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Key Points
  • Over 59 percent in the Annual CFO Survey believed bringing down corporate cost is a top priority. 48 percent believed improving their internal control environment is also important
  • Over 50 percent of the respondents leverage alternative operating models like finance and accounting outsourcing for achieving both operational and strategic goals
  • Over 75 percent of the respondents plan to expand their outsourcing programs in 2010
  • While outsourcing can help CFOs reduce their F&A costs, it can also deliver strategic business value.
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Jessica: Hello and welcome to the WNS business insights podcast series. This podcast series brings you the latest trends and concepts in your industry and in the field of outsourcing so that you can make your outsourcing programs even more successful. I am Jessica Harrington, your host for this podcast with Manish Vora, Senior Vice President at WNS, a leading global business process outsourcing company. Hi Manish and welcome to the WNS business insights podcast series.

Manish: Good Morning Jessica. How are you? Thanks for inviting me.

Jessica: I am good. Thanks for being here. I’ll just dive right in. WNS recently completed the WNS Annual CFO Survey 2010. What were some of the key findings?

Manish: Jessica as you know, last year was one of the most challenging years for large global corporations and the CFO community is obviously at the forefront of helping their organizations navigate through these difficult times. Given this background, WNS conducted an annual CFO survey. We conducted this survey in ‘Fall 2009’ in order to understand the various issues that today’s CFOs are challenged with, their priorities and the strategies that they are implementing to take their organizations to the next level and I must say some of the findings of the survey were quite interesting and I’ll give you some of the top findings that we came across when we polled about 100+ CFOs, both in the US and the UK.

Jessica: Okay that’d be great!

Manish:As you would expect, you know, driving down cost organization-wide is a huge priority. Over 59 percent of the respondents to be surveyed believed driving down corporate cost reduction initiatives is a top priority. No surprises there. 48 percent which is almost half of the respondents believed that improving their internal control environment is also one of the most important items on their agenda and to be this perfectly honest with you, caught me a bit by surprise. 44 percent of the respondents believed that growing the business as the organization comes out of these recessionary conditions is again a very big item on their agenda. The good thing about this finding is that the CFOs are already talking about growth which is a very positive sign.

Jessica:Right

Manish: Over 50 percent of the respondents leverage alternative operating models like finance and accounting outsourcing for achieving both operational and strategic goals and, last but not the least, over 75 percent of the respondents plan to expand their outsourcing programs in 2010.

Jessica: Now does this surprise you? This 75 percent?

Manish: Not really. Because you know Finance and Accounting outsourcing has been a proven vehicle for companies to reduce costs, improve processes… you know some of the typical challenges that CFOs face in today’s environment. So not surprising at all.

Jessica: So what are the big three items on the CFO’s agenda? And to add to that how are they responding to this?

Manish: Jessica, the three big items on the CFO’s wish list for 2010 are improving the internal control environment. Secondly, achieving a functional transformation within the finance function and three getting ready for the upturn and CFOs are responding to these items on their agenda by undertaking internal F&A process improvement and reengineering efforts. They are implementing or expanding the use of shared service centers including implementing offshore captive centers, talking to third party providers for delivering F&A processes on an off shore location and they are also looking at ways and means of upgrading the talent pool available within their finance organization and this is where quite frankly, I believe outsourcing can help CFOs because outsourcing can help them transform finance function by consolidating their decentralized processes into a shared service environment. Outsourcing can help companies leverage high end data analytics in the finance area and outsourcing can also help CFOs transform their organizations from a technology perspective by automating processes not to mention that outsourcing could also be a great option for CFOs to access a vast pool of skilled and professional accountants at a fraction of the cost.

Jessica: Yeah, that’s a great point. There’s often a conception that finance and accounting outsourcing is only there for supporting operational activities. Has the survey finding suggested anything different?

Manish: Absolutely. F&A outsourcing market has greatly matured during this last five years. Thanks to the evolution of the provider base, change in buyer perception and a number of success stories of companies outsourcing and end to end F&A functions to a third party service provider. So there have been adequate examples in the industry. As a matter of fact, one of the key findings of the survey was that 51 percent of the respondents viewed finance and accounting outsourcing as a tool to address both operational and strategic finance and accounting needs and so while outsourcing can help CFOs reduce their F&A costs, it can also deliver strategic business value and finance executives recognize that a broad range of activities that have been historically deemed strategic in themselves in example being finance analytics, planning, budgeting, forecasting are viable candidates for some level of outsourcing. This is clearly evidenced by the fact that when we look at the opportunities at the market place companies are including end to end activities across the entire process in scope for the service providers.

So you know the survey is clearly indicating that finance and accounting outsourcing is not just meant for supporting transactional activities, but also more strategic functions.

Jessica: Okay I see. One more question here. What is perceived to be the top risk or concern associated with finance and accounting outsourcing?

Manish: I think the top concern across the industry is the perceived loss of control.

Jessica: So how would you counsel CFOs addressing this concern?

Manish: I think there are a number of ways in which companies can mitigate this concern. Firstly, both the service provider and the company must implement a multi tier governance framework that is nimble and proactive. The governance program for it to be successful must work across all levels of both organizations wherein both practical and strategic issues are raised and resolved, so I think governance is the key.

Secondly, companies must put in extra rigor while implementing a change management program that spans across the life cycle an outsourcing relationship. Outsourcing processes to a third party service provider brings a significant change and companies must recognize and deal with that change right throughout the life cycle of an outsourcing transaction from tree contract to transition to operations to even finance transformation. So change management is a second way in which you can mitigate the loss of control issue.

Thirdly, companies must design or I should use the word ‘redesign’ their retained organization keeping in mind the future stage operating model. So they need to clearly define retained versus outsourcing responsibilities. We need to clearly define the standoffs between the two teams and you know you need to document these handouts in great details.

Companies may also be required to train their retain teams in how they should manage the relationship and the delivery that they receive from their outsourcing partners. Companies are used to working right down the hallway, in the future environment their work is going to be performed some 7 or 8 or 10,000 miles away. So it’s a change in which you deal with your extended organization and last but not the least, companies that have outsourced a business process should also leverage technology to the fullest and manage the provider based on operational and key performance matrix.

So I strongly recommend that the companies manage their service provider based on pre contracted service level agreements. They should not worry about what goes in how the service provider manages the delivery. They should be concerned with actual output.

Jessica: So Manish, I have to ask you, in your opinion what’s the future for finance and accounting for outsourcing?

Manish: You know I truly believe that the potential for finance and accounting outsourcing is very promising. The flurry of activity that we have witnessed in the last two to three years in my mind is only the tip of the ice berg. I believe that the CFOs have realized that for their companies to compete in a global environment, they need to leverage global resources. You know I truly expect companies that have not embraced finance and accounting outsourcing will do so in the coming years and companies that have already implemented an outsourcing program will look to expand the scope of their program as they move up the value chain. We have seen this trend across all industries including industries that were late in joining the BPO bandwagon. So as far as my view goes, I am very confident that finance and accounting outsourcing is here to stay.

Jessica: Well great. Thank you Manish for a very topical and insightful conversation.

Manish: Thanks Jessica.

Jessica: For more information on how you can leverage finance and accounting outsourcing visit us at www.wns.com/financeandaccounting.

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