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Josh: Hello and welcome to 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 you can make your outsourcing program even more successful.

My name is Josh and I am the host of this podcast with Manish Vora, Senior Vice President of WNS, a leading global business process outsourcing company.

Today we will discuss with Manish the latest trends in finance and accounting outsourcing which is clearly one of the fastest growing areas in the outsourcing scene. We will also talk to Manish about the concept of Business Process Utility.

Hi Manish, welcome to the WNS Business Insights Podcast Series.

Manish: Thank you Josh for having me here.

Josh: Manish, we have seen a lot of talk in the finance and accounting services. We have heard in some instances that the demand is increasing and from other sources that the demand would decline. For someone who is front and center selling these services to clients, what are you seeing out there?

Manish: Josh, I definitely have to side with people who are saying that the demand for finance and accounting outsourcing is going up because we are definitely seeing an uptake in the demand for finance and accounting outsourcing services.

In the current economic climate, every CFO is looking at all possible ways and means to reduce cost and finance and accounting outsourcing is a proven vehicle not just to reduce cost on a consistent basis but also to improve effectiveness in the finance organization.

What we are seeing is actually a consistent demand across all industry verticals, in all geographies especially the Americas and Europe which traditionally have been most active in the F&A outsourcing however we are also seeing an increase in the size of the opportunity that comes to us. And if I think about it, this can be attributed to couple of factors.

First of all, we are seeing many more global deals as compared to regional deals which we used to see a couple of months or couple of years ago. So in the past CFOs would want to outsource the function in US or UK however we are seeing them wanting to outsource their global finance organization.

Secondly, we are also seeing many more multi function finance and accounting outsourcing deals against a few months ago, company would out begin their outsourcing journey by outsourcing may be one or two transactional processes like accounts payable or accounts receivable, today CFOs are seeing that the F&A BPO market has matured and they are therefore getting more comfortable in outsourcing more complex functions like financial planning and analysis, management reporting, financial closure and even in some cases industry specific function like in a recent case we had a newspaper media company wanting to outsource their circulation and publishing functions and all back office related function.

We are seeing another interesting trend - in addition to cost saving we are seeing an increased focus on process improvement and transformation.

In addition due to the current economics climate, CFOs want to move from a fixed cost structure that they currently have to a variable cost structure. They are not just looking for saving in cost they are also looking to move from fixed headcount that they currently have to bear to a variable cost structure by migrating to a unit transaction pricing mechanism so that as their business volumes drop, their back office cost would also reduce.

CFOs are interested in gain sharing mechanisms so if the service provider is able to deliver a better performance then CFOs are ready to share their gains with their service provider. If the service provider is able to reduce the cost further then companies are willing to share the benefits of the savings with the service provider. So the service providers are coming forward and putting more skin in the game and they do this by either implementing process improvement initiatives or by implementing transformation initiatives.

Josh: Manish, seems like there is a lot of action out there. Can you give us a couple of examples of how companies are leveraging finance and accounting outsourcing to achieve their business objectives

Manish: Absolutely, let me share with you one of my favorite examples, we have a client that operates in an extremely complex environment. They have over 35 different business units they operate in more than 40 countries and they have over 25 different accounting systems so you can imagine and visualize that their environment is very fragmented and their processes are not standardized.

What we have been able to do with this client is consolidate their finance and accounting shared services organization into one single location in India. In doing so, we have introduced a fair degree of standardization into their processes. The client has also benefited from a number of process improvements and automation initiatives that have enhanced quality and reduced error rates.

For another client of WNS, we have outsourced almost every function within the CFOs organization, right from simple transactional processing to high end management reporting, financial planning and analysis. The client has outsourced every single function. The only functions that are in the CFO's organization are a couple of people who report to the CFO. What we have also done for this client is to move them from a fixed cost structure to a unique transactional variable structure which helps them to weather the ups and downs in the business cycles very effectively.

Josh: I was recently at a conference and the topics of Business Process utility came up quiet often. Manish can you tell us a little bit about Business Process Utility. Seems like it is the next wave in Business Process Outsourcing.

Manish: Sure, so at a very high level, I would define a business process utility, as a comprehensive managed service solution that comprises of people, best in class processes, and state of art technology. In other words the service provides you with the labour, process know-how as well as the technology platform.

This is very different from a typical finance and accounting outsourcing arrangement where all that the service provider does is providing skilled people. But process is typically defined by the clients and the technology, the systems, the application are also provided by the client.

So when the clients migrate to the BPU model they outsource not just the technology part of the process but also the process itself and the labour associated with the process. Certain processes within finance and accounting can be moved to the Business Process Utility model - for example - rules based process such as reconciliation, invoice processing, expense claim process are some candidates for a BPU model. We are definitely seeing some action in that space and I am sure over the next few months and next couple of years the BPU model will definitely get entrenched.

Josh: Manish, for a CFO who has never outsourced finance and accounting function before, can you tell us what benefits can they expect from outsourcing processes to a third party provider.

Manish: I think there are 2 or 3 key benefits that CFOs can expect from their finance and accounting outsourcing provider.

First and foremost they could very easily take the money to the bank. Based on our experience most of our clients save anywhere between 35% to 50% of their current cost base. So that is a significant benefit that would do a lot for a CFOs budget.

Secondly, a CFO should also expect standardization of processes especially if they operate in a decentralized environment with non-standardized processes because once the service provider moves the work into one or two locations, the scope for process improvement, process standardization is real and the service provider will also be able to implement industry best practices across the finance organization; the expertise which the CFO's current organization may not have.

Also, today service providers have good transformational capabilities. Service providers like WNS have ERP optimization capabilities which can further automate and enhance CFO's organization.

So those are some of the key benefits a CFO should reasonably expect.

Josh: Finally, looking at the current economic conditions, what would your counsel be to the companies looking to outsource their finance and accounting processes and how do they get started?

Manish: First of all I believe companies should consider finance and accounting as a vehicle to save cost and also to enhance the effectiveness of their finance organization. However, finance and accounting outsourcing program present significant change and therefore commitment and sponsorship at the highest level within an organization is important.

Also, companies should look at their service providers as a true extension of their enterprise and not just as a vendor. This is not about throwing work over the fence. This is working together and creating a high performing finance organization and finally a very strong and structured awareness program is something that CFOs should put in place right from day one to ensure the success of their outsourcing initiatives.

Josh: Thank you Manish for sharing your insights on this very interesting topic. For more information on Finance and Accounting outsourcing or other business insights on how you can improve performance, visit us at www.wns.com.

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