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From processor to partner

Oct 01, 2019
When it comes to finance process outsourcing, how do we keep up with industry trends?

By Sinead Donovan

Whether an organisation uses an in-house shared services centre (SSC) or external service provider, outsourcing has become a familiar concept to many of us in industry and professional services settings. It is no longer a new idea when it comes to finance and non-core process solutions. Long gone are the days when terms such as SSC and business process outsourcing (BPO) were treated as an innovation. Rather, it has become a finance strategy staple for most mature and growing multinationals.

The first outsourced centre in Ireland opened its doors in 1995 – an SSC of a large US multinational. Others quickly followed suit and there was an explosion of SSCs across Ireland supporting multinational organisations globally. Many have since moved away from the Irish market, or made a complete turnaround by transforming their services in the last number of years. This is a natural progression in the lifecycle of outsourcing and service transformation. Coinciding with this evolution, a new era of outsourcing has emerged which is a very interesting and indicative trend.

Traditionally outsourced services concentrated on high volume and low complexity, non-value-add processing tasks – be that booking of accounts payable invoices or entering pre-approved journal vouchers. A typical offering comprised of three main functions: accounts payable (AP), accounts receivable (AR) and general ledger (GL). While you may have occasionally found other support functions (think of master data management), this was not standard practice in the early days.

Business partner

Some 20 years on, the situation is rapidly changing. SSCs and BPOs are now expected to remain relevant while delivering valuable services to the parent company or clients they serve. With the increase of automation and technology, there is decreased need for support of high volume, low complexity tasks. Instead, there is an increased requirement for higher value-add analytical services. System transitions and implementations, process improvement and historical issue resolution are among the services now provided by BPO teams across professional services and SSCs alike. Additional value-add supports sought by the parent company or client now include financial planning and analysis, advice on enterprise resource planning (ERP) and business combinations. If we were to sum up this trend in one sentence, ‘a move from processor to business partner’ seems the most fitting.

From a business perspective, what do companies look for when transforming their finance function? It seems that demands placed on service providers have evolved from what they would have been some 20 years ago, when the main consideration was which finance process could be outsourced using a straightforward ‘lift and shift’ model.
Today, this approach has changed. Many businesses are undergoing systems and process transformation. Thus, shared services providers need to take that into account and adjust their solutions to add real value and innovation. This is often done by utilising technology, robotic process automation (RPA) or artificial intelligence (AI) to tackle all the repetitive and high volume tasks while allowing employees to concentrate on process improvement, in-depth analysis of big data, and key risk areas instead.

Looking to the future

With this trend, it is easy to see that the key to success for any SSC or BPO service provider – especially those in a professional services environment – is to remain relevant and to continue looking for new ways to improve efficiency, add value and innovate. Exactly how to stay relevant is, of course, a bigger question.
It can be easy to get lost in multitudes of considerations, trying to keep up with changing attitudes and demands. While there is no doubt that continuous improvement and development is important to successful client-provider relationships, there is another more subtle – but equally important – aspect that should be given just as much attention. Indeed, it is especially relevant in the professional services setting.

Mutual trust in the relationship between provider and client can be the deciding factor in the success or failure of a project. Both parties should be committed to the mutually beneficial collaboration that allows BPO providers to continue adding value and evolving to support clients or parent companies – all with a view to remaining relevant in this dynamic market.
Sinead Donovan FCA is a Partner in Financial Accounting and Advisory Services at Grant Thornton.