Customer Service Outsourcing

Businesses Save Money By Outsourcing Finance And Accounting

Companies are facing intense competitive pressures and being challenged to innovate, introduce new products, and expand into new markets. This is especially true in the U.S where economic times are experiencing severe challenges. Due to this, offshore outsourcing and consulting is increasingly becoming the strategic business solution of choice to position manufacturing firms for ‘profitable’ growth. Companies are spending more time focusing on their core business activities assigning their operational and back office work to several outsourcing providers and companies. Industry experts state that outsourcing is essential for companies to compete in today's economy. Companies fully understand that it is cheaper to perform the above functions outside of the United States. Indeed, it is estimated that by the year 2010, the F & A industry in the United States will save billions of dollars as a result of outsourcing..

Companies trying to reorganize their business processes, by pulling the F&A function from every division and moving it into a separate organization - a shared services center. This move produces the beneficial results of outsourcing: it improves the process, lowers the cost, produces more management oversight and installs better controls. Companies outsourcing the responsibility and accountability for their training function to an outside vendor, who then delivers it back in a cheaper, better, faster form. Companies want to capture cost savings. But they are also looking to BPO for business process transformation.

Companies consider outsourcing for many reasons - and the range of reasons is growing. Companies care about costs and profitability. Initially, companies considered outsourcing in order to achieve a reduction in costs of non-core, support services and to focus management effort on the core business. Apart from this, outsourcing is one method through which the large businesses can cut down costs of hiring finance and accounting professionals. A company which was not making profit before outsourcing may now be able to expand its area of operation with the savings outsourcing offers. Approximately 30 percent of companies already outsource some finance and accounting functions, with two-thirds (65 percent) characterizing the arrangement as successful (57 percent) or extremely successful (8 percent). Employee payroll is the F&A process buyers outsource the most (27 percent.) Budgeting and forecasting are the two finance and accounting functions buyers are least likely to outsource (one percent).

According to IDC, finance and accounting (F&A) BPO services are projected to reach approximately $47.6 billion in 2008 from $25 billion in 2003. Within this, US and Europe lead market spending, followed by a rapidly growing Asian market. According to studies conducted by Cutting Edge Information, a US-based business consulting firm, the tendency for banking call centers to draw on skilled, cost effective overseas workforce shows no sign of changing. The report cites the example of Bank of America, which in a move to reallocate financial and human resources, outsourced some of its back office jobs to India.

One way that F & A outsourcing is able to be successfully integrated into a business's functions is through the use of web-based applications. Sun Microsystem has introduced J2EE Java Platform, Enterprise Edition (Java EE), which builds on the solid foundation of Java Platform, Standard Edition (Java SE) and is the industry standard for implementing enterprise-class service-oriented architecture (SOA) and next-generation web applications. This strategy allows companies to have a centralized application running on the web that is accessible by inside personnel, consultants, and outsourced employees. The job of finance and accounting can be accessed by all of the aforementioned at the same time. The cost to implement such a system is usually offset by the savings of using an outside firm for the f&a outsourcing.
 

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