Despite the conventional wisdom about outsourcing of
processes, here is some Best Practices reality check from the Best Practices Big Daddy The Hackett Group on where the
direction for Finance Processes is headed to.. its the Shared Services that clients feel most comfortable about while
outsourcing. Currently the onshore Shared Services are ruling the roost but this trend will change soon to the offshore
Shared Services Centers as the demand and maturity grows!
Hackett’s study found that companies today
outsource only 4% of all finance processes, while they turn to onshore or offshore shared service centers 65% of the time.
Companies said they expected their use of outsourcing to more than double in the next three years, but reliance on shared
service centers will increase slightly as well, and shared services is expected to remain the preferred sourcing alternative
for finance by a wide margin.
While the majority of shared service center utilization is currently onshore,
companies also said they planned to nearly double their use of offshore shared services over the next three years, from 7%
today to 13%. This makes offshore shared services nearly twice as attractive as outsourcing to companies, today and in the
near future.
“It’s not hard to find people who will tell you that comprehensive or full-service
outsourcing is a tremendous growth wave in finance right now. But our analysis tells a very different story,” said
Hackett Senior Business Advisory Penny Weller. “While companies are looking at expanding their use of outsourcing and
offshoring, it represents an almost insignificant portion of their finance efforts today. In fact, it’s the least
popular sourcing option we looked at. Meanwhile, companies are seeing tremendous value in moving finance processes to shared
service centers, and are making this their primary sourcing approach.”
According to Hackett Senior Business
Advisor Julio Ramirez, “There’s no doubt that there are potential benefits to outsourcing finance, such as
leveraging lower-cost labor or getting access to critical systems to enable process automation. But companies can get much of
this benefit by taking a best practices-driven approach to shared services. Then, once they have streamlined and centralized,
they often look at whether finance processes can be eliminated completely through technology, and sometimes consider
selective outsourcing. But in most cases, companies see the perceived risks of outsourcing finance, led by compliance and
control concerns and unknown total costs, as far outweighing the benefits.”
Hackett’s study, which looked
at 11 finance process areas, also found a clear trend away from decentralized finance operations. Currently, companies
reported that 27% of finance processes remain decentralized, making this the second most popular sourcing alternative. But in
three years, companies said they expect this number to be reduced by more than half. At the same time, in addition to an
increase in the use of shared services, companies said they expect to increase by 150% the number of finance processes that
are fully automated.
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