 Kolkata:
Once upon a time, not long ago, a layman believed
business process outsourcing (BPO) is nothing but call
centres and medical transcription. As the concept of BPO
is getting mature the world over, its universe is also
expanding, with more and more companies providing value
and insights that go beyond merely running voice calls.
Against
this scenario, one of the segments within the BPO stable
that is getting increasingly serious is finance and
accounting (F&A) outsourcing, where customers want
to go beyond transactions processing and seek trends
analysis and crucial information that will help their
chief financial officers make more informed decisions.
National
Association of Software and Service Companies (Nasscom)
says worldwide, a new trend seems to have set in and
BPO majors are now redefining the boundaries of customer
satisfaction. Today’s customers are looking at
BPO as a vehicle for achieving the greater target of
business process transformation.
In
the past, a majority of F&A outsourcing deals were
focused on transaction processing. But, as in today’s
date, customers want BPO solution providers to manage
business processes, all on a turnkey basis.
According
to figures available with the International Data Corporation
(IDC), out of the worldwide BPO market growth of $1.2
trillion in 2006, the F&A BPO market will touch
around $65 billion, which is a 12.3-per cent five-year
annual compounded growth, up from $36 billion in 2001.
This establishes the fact that the F&A outsourcing
market will be the fastest-growing BPO segment in the
years to come.
Sample
some of the reasons why F&A outsourcing is going
to be a hot proposition for BPO players:
-
F&A
outsourcing leads to greater savings and better results.
One way of doing business here successfully would
be by selling shared services centres and switching
on to an outsourcing strategy.
-
One
of the positive fall-outs of the economic downturn
is that companies are compelled to look for service
providers that can provide analytical information
to better understand financial data.
-
Availability
of seasoned and stable BPO suppliers is helping the
F&A outsourcing market to explode. While F&A
outsourcing is already a decade old, leading services
providers have just gained history, context and actual
experience to develop best practices in this area.
-
Consulting
giants like ACS, Accenture, Deloitte Touche, SourceNetSolutions
and EDS have built their credentials in this space.
India
is poised to ride the crest of the global IT-enabled
services (ITES) wave, due to its cost advantages, the
success of reference customers and positive government
initiatives. The industry has been growing at a blazing
70 per cent over the last two years. The sector has
employed over 1,00.000 people as of March 2002 and over
50 global corporations have begun pilot projects in
either captive or third party operations.
The
ITES industry has attracted a significant share of venture
capital (VC) and is expected to account for 40 per cent
of all VC investments by the end of 2002. Against this
backdrop, it is worthwhile to explore how India could
cash in on the F&A explosion that is about to happen
on the BPO horizon over the next couple of years.
With
some top global players already setting up shops in
India and others such as AIG and Accenture waiting in
the wings to make an entry into the Indian BPO scene,
India certainly offers cost-cutting advantages. Off-shoring
F&A solutions to Indian companies can lead to cost-savings
of 25-40 per cent, according to Nasscom.
Indian
companies have the expertise and knowledge in F&A
verticals. Indian players have experienced professionals
with blue-chip backgrounds on their management team.
They have extensive service delivery experience and
can scale up operations rapidly.
 Further,
India’s richness in human resources will stand
in good stead. Most Indian BPO companies dealing with
F&A outsourcing have a base of skilled professionals.
The minimum entry standard is graduates, usually with
a bachelor of commerce degree. These graduates are English-speaking
and familiar with UK/US GAAP.
Most
supervisors have part-qualified accounting or CA qualifications.
Further, Indian companies have strong hiring and retention
policies and most organisations are using international
ergonomic design, international connectivity and workflow
solutions to ensure a 24/7 capability.
Some
of the BPO outsourcing trends that may be witnessed
in 2003 for the F&A segment are:
-
The
Fortune 100 group is expected to use both tier-one
providers and niche players for financial systems
BPO contracts.
-
IBM
is expected to become a big BPO player and will bring
to profitability the PricewaterhouseCoopers BPO unit,
which it purchased in 2002.
-
Companies
will look to BPO for business process transformation.
-
Transaction
engines and offshore labour arbitrage will be crucial
elements to growth.
Thus,
the writing on the wall is vivid — the BPO landscape
is undergoing a radical transformation. As traditional
function-specific BPO providers continue to evolve their
service portfolios to position competitively in today’s
technology-driven economies, new entrants in IT service
providers and pure-play technology companies are causing
the BPO landscape to expand and converge.
But
there is a snag, a need for caution. While the BPO market
forecast of $1.2 billion worth of growth by 2006 seems
awesome, this must not be viewed as the real market
opportunity.
Uncovering
the real opportunities will require providers to define
their role, choose specific segments within the overall
BPO market, define a value proposition that is aligned
with their strengths and market requirements, coupled
with partnering strategically for where the market is
going, could be a winning strategy.
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