Outsourcing Finance & Accounts – A revolution to experience

Outsourcing Finance & Accounts – A revolution to experience

The outsourcing industry has grown rapidly and systematically over the last couple of decades with India being at the epicentre of the action.  Yet there are numerous businesses globally who are far away from considering outsourcing as an alternative to in house functions.  The question that remains for them is - why they should start shifting non-core activities overseas?  Isn’t outsourcing your accounts to someone who isn’t a native English speaker and working thousands of miles away risky?  So here we will deal with explaining why outsourcing pros weigh out the cons.

As businesses expand, many of them look for strategies to help control expenses, stay ahead of the competitors, and implement novel solutions without increasing overheads. Outsourcing of Finance & Accounts, when professionally managed, happens to be a sure shot solution sufficing those requirements. Still, not everyone is open to change and there could be some pre-conceived notions preventing Business Heads and CFOs/Finance Directors from taking advantage of outsourcing finance and accounting services to India.  So we hereby address some common misconceptions regarding outsourcing of finance/accounting and payroll functions.

Cost savings

Business owners looking for cost gains often choose to outsource their finance and accounts which can cut down their costs by up to 50-60% compared to in-house operations. The key is to achieve this without disrupting your operations, or inversely impacting the quality of output. With an expert accounting service provider, these issues easily dry out. The major savings come in the form of labour arbitrage, but value additions in the form of improved efficiency, revenue recognition and higher rates of accuracy can also deliver significant monetary benefits.

Flexibility in scaling operations

Expert F&A outsourcing service providers usually have solid recruitment capabilities and they operate in cities that have a surplus of accounting graduates. This makes it easy for them to hire skilled and qualified accounting professional in a relatively short period of time. Consequently, staffing shortage is a non-issue when you choose to outsource (as long as you are dealing with a seasoned service provider). The release from the stress of staffing issues plays a major role in the decisions of business leaders who usually face major challenges finding and retaining accounting staff locally.

Outsourcing service providers will go the extra mile in supporting their clients during month-end and year-end accounting requirements and also support during statutory audits. The outsourcing partner may have a significant bench strength, or may have a surplus of trained resources as a back up to ensure the continuity of operation. Some staff may even be available as a backup during holidays to guarantee timely delivery.

Strategize & Grow

Offshore accounting service providers have the people, processes and technology that make F&A functions more efficient and they have reporting mechanisms that provide better visibility on the activities at the same time. They also take care of compliance and shoulder the burden of other administrative tasks. As a result, accounting personnel in the onshore are able to focus on delivering accurate management reporting and investor reports as they are freed from various daily accounting chores. This enables finance leaders to give full focus to industry trends and other areas that contribute to the overall business growth.

Digitization & Process Improvements

It is difficult for accounting departments in businesses to find the bandwidth for major digitisation or process reengineering initiatives. Mature outsourcing service providers already have processes in place and may already possess the experience needed for moving paper-based processes to digital platforms. Many businesses combine outsourcing with modernisation initiatives to kill two birds with one stone. The only challenge is to find a provider that is able to provide valuable assistance in these areas.

Seamless & Real time communication

Cross continental exchanges between a business and its outsourcing service provider have to be uninterrupted and as real time as possible. CEOs and Finance Directors are hesitant at times to consider cost-saving options such as outsourcing due to the fear that an offshore team may not be able to communicate fluently in English or may not be a good cultural fit.

A trained dedicated accounting team will be able to easily communicate over a phone, via mail or through audio conferencing. The offshore teams usually receive English communication and culture trainings to equip them to work efficiently with the clients. Outsourcing service providers often hire people who have studied or worked in the international zone to ensure they adapt easily.  The offshore guy is usually just a call away through phones or Skype as at times they may be working in the time zone of their Client.

Data security and compliance

Data security, which also now comprises of personal information privacy, will always be a concern for businesses and individuals wanting to outsource their work. Companies in India that focus on outsourcing appreciate this apprehension and have established themselves as credible outsourcing partners by pre-emptively addressing data privacy and security risks. Indian outsourcing providers mostly take measures such as attaining all physical and logical controls towards protecting their client’s information and systems.  They review and regulate their IT processes and networks to ensure it is in line with necessary data protection norms.

To minimize security breaches, the service providers usually take care of the following:

Access cards and biometric login for all employees

Confidential, non-disclosure agreements signed by each employee

Data access restrictions to authorised users only

All methods of data transfers to external sources are controlled

SSL secure network and electronic locks on every access

Anti-virus software

24x7 CCTV monitoring

Regular security audits

Improved end-customer experience

Finance teams in developing countries are expected to deliver a good customer experience; i.e., they are expected to deliver satisfactory services to end-clients, customers, employees and other stakeholders. F&A outsourcing has moved beyond TAT (turn-around time) and delivery to focus on providing better experiences to all the people that it services. Via mature partnerships with vendors, companies are able to leverage outsourcing to deliver a better customer experience. This is accomplished through timely delivery, accuracy, regular follow-ups and quick query resolution.

Insightful reporting

Finance and accounting services providers can help businesses take their financial reporting to the next level through customised reports in easy-to-digest formats. By delivering high-quality and accurate data, offshore teams enable onshore finance leaders to speed up reporting and make data-driven decisions. When dealing with more mature offshore teams, companies can share data to get detailed analytics; however, for this to happen the business has to be willing to share business data with a service provider.

Better management & Talent retention

Basic finance and accounting functions like payroll, AP, AR, credit control or management accounts do not satisfy ambitious and exceptional accountants onshore. Most accounting professionals onshore want to grow – and fast. The more talented your accounting staff is, the more difficult it is to retain them; especially when the work you want them to do is perceived as tedious, labour-intensive and time-consuming.

Offshoring F&A and payroll functions opens up managerial or strategic positions for the most talented members of your team – not only is your organisation able to retain the best, but it is also able to derive the most value from them. Using the team in India for day-to-day accounting functions has helped many businesses to retain their strongest performers.

Offshore Centre of Expertise

As the team in India integrates with the onshore team, and as they work together to set and refine processes, the offshore F&A team gains a complete understanding of the processes. Over time, the communication between the teams becomes seamless. Reliable delivery from the offshore team gives the finance leaders peace of mind – they learn to count on the offshore team and treat it as an extension of the onshore team.

As the team members’ on-shore move into strategic roles or shift focus to high-end activities and the service delivery from the offshore location becomes completely reliable, it is possible to take the relationship to the next level. For many of the businesses, the offshore payroll and accounting teams function as a centre of expertise. This means that the offshore team drives innovation and adds value way beyond labour arbitrage.

If you would like to learn more about how outsourcing can work out for your organization, please do not hesitate to get in touch with us for free consultation.

You can reach us at info@gjmco.in to deliberate further.

Thanks & Best regards,

Knowledge Base Team

GJM & Co.

Chartered Accountants

www.gjmco.in