methodologies can produce systemic and sustainable business process improvement. The underpinning theory for Six Sigma is to identify and reduce variations which will ensure that business processes are standardised, repeatable and reliable for both internal and external customers, while Lean helps to reduce waste and increase value by seeking to remove non-value adding steps in a particular process.
The tangible outcomes that outsourcing service providers can achieve through implementation of multiple Six-Sigma projects across F&A processes are:
The broader implications are:
Mature outsourcing providers are therefore being punctilious as well as robust in their approach and re-engineering the entire F&A processes.
Author: Debaleena Debnath
Debaleena is a digital media consultant @ speradigital.
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