The conventional approach to back office process sourcing has been to depict shared services and outsourcing as mutually exclusive choices. In business processes like finance and accounting, control issues have been a key determinant in choosing between the two, with preponderance towards domestic or offshore captive shared services.

However, the rapid expansion of global markets and the increasing maturity of F&A outsourcers have led many companies to adopt a more hybrid approach.

In the last 2 years, the need to establish globally integrated and transparent financial management and transaction systems quickly has increased considerably. Fueled by the increasing focus on the exploding markets in Asia, Eastern Europe and South America, US companies are investing in large scale plants, distribution networks and centers, customer services, and management. The scale of these investments and potential profits (particularly as the dollar devalues) has caused many CFOs to be concerned about the adequacy of financial standards and controls in these markets. No longer being able to wait for home grown functions and management systems to evolve, companies are increasingly open to lean on global outsourcers for the more routine transactional processes like purchase to pay, travel management, close to report, asset management, and the back end of order to cash processing.

Here at home too, more and more companies are looking to outsource similar processes for their US businesses. A specialist provider in accounts payable processing, based in the US, recently remarked, “…two years ago I had a tough time convincing US companies to outsource their payables to us…today I am getting, on average, 3 inquiries a day, and a lot of it is from large companies who have shared or centralized processing already.” These same companies are reluctant to outsource the more analytical and financial management functions to a third party, yet they recognize the need to improve these processes from a cost perspective as well.

The need to get more efficient and qualitative financial management quickly and in the most cost effective manner has several implications for how shared services and outsourcing will be used in the future. No longer the feuding sisters, the two philosophies are becoming more of a cohabitating couple!

If your company is looking for cost reduction and better management information faster, out of your F&A processes, Alsbridge can help. Please contact us at 214-696-6410 or by email, EnquiryUSA@alsbridge.com.