Because of the increasing economic instability and a decrease in profit margins in most industries throughout the world, the company’s management strategy now only focuses on increasing efficiency and produces significant cost savings. The outsourcing business process as a strategic tool has been received as one of the most effective ways to achieve these twins. Most companies now consider financial and outsourcing accounting as an important part of their outsourcing strategy. Some of the latest research and surveys highlight the following:
• Independent surveys estimate that software export revenues and services are expected to grow more than 16-17% to reach USD 62 billion by FY 11 with FAO into the second largest outsourcing area
• Financial Market and Outsourcing Accounting (FAO) in 2010 are expected to continue the growth trajectory that is more similar to the pre-recession rate, moving towards 20 percent and reaching almost US $ 3.7 million in the volume of annual contracts (ACV)
General Outsourcing activities in Accounting
The most common activities in this field include:
• Record to report (eg, general accounting and reporting, estimates and planning, banking)
• Procurement to pay (eg, invoice, travel and load)
• Cash message (eg, order processing, credit and collection)
While the cost reduction will remain a primary driver for financing and outsourcing accounting, a study shows that global financial executives also appreciate the ability to get a sharper focus on core competencies. Thirty-two percent of respondents said outsourcing played a role in increasing business productivity of financial staff and enabling their organization to access the best talents and technology.
Some of the main benefits of outsourcing are as follows:
• Cost-outsourcing savings reduces staffing costs by 30 to 70%, reducing the overall processing costs of 20 to 50%. A good accounting company is equipped with advanced infrastructure, innovative technology and professional expertise to handle custom projects in their specialty branches. As a result, you are not only saved from making expensive investments, but also benefit from professional expertise at the price of most developed countries cannot offer
• Larger leverage buyers have access to supplier leverage obtained from infrastructure sharing and process consolidation
• Increased reporting-outsourcing can also increase service giving, improve process accuracy and increase reporting speed
• Achieving strategic business value – according to the latest research, half of the total respondents showed that FAO was seen as a tool to address the operational and strategic needs of F & A
Buyers generally achieve the benefits they are looking for from their implementation of FAO, especially relative to reducing costs and using savings to fund F & A transformation efforts
The role of outsourcing in directing profitability has increased significantly in the current economic scenario. Organizations that adapt outsourcing will not only reduce their operational costs but get significant competitive advantages in their industry.