Outsourced arithmetic doesn't always add up

Outsourcing - good thing or a bad thing? Well of course it would really rather depend on which side of the fence you're sitting on. If you're the one whose job just got outsourced or offshored, then you're hardly likely to be swinging from the chandeliers in joy! On the other hand, if you're the hard pressed finance director looking to cut costs or a shareholder looking to see operational efficiencies that send your portfolio up a notch or three, then you've every reason to be quietly satisfied.

It's the motivation for outsourcing that has so often been the downfall of its public perception. There are clear cost advantages for shipping back office jobs out to India or elsewhere and in an economic downturn such as the one we've been living through that's a mighty fine inducement for many organisations. If done properly there are other equally compelling drivers, such as improved processes, increased efficiencies and higher levels of customer or end user satisfaction.

Some areas of the organisation have been more prone to the allure of outsourcing than others and some have suffered more than others for succumbing to temptation. When it comes to outsourcing - and particularly to offshoring - it's important to consider that while the public as a whole will say they dislike the concept, the reality is that they dislike some visible aspects of it while being blithely unaware of others. Indeed where would the likes of Asda and Tesco et al be if they couldn't outsource to cut their costs and engage in price wars that benefit the cash-strapped shopper? Outsourcing's a good thing there, but of course the ordinary punter isn't aware of it.

On the other hand, if it's 8pm on Monday night and you're settling down to see who murdered Archie Mitchell, then the last thing the average viewer wants is a phone call from a Bangalore call centre from someone whose main knowledge of EastEnders comes from having to watch soap operas to acclimatise to UK 'life as it is lived' as part of their induction and training courses. That's the outsourcing that people rail against, the kind that reaches into their living rooms and slaps them around the face.

So where does finance and accounting outsourcing (FAO) fit in?  Surprisingly well as it happens. It's a back office function that's extremely process-heavy and which doesn't touch people directly on a day to day basis. Of course, it does in the real world long term. If the finance function breaks down and people don't get paid, then outsourcing will very much become a bad thing. But if FAO enables organisations to streamline procedures, to optimise processes, to make getting those expenses claims through a week earlier or to see improvements in the speed with which payrroll is processed, then it's a good thing. 

The findings of The WNS Annual CFO Survey Report  this week suggests that FAO can be a major tactical and strategic weapon in achieving corporate goals in the ravaged economic environment of 2010. In that case, outsourcing is a good thing. But it does need to be approached with care. The maxim is simple: you can't outsource a problem and expect it to go away. If there's something inherently broken in your processes or in your practices, then outsourcing it to someone else just gives you someone to blame when it all goes horribly wrong.