How to Outsource Finance Jobs
Outsourcing is the use of external suppliers for products and services, including an organization's finance and accounting functions. Outsourcing can reduce costs and improve performance. It can also have a strategic benefit: Outsourcing repetitive back-office functions can allow the retained finance staff to work more closely with company management on strategic decisions, such as product positioning and mergers and acquisitions. Successful outsourcing requires careful planning.
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Instructions
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List the processes to outsource. The accounting and finance outsourcing market has three major segments: payment services, such as check clearing and credit card authorizations; compliance services, such as tax reporting and regulatory reporting, and analytic services, such as payroll and receivables collection. Start small with one or two processes, such as payroll processing or credit card authorizations. This will give you a chance to evaluate your outsourcing partner and plan the internal transition.
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Choose an outsourcing model. There are several available, including conventional outsourcing, which involves using a niche supplier for a narrow set of services, and collaborative outsourcing, which is a broader and more flexible arrangement involving more services.
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Research potential outsourcing partners by talking to industry peers and visiting facilities. Prepare a short list based on financial control and visibility, operating cost savings and track record. Examine the desired cost structure, service requirements and risk profile of your accounting and finance services. A risk profile assessment might lead you to retain certain services in the United States, despite the higher labor costs.
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Select an outsourcing partner. You may decide to use multiple partners -- for example, one for routine transactions such as payroll processing and another for more value-added functions such as regulatory compliance. Look for a partner who has "a vision around improving productivity, transforming processes, as well as providing cost savings," Richard Bailey, vice president of business process outsourcing at Xerox Global Services, told IndustryWeek.
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Seek the counsel of outsourcing experts and lawyers during outsourcing contract negotiations. Do not drag the process out too long because that may create uncertainty within your own organization, and you may lose strategic opportunities.
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Manage the transition process. Prepare a schedule for the various finance and accounting functions that are going to be transferred to the outsourcing partner. Coordinate technical and cultural training for the employees who will be moving over.
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Maintain and extend corporate governance policies to the outsourcing partnership, including audit controls, ethical business guidelines and risk management programs.
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Monitor the outsourcing contracts. Establish a cross-functional project management office to coordinate all outsourcing issues. If necessary, renegotiate the contract consistent with your business strategy, and changes in technology, labor costs and industry structure.
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Tips & Warnings
Outsourcing drawbacks include loss of control, short-term disruptions as staff transfers from head office to offshore sites, and the risk of losing proprietary data to competitors.
References
- Thinking Managers: Outsourcing the Financials
- CFO: Finance to Go
- Wiley: The Finance Outsourcing Landscape --- Excerpt
- Bank for International Settlements: Outsourcing in Financial Services --- Executive Summary
- The Chartered Institute of Management Accountants: Finance and Accounting Outsourcing
- IndustryWeek: How to Select a Strategic Outsourcing Partner
- Photo Credit Comstock Images/Comstock/Getty Images
