Financial and Accounting Outsourcing (FAO) is undergoing a paradigm shift as businesses look to their finance function to deliver insights that will drive business improvement. As they explore further opportunities for FAO optimization—including automation, cloud-based computing, data analytics, and more quality-oriented services—it is also likely to impact the entire outsourcing package, giving a new shape to the market. According to industry research, small and medium businesses (SMBs) are driving industry growth, constituting 26% of the businesses to adopt FAO in 2012-13 across geographies.
Outcome-oriented outsourcing: As with the fixed price outsourcing models, businesses are looking beyond meeting SLAs to obtain greater finance and accounting process transparency and visibility as also standardized criteria. Numbers do not lie—that is the latest mantra. The latest finance and accounting tools can facilitate benchmarking of output in the outsourced projects, preventing overpayment, data errors and inconsistent processes—improving outcomes. This is leading to clients looking for tangible and measurable business impact through FAO services.
Leveraging data analytics to improve performance: Outsourcing businesses are looking for a partner who can think beyond outsourcing to deliver value-added FAO services. They expect their provider to give an end-to-end perspective on their finance process to optimize it beyond mere cost saving, and deliver analytics-driven strategic business insights. Analytics tool can help to identify errors in financial data processing and proactively prevent them, instead of post-audit rectification; they can also be used to discover areas of potential improvement.
Automation: An increasing engagement with cloud-based offerings will encourage businesses to automate the finance and accounting processes, enabling new tasks and opportunities. Shifting to automation tools and smart robots, in combination with cloud services, can deliver businesses solid benefits including error reduction, enhanced speed and efficiency, and competitive costs. In addition, automation can help businesses retain their finance and accountancy processes as well as data in-house, allaying compliance issues.
Businesses look for a hybrid FAO model. FAO scope is expanding to end-to-end functions, with businesses partnering with suppliers, sharing services on different processes. They are looking to improve not only the output but also the transformation of the finance function itself, with process innovation, productivity, and effectiveness becoming as important as cutting costs. Businesses will heavily leverage cloud-based offerings and SaaS (Software as a Service) to this end, relying on providers offering both IT and process transformation.
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