Asia-Pacific embraces finance and accounting outsourcing

Outsourcing
Asia-Pacific embraces
finance and accounting
outsourcing
By Andrew Friars

This article was published
in the July 2007 issue of
FAO Today.
With a projected annual growth rate of
nearly 16 percent, finance and accounting
business process outsourcing (BPO) is
finding a receptive base in Asia-Pacific as
organizations move up the value stream to
go beyond transactional processing.
Once a laggard in the adoption of
finance and accounting BPO, the Asia-
Pacific region is now showing the
fastest growth rate in the world, with
many companies poised to leapfrog their
European and US rivals in the adoption
of higher-value outsourced services.
Uptake of finance and accounting BPO
services in the region has traditionally
been slow, probably because of a
general preference for wanting to wait
and learn from the experience of others.
But with many of the world's largest
and most successful companies now
engaged in outsourcing, Asian companies
have joined the trend. They are now
seeing the benefits, with that message
spreading to many companies.
At the same time, these companies are
experiencing ever-increasing economic
pressure to lower costs. Outsourcing is
seen as a logical and practical way of
getting there, delivering those cost
reductions while incorporating greater
transparency and standardized processes.
Research from IDC shows the finance
and accounting BPO market in 2005
totaled $2.3 billion in Asia Pacific. IDC
projects that the market will increase
to $4.9 billion by 2010 at a five-year
compound annual growth rate (CAGR)
of 15.9 percent.
Historically, Asian companies have
leaned toward very rapid adoption of
proven concepts, and the current high
growth in FAO shows this to be no
exception. This growth has occurred in
parallel with a general increase in overall
outsourcing activity in other areas of
the business as organizations realize
that often it is better to hand off
back-office functions to a third party.
Forms of infrastructure and application
outsourcing are becoming commonplace,
and the natural progression is to move
to the outsourcing of processes.
All of this is boosted by a wave of
shared-services delivery through the
Asia-Pacific region, which has moved
from a national to an international

asis. As the risk in this journey increases,
companies look to share that risk with
expert providers through outsourcing.
Many companies are starting with socalled
low-risk areas in the realm of
transaction processing before moving
to higher-end functions such as business
analytics, performance management
systems, and report generation, followed
by support for policy and strategy
development. It is in these value-added
functions that Asian companies are
starting to lead their counterparts in
other parts of the world.
A further driver of the rapid uptake of
outsourcing services by Asian companies
is a shortage of experienced and
talented management throughout the
region. Outsourcing the back office—
particularly low-value activities such
as transaction processing—allows
companies to turn their attention to
front-office services and value-adding
activities by freeing up key executives
to work on tasks that deliver greater
value to the business. Another benefit
that companies that outsource and
pursue a growth agenda often realize is
the increased flexibility to revise scope
or integrate finance operations of
acquired organizations.
As process realignment programs move
on a journey from transaction processing
outsourcing to more highly valued
arrangements, companies are looking
for more collaborative relationships.
One major Australian bank is now
working with Accenture in outsourcing
certain decision-support activities,
gathering business analytics, and
presenting it in a way that delivers
deep analytical information. This
particular client started with accounts
payable and then moved through
several waves of report generation and
decision-support activity.
Organizations are also realizing reduced
costs of adopting new technology
through an outsourced model. For
example, profit and recovery analytic
tools are able to detect payment errors,
such as duplicate payments or payments
that have not been made in accordance
with business terms. These sophisticated
tools can be loaded with various
contract terms for business spending
and not only interrogate databases or
past payments to find errors but also
to force new payments to be kept in
accordance with mandated terms and
conditions.
Asian companies are quickly moving up
the finance and accounting BPO value
chain, taking on new services that are
only now being moved into outsourced
models in the US and UK But Asian
companies have been able to learn
from what has been done in the US and
Europe, using this knowledge to leapfrog
their businesses ahead rather than taking
the incremental development path.

About Accenture
Accenture is a global management
consulting, technology services and
outsourcing company. Combining
unparalleled experience, comprehensive
capabilities across all industries and
business functions, and extensive
research on the world's most successful
companies, Accenture collaborates with
clients to help them become highperformance
businesses and governments.
With more than 178,000 people in 49
countries, the company generated net
revenues of US$19.70 billion for the
fiscal year ended Aug. 31, 2007. Its
home page is www.accenture.com.
Copyright © 2008 Accenture
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High Performance Delivered
are trademarks of Accenture.
About the author
Andrew Friars leads the Accenture
finance, procurement, and customer
contact business process outsourcing
unit in Asia-Pacific.