Finance and Accounting was one of the first business processes to be outsourced by companies, large and small, to third-party service providers operating in different parts of the world. Over the years, outsourcing has continued to grow, with the sector clocking a growth of 8% in 2014 despite the global economy struggling to pick up pace after the recession.
However, there has been a marked shift in the approach of companies as far as outsourcing of accounting processes is concerned. Instead of focusing solely on cost reductions, companies are seeking additional benefits and advantages from the outsourcing deals, which has led to many new trends in the market.
Value Addition and Better Efficiency
Accounting outsourcing firms are increasingly being asked to explain how their services add value to the overall operations of their customers. Mere cost savings resulting from outsourcing of bookkeeping and accounting functions to a cheaper labor pool is no longer a satisfactory reason for most firms.
Firms that cannot afford to invest in high-end technologies and processes for a better and more efficient accounting system are asking outsourcing firms to step in and fill the gap. Just as SaaS service providers allow firms to utilize high-end applications without having to invest in a full-fledged IT department, firms are seeking expert knowledge and services from outsourcing companies, and are prepared to pay premium pricing for such services.
Outsourcing of High-Level Functions
The emphasis on efficiency leads to the next big trend in the world of accounting outsourcing services—shift from transactional processes to high-level functions. In the past, firms chose to outsource repetitive tasks like bookkeeping and preparation of records to third-party service providers.
They relied on their in-house teams for high-level functions like internal audit and budget forecasting. Today, firms are open to the idea of moving up the value chain, and are prepared to consider outsourcing of high-level functions as well.
Standardization of Accounting Processes
The accounting outsourcing process has enabled firms to establish standardized procedures and benchmarks for all accounting and financial transactions. Expert knowledge of third-party service providers are being used to identify the right benchmarks for pan-enterprise accounting procedures. Firms are discovering that outsourcing can help them streamline the implementation of rigid standards that are in compliance local regulations as well as the firm’s policies.
Big Data Analysis and Data Mining
Versatile programs and more powerful technologies have enabled outsourcing firms to offer advanced analytics as a part of their services. Today, enterprises can obtain end-to-end services ranging from bookkeeping to analytics designed to facilitate informed accounting and financial decisions at all levels. The firm is freed from the task of frequently upgrading its accounting team to match the frequent changes in the dynamic business environment.
Transition to New Technologies
Accounting software consulting firms are helping companies and enterprises adapt to newer technologies. How can cloud computing help the firm enhance financial control and facilitate better implementation of accounting standards? How to ensure mobile access to cloud-based apps don’t result in internal control issues? Third-party firms are now helping companies in their transition to new accounting and financial technologies.
In the past, accounting merely involved maintenance of records and preparation of statements. With firms now facing a wide range of new rules and regulations, and with technology offering new opportunities and creating new challenges, the nature of accounting outsourcing contracts now focus on high-level functions and value addition as opposed to mere cost savings.
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What are your thoughts on outsourcing? Any plans for your business?
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