The latest study regarding F&A outsourcing states that companies are moving up in the value chain in the types of F&A functions they outsource, transitioning from basic transactional processes to strategic functions, such as budgets, forecasts and internal audits. As companies realize the benefits of outsourcing to firms that have greater expertise and technology resources, they look increasingly for end-to-end F&A capabilities to have an increased focus on process improvement and transformation in addition to cost saving.
WE CAN HAVE A DETAILED LOOK AT THE 3 MAJOR WAYS IN WHICH F&A OUTSOURCING Maximizes VALUE OF BUSINESS:
This in turn reduces the operational expenses to a great extent as compared to running an in-house F&A department as the costs of hiring, training and retaining F&A staff is almost nil in case of outsourcing. The KPIs and performance metrics of the service provider are now the KPI as performance metrics of the organization's F&A department, which will of course see much improvement compared to an in-house team. The benefit of this can be extended to the complete organization, i.e. other departments will start to operate according to these standards and hence performance measurement capabilities across the business experience a spike.
IT BRINGS ABOUT IMPROVEMENT IN THE PROCESSES
When F&A is outsourced, it becomes imperative for the organization to adopt lean business practices which the service provider brings in. The service provided, being specialized in F&A core functions, is able to offer a range of industry best practices due to its exposure to and experience with various other companies of the same industry. Instead of this, if the organization would persevere to achieve such experience on its own, it would have to invest much more time and resources, eventually taking away value from the business. The same rule that applies is in the most common business practice of ‘division of Labor’, naturally applies here too; the service provider of F&A functions brings in process efficiency to the organization, hence maximizing productivity as a whole.
IT HELPS EXTEND & ELEVATE FINANCIAL MANAGEMENT SCOPE
By outsourcing the core F&A functions of the organization to a specialized service provider, the Finance department team has its hands free to work on functions over and above the conventional planning, budgeting and forecasting. They can now focus on improving their analytical capabilities and elevate the scope of work to predictive & prescriptive analytics, to be able to give better support to other operational functions and hence add more value to the business. By studying number crunched information received from the service provider, they can analyze and identify key opportunities and pass on insights to business stakeholders for better financial decision-making. The F&A in-house department can now focus on developing self-serving reporting mechanisms across the organization and set up systems to bring in more visibility and transparency, further leading to more beneficial business decisions.
IT LEADS TO BUILDING OF AGILE AND FLEXIBLE FRAMEWORKS
In the presence of a separate specialized entity in the form of a service provider, the business is able to rapidly adapt to changing compliance and regulatory environment, as the information and adaptation of the same is almost immediate by the service provider for all the organization being served by them. The responsiveness of the service provider in case of required support during emergencies, or normal course of business, is much higher than an in-house team, which has its hands full of other day-to-day tasks to respond to. Even in situations where business wants to go through changes, an outsourced team is more likely to easily be able to align itself with new business objectives and hence outsourced F&A business model offers much higher flexibility. Service providers adapt to the latest technology and business trends with much more agility than an in-house team, where in transition and training costs are involved for the organization. In addition, when the organization needs to fulfil ad hoc processes and tasks, execution is almost instant and without any disruption of existing functions.