Ten years back, Fortune 500 enterprises were the first ones to discover how easily they can increase the quality of service and reduce cost by outsourcing non-core accounting processes by investing into technology and communication infrastructure. In the last ten years, both technology and communication have become increasingly inexpensive and several midsize enterprises find it quite easy to enjoy the same advantages of better service and lower cost by outsourcing accounting operations.
It is a lot easy to define what you cannot outsource than what you can outsource in accounting. You should not outsource:
The rest can be easily outsourced.
However, most experiments in outsourcing fail because people plan just for the wedding and not for the marriage. The quality of the service provider is far more important than price or credit period. The service provider should understand that the key mission is your business’ success in the market place and not just processing transactions at a lower cost. There should be no post engagement shocks. There should be reliability and trust. The engagement should be long term for both the parties.
Therefore a clever CFO would be careful to ensure:
How do you choose a service provider? You look for the following:
Does the outsourced service provider have a reasonably long and proven track record?
Look for number of years of operation, and number of clients. You are safer with an experienced service provider. If the service provider is new, look for quality of management.
Does the service provider have the cultural traits required to be a partner in managing your processes?
The key test is that the service provider should see your success in your market place as their mission and do everything necessary to achieve this. (This is what your employees do). If the key value proposition is “better management of processes” or “lower cost”, you are buying just the mind; not the heart. The best way to ascertain this is to talk with the existing clients.
Does the outsourced service provider have quality processes in place?
Outsourced accounting service providers should have expertise in designing and managing processes and create value by a superior set of processes that provide you competitive advantage. This cannot happen overnight. (Your role in ensuring this happens is more than what you imagine it to be). However, if this does not happen and you are outsourcing for lower costs alone, you are not getting the best benefits of outsourcing. Look for tell-tale signals of process excellence (ISO standards etc).
What kind of expertise does your outsourced service provider have?
This can be assessed by verifying the service offerings by the outsourced accounting service provider. Most service providers stick to offering standard accounting tasks such as book-keeping. There are other service providers equipped to handle complex tasks such as financial analysis for decision support. In the end, you are better off with someone who can scale up the variety of work that can be handled.
What security and confidentiality processes are followed?
Service providers should be able to demonstrate that they are using robust and secure information technology systems. Compliance with ISO 27001standards is an important credential for information security management processes adopted by the service provider. It could also be worthwhile to check if providers invest in technology to ensure security and confidentiality of data.
How competitive are the service provider’s prices?
Pricing is one of the most crucial factors in choosing a service provider. A service provider with a low price does not necessarily translate into the best option. A safer approach would be to perform additional checks on quality – a sample output or a paid pilot project would be a good option.Cost is an important factor to consider in an outsourcing relationship. However, cost alone cannot ensure the sustained success of an outsourcing relationship. Attention to thefactors described here will ensure that the outsourcing relationship succeeds on the long run.
TaurusQuest is a vendor with eight years track record; serves more than 40 clients worldwide;is accredited with ISO 9001 and ISO 27001 certificates for compliance with quality management and information security management standards; has a senior management team with rich experience in finance/accounting and is a competitive vendor.
TaurusQuest offers a wide range of services in finance/accounting area including book keeping, reporting and decision supportive analyses.
To find more about TaurusQuest, visit www.taurusquest.com or send an email to us at email@example.com
The views expressed are that of the author’s and TaurusQuest is not responsible for the contents or the views expressed therein. If any part of this blog is incorrect, inappropriate or violates the IP rights of any person, please alert us at firstname.lastname@example.org. We would take immediate action to correct any violation.