ETM : The ‘labor arbitrage’ model of outsourcing provided value to Finance & Accounting [F&A] buyers when outsourcing was in its nascent stage. However, Finance & Accounting Outsourcing [FAO] has rapidly evolved from the labor arbitrage model. Having spent close to two decades in the F&A domain, you have seen the changes from very close quarters. What in your view are the top two / three changes that have occurred in buyer demands and provider solutions in the past few years?
Tasneem : The FAO [Finance & Accounting Outsourcing] market continues to grow and has matured over the last few years creating an increased focus on mature offerings and additional programs from a transformation and innovation perspective.
The market has more than doubled since 2005 and continues to grow at an accelerated pace with increasing adoption across industries and geographically. Buyers of FAO services are more sophisticated compared to the early 2000s with key customer mentality changes, including global adoption of delivery models, the emergence of costs plus value propositions, and increased demand for transformation and innovation applicable to their business processes.
We have also seen several requests from new and existing clients for system high-end services. In fact, for a large global conglomerate we support the regional finance director in delivering finance and business intelligence for different countries reporting to the him. What this means is sustained budgeting, planning, and analysis between actual submissions to that of the budgets. In addition, we have also partnered with several of our clients in working on their transformational road map and in executing them as well. So essentially we are moving away from traditional transaction processing to high-end services, thereby moving up the entire value chain in the business finance process area.
ETM : The FAO landscape has seen extensive changes and is today in its maturity phase. As mature buyers, what do CFOs expect their outsourcing partners to deliver? Are client expectations moving away from ‘tactical’ deliverables to becoming more ‘strategic’?
Tasneem : Absolutely. Today the Chief Financial Officer’s [CFO] demands and expectations have seen a dramatic shift to what we experienced in the early 2000 when the industry was in its nascent stage. The expectation was more from a cost arbitrage and productivity-led agenda. But today’s expectations include pricing flexibility; deployment of industry best practices; labor arbitrage but combined with business outcomes; and productivity, but combined with process effectiveness, including deployment of models or technology frameworks to drive best process performance, industry-orientated offerings that are balanced on shore, near shore and off-shore strategies from a locational delivery perspective. This results in moving the relationship from a buyer-service provider to a partnership approach, creating increased value for both organizations as they move up their strategic goals.
ETM : What are the imperatives for a service provider like WNS to live up to the advanced demands of buyers? What are the capabilities that will catapult FAO to the next level?
Tasneem : With the maturity and changing dynamics of the industry, client demands and expectations have also seen changes. What we see in terms of the capabilities that will take FAO to the next level are : 1. Tools, which could be work-flows, applications, wrappers around existing technology, business or finance intelligence dashboards. 2. Platforms such as Business Process as a Service [BPaaS] include integrated applications and processes, which are owned end-to-end by the service provider. 3. Onus is on innovation from a process side, looking at and working with frameworks to drive best processes to be able to push these efficiencies across the length and breadth of the organization. 4. With the industry dynamics changing, clients are expecting service providers like us to look into specialized processes or end-to-end offerings embedded with analytics. So this could include business insights on some of the data that we process for them, or include future trend analysis and how we could use tools and technologies to be able to push them through. And, of course, today FAO is not only about finance processes, but increasingly clients are also demanding a thorough knowledge about industry offerings.
So to meet these demands from our clients and customers, what we have done in WNS today is align ourselves by industry verticals where the delivery responsibilities are within the workplace, allowing us to deeply integrate the solutions that we bring into the industry specialization focus, which clients are looking for. We have also created a new team called ‘Capability Creation’, comprising senior leaders from a horizontal domain to look at new tools and platforms, BPaaS offerings, process innovation and transformation frameworks to be able to service our clients better.
ETM : What would you say are the roles that platform-based cloud-based offerings will play in the growth of FAO?
Tasneem : The cloud is set to revolutionize the way Business Process Outsourcing [BPO] service providers extend their offerings, and the benefits that organizations accrue by outsourcing their business processes.
You may also see changes in applications because the cloud will now be made available over network on demand, and with cloud operating like any other utility, it could be like a ‘turn-on’ application or a ‘turn- off’ On Demand, thereby eliminating the need to invest in IT and reducing costs significantly. The Internet is also creating significant shift in the way organizations buy and use technology. Organizations are looking towards BPO service providers like us to deliver these in a way to service with significant cost arbitrage that outsourcing has traditionally offered. So having your IT applications hosted over the Internet means that companies can now concentrate on their core businesses without worrying about the day-to-day issues of running the IT infrastructure.
With the cloud spurring the delivery engine, BPO service providers like WNS are set to move to a higher level of arbitrage and efficiencies. Cloud brings cost reduction and scalability, since the cost of huge investment on capital outlay will be replaced by a more predictable simplified monthly fee or a pay-per-use-fee. The entire complexity of funding and implementing the necessary hardware, system software, application software, training people, looking at updates and upgrades, means all of this is going to be managed by the BPO service provider. These solutions tend to be priced either on a transactional pricing or on business outcomes. The client now has the flexibility of engaging on a very good pricing model, managing not only the variability of their business but also on outcome based pricing models that enable it to pay for a well defined business outcome. Variable pricing or pay-per-use models obviously help align costs with the highs and lows of the business, meaning increased efficiencies and further adding to the reduced costs, which most companies are looking forward to.