Financial Offshore Outsourcing - A Cost-Effective Alternative for Small & Medium Enterprises

Over the last decade, we saw that Financial Offshore & Outsourcing was perceived as a domain relevant to large corporates only. With global operations and multiple strategic business units, it was inevitable, that these large organizations will take a close and hard look at outsourcing Finance & Accounting Services.

But today, we see that a new trend is slowly emerging. Even small and medium sized enterprises are now looking at outsourcing Finance & Accounting Services.

A rapidly intensifying competitive environment is forcing even small companies to closely examine all areas of their balance sheet in order to stay competitive. The tumbling markets, falling exchange rates and escalating financial pressures have driven cost-cutting measures even deeper, and many small firms are turning to Finance & Accounting (F&A)outsourcing to reduce overall spend, conserve capital and increase efficiency. The resulting belt-tightening is greatly benefiting F&A outsourcing service providers. Simply put, organizations are investing money to save money.

Recently, I came across the singular instance of a new Finance Head of a relatively small organization, who was given the responsibility of building a finance team from 'ground zero' to support an existing business, which already had a significant customer base in place. Instead of adopting the time-tested route of recruiting a stream of personnel, he did something 'out of the box' - he outsourced most of his finance and accounting (F&A) work.

His superiors were initially skeptical of outsourcing, assuming that it was more appropriate for large global organizations. But he made it work, by first outsourcing all their transaction processing — and then after the first year, he was able to scale back as the processes became more stable, with no penalties.
In the past, it was unthinkable that one could strike an outsourcing arrangement to cover less than 10 employees. Simply because, most outsourcing vendors found it very unviable to service small enterprises.

However, over the last few years we see that as the processes become more defined and more importantly thanks to more-easily deployed technology, it's becoming increasingly viable for small organizations to outsource all or part of their F&A work offshore, and at very favorable rates.

So, how to make F&A outsourcing viable for smaller organizations? Vendors should focus on creating as standard an offering as possible, and host it in the cloud where smaller clients can access it remotely. This is in fact the other end of the spectrum, for vendors who are conditioned to working with large organizational clientele, wherein, the vendor works within existing client systems and processes.

In Summary:

In general, the price of F&A outsourcing has decreased between 6% and 8% a year for the past two years, according to a recent study by Alsbridge, an outsourcing advisory firm. Market competition is the major driver of the decline, with outsourcing providers taking smaller profit margins in order to win business. And the greatest beneficiary of this trend is the small and medium sized enterprise, as they are now able to leverage F&A outsourcing benefits, as a competitive advantage. Moreover, the availability of “turn key” solutions make F&A outsourcing a viable and practical solution for smaller enterprises. As a senior executive at Amicorp BPO stated, “Turn key solutions are increasingly gaining traction with companies that had not considered F&A outsourcing due to their size.”

For more information about our services please contact:

Hanno de Vriend
BPO Director
H.deVriend@amicorp.com

Fernando Cancino
BPO Sales Executive
F.Cancino@amicorp.com