Benefits to business
There are a number of benefits to outsourcing. For example, turnaround times can be faster, says Lowe, because the outsourcing firm can focus its energy solely on the task.
But the main benefit of outsourcing is cost and productivity. A 2011 Accenture report says cost savings of “30 per cent and higher” are possible on outsourced accounting and finance activities.
Ben Whitehouse, managing director of BB Whitehouse Group, an accounting firm that also provides financial outsourcing services, says recent studies show that by outsourcing and thereby focusing on its core functions, a business can boost productivity by at least 32 per cent.
There are generally two ways to outsource: set up your own operations, usually in a cheap-labour country, such as India; or hire specialist finance and accounting outsource companies.
Apart from lower costs, there are other benefits from going offshore, including time zone factors. A company may outsource work to the Philippines, for example, and if its payroll needs to be done by the next day, the outsource company can work overnight to complete it.
[breakoutbox][breakoutbox_title]Key questions for businesses to ask when considering outsourcing:[/breakoutbox_title][breakoutbox_content]Does outsourcing accounting and finance operations allow greater focus on your core business?
Will outsourcing lower finance and accounting process costs?
What are the risks of outsourcing, including information security?
How will the firm maintain quality control of outsourced work?
Does the firm you’re outsourcing to have the expertise to deliver a good product?
Are your company’s computer systems secure, and can you allow outside parties to log into them securely to work on client files?
Does your company have systems and processes that will work effectively with an outsourced solution?
Do you wish to develop your own team of staff for outsourcing, or do you wish to pay more and access a pre-trained and skilled team from a specialist company?[/breakoutbox_content][/breakoutbox]
Beware the risks
Outsourcing, whether in Australia or overseas, can bring risks as well as benefits, and companies need to be cautious, warns Whitehouse.
One risk is maintaining security of confidential data. At the very least, he says, companies that are outsourcing should use a hosted computer platform maintained by highly qualified technicians with a strong degree of security knowledge.
But the main risk, according to Whitehouse, is the quality of financial work offshore. While this has improved in recent years, he says many firms that have chased lower-cost options have ended up with poor-quality work. Whitehouse recommends hiring a specialist outsourcing consultant to help identify the right people and right country for the needs of your business.
Outsourcing, ultimately, does not remove the need for quality control, says Lowe, adding that managing outsourcing services is not all that different to managing people from interstate. The key is regular communication and systems. “You certainly have to put a whole lot of structures in place,” she says.
