In an endeavour to remain competitive in the market, along with the pressure of providing consistent quality enhancements with cost reduction, businesses are trying to get the most out of their people, process and technology. CFOs play a strategic role and they should be always ready to face volatile and uncertain market challenges. Outsourcing has proven to be a win-win solution by creating synergies between the three drivers of an organisation and enabling value creation. Creating value has emerged as an important outcome of the process. Businesses, particularly SMEs, have been outsourcing back-office processes such as finance and accounting (F&A) in order to achieve offshore labour arbitrage by lowering the human costs of performing the associated services.
F&A Outsourcing (FAO) benefits are overwhelming in terms of cost of ownership of resources and technology, saving on time and expertise for concentrating on the core business areas, and security and confidentiality of the data even in case of business emergencies. Businesses can profit from their F&A operation’s performance and seize opportunities for significant process improvement by using bundled and customisable standalone services that focus on people, processes and technologies and help buyers improve their operations and achieve measurable results, in:
· order-to-cash process which includes requisition-to-purchase, invoice processing and accounts payable & travel and expenses,
· record-to-report process consisting of treasury and risk management, regulatory compliance and taxation, balance sheet commentary among others
· procure-to-pay process including billing, order management, accounts receivable, dispute and deduction management
· document management services, and
· web-enabled process management tools.
However, the FAO market has begun to reach saturation with organisations seeking out new ways to be more cost efficient. This fact is evident from the estimated growth rates tapering to approximately six percent by 2015 from a moderate growth rate of 8 percent in 2014.
With maturation of the market, the buyers have become more value-centric wanting more than labour costs advantage. Although, contract termination rate has declined in 2014 after a spur in 2013, the contractual scope is increasing in terms of both processes as well as geographies being served. Consequently, the providers are coming up with outsourcing ‘as a Service’ with robust offerings like Robotic Process Automation, predictive & prescriptive analytics, judgment-oriented processes, and hybrid pricing models so as to capture the productivity aspect, rather than taking a dogmatic approach with no differentiation. For instance, according to an IBM report, although 82% of CFOs see the value in integrated enterprise-wide data analytics, only 24% think their teams are up to the task is a troubling trend. Another interesting insight from the same study is that of the highest performing CFOs, 44% combine internal and external data to produce insights. Thus, automation combined with advisory and analytic services present not only an end-to-end process driven approach to FAO but also a promise for consistent, improved and optimised service, including delivery and enterprise-wide integration.
Author: Debaleena Debnath
Debaleena is a digital media consultant @ speradigital.
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