The global finance and accounting (F&A) outsourcing market is expected to grow at an estimated 5.9% CAGR and is expected to be valued at $53.4 billion by 2026. The US F&A outsourcing market alone was worth an estimated $18.3 billion in 2021. Spurred on by the economic and operational impact of the pandemic on businesses, the F&A business process outsourcing industry continues to grow steadily. The main advantages of F&A business process outsourcing include cost reduction, increased operational flexibility, and enhanced efficiency of business processes. Choosing the right F&A business process outsourcing partner will give you access to industry best practices and technologies to better equip you in handling your operations. In short, outsourcing will most certainly give your business an edge over competitors. However, there are inherent problems and risk associated with business process outsourcing, most of which comes to light during the first 6 to 18 months of an outsourcing implementation.

A common problem is that the new processes and decision rights have not been well designed or understood. This can lead to the client and the service provider staff feeling frustrated as decisions are stalled, and expected business benefits are delayed. When the business process outsourcing partner has been brought in as a change agent, there is often resistance in the client’s team towards adopting new processes, methods or approaches.  And in some cases, if functional heads on the client side were not part of the decision making process to select the service provider, they may feel unprepared for the changes being asked of them. In some situations, a certain inflexibility may also come from the service provider who comes in with the view that ‘this is what we have done for other clients.’  All of this can create a tense and frustrating situation for all.   Unfortunately, there isn’t a magic formula to be handed out that works for every company and for every outsourcing initiative. In the blog, ‘How an Outsourcing Partner Can Help You Grow Your Business,’ we covered how partnership, communication, flexibility, and trust are vital for successful business process outsourcing relationships to work. In addition to these essential elements, here are three strategic aspects to consider while evaluating a prospective F&A business process outsourcing service provider.
 

1. Does the F&A outsourced provider have a strong PMO (project management office)?

Business process outsourcing project failures are usually due to (a) the lack of clearly defined objectives and milestones, (b) faulty strategies, (c) lack of ownership, and (d) poor project delivery discipline. Organizations can bridge the chasm between high-level strategic vision and outsourcing implementation with a strong project management office (PMO) leading the initiative. A PMO creates tangible goals, aligns the vision for the outsourcing project with the client and partner teams, and ensures that targets are met. The guidance is driven by the PMO team through project templates, standardized processes, timely communication, and budget and timeline monitoring. Most, but not all, high-performance organizations have their own internal PMO. For those that don’t, or that can’t divert their PMO resources to an outsourcing initiative should look for an F&A business process outsourcing partner with their own PMO that can take on the responsibility to drive the project. You can expect the outsourced PMO to:

• Ensure the project is delivered as per the agreed time frame and within budget.
• Supervise standardization of project processes to meet the change agenda.
• Provide a central repository of data and information for project teams on both sides.
• Proactively monitor and identify issues that need to be addressed during project implementation.
• Minimize information silos and miscommunications.
• Prioritize project tasks for closer alignment with the C-level.

You can also leverage the outsourced PMO office to do a Six-Sigma workshop for documenting your existing employee resources, processes, and technology to identify gaps that exist before the implementation of F&A outsourcing. The responsibilities and expectations you have of the PMO should be in-built into your F&A business process outsourcing contract.

2. Does it make sense to do a complete cut-over to outsourcing all at once or should you choose a hybrid model to start?

If this is your first time outsourcing a business function, consider partnering with a service provider that is flexible to work with you in a phased approach to outsourcing.  This means that you start with outsourcing a part of the process to them and then as you gain comfort with it you continue to move more and more over to them.  Some companies don’t always have the luxury of time to pursue this approach, but if you do, it can help the entire organization ease into the outsourcing world. Additionally, you can also check for a provider that offers a hybrid BPO model. In the hybrid model, the technical team is situated offshore (in another country), but there is an onshore office for the service provider (in your home country) with whom you primarily communicate.  A hybrid BPO model gives you the benefits of low-cost business process outsourcing solutions, but gives you a measure of comfort that you won’t have any issues with understanding your service provider team. Again, as you gain comfort with the service provider’s offshore team, you may decide to move to a fully offshore solution to save yourself additional money.

3. Does the F&Aoutsourced provider have the right technology to make this relationship as seamless as possible?

Ensuring that the outsourced service provider you choose has the right technology to make the transition as seamless as possible will go a long way in ensuring that the project timelines and expectations are met. Having the right technology is also essential to ensure that the quality of ongoing service meets your expectations.  Some of the questions you should be asking about their technology are:

1. Is the platform scalable going forward?
2. What system reports can be accessed to evaluate the efficiency of the transition and ongoing work?
3. Is there a way to record discrepancies and escalate such situations if needed?

Another key concern to consider with F&A business process outsourcing is information security, especially when your business captures customers personal and financial data. Data leaks can compromise the integrity of your business and your bottom line, so you also want to ensure the service provider has a strong data security infrastructure and policy in place.   In today’s dynamic economic environment, it’s become more necessary than ever to control costs while being responsive to business needs. In such a scenario, outsourcing functions such as F&A make it easier to efficiently manage the administrative aspects of your business while you and your team focus on product development, service delivery, and marketing innovations. Even if you had a bad experience with outsourcing in the past, don’t let it bias your decision today. You don’t necessarily need to go all-in with business process outsourcing all at once. Start small by outsourcing one area of your business, and then as you get comfortable, you can add more functions to your scope with your selected service provider. Finding the right partner for you is the key to business process outsourcing success.

We hope you’ve found this article insightful. Contact us to learn more about F&A business process outsourcing.