Entrepreneurs, small-to-medium enterprises (SMEs), scalable startups, and even large corporations farm work out to external agencies or business process outsourcing (BPO) firms, usually overseas, for various reasons. For example, cost reduction is one while access to expertise is another. In addition, some companies offload their non-core business functions to BPOs so they can focus on their core competencies and increase efficiency.
If you agree with these common outsourcing reasons and consider finance and accounting as non-core activities of your business, then a logical step forward would be outsourced financial services. You can either outsource your entire finance and accounting function or a portion of your efforts. A reputable and experienced BPO of offshore financial services can make the transition easy and convenient for you and your in-house team. It’s also a good idea to research the pros and cons, so you know what to expect from outsourced financial services. To help you get started on your research, here’s a list of advantages and disadvantages of financial services outsourcing.
Pros
1. It’s more cost-effective to outsource than to employ an in-house team of finance and accounting professionals.
Building and growing an offshore team is often quicker and more affordable than recruiting and onboarding an onshore team. You also need to pay full-time salaries and other benefits to your in-house finance and accounting team members.
2. Access to a large talent pool.
You expand your search for highly skilled finance and accounting specialists without incurring high-priced recruitment costs. Expanding your recruitment reach internationally also gives you the chance to land better-qualified and more experienced candidates.
3. Business operations work round the clock.
International time zones work to your advantage; you can inform your chosen BPO partner if you need two or more teams working various shifts. Your company experiences zero delays and minimal work interruptions.
4. Time-consuming tasks get done much faster.
Niche experts skilled in finance and accounting can significantly augment and improve your in-house staff’s repetitive tasks. You or your full-time employees also focus on more value-adding business activities. This shift is more relevant if you consider finance and accounting as non-core business services.
5. Expert and efficient handling of financial transactions provides peace of mind.
Thanks to outsourced financial services, you drive all time, effort, energy, and resources to more critical business activities that impact and influence your company goals.
Cons
1. There may be some hidden costs.
More often than not, less-than-reputable BPO vendors are not always transparent with all fees involved. It’s essential that you have all of your questions ready during your discussions with the financial services outsourcing provider. It’s also up to you to be diligent about identifying all possible additional expenses, reviewing the contract thoroughly, and reading the fine print.
2. There are some security risks involved.
Over time, your offshore finance and accounting team may change or rotate. A transition plan, which covers data protection, needs to be in place before any changes occur. More importantly, you have to hold your BPO partner accountable to deliver what was agreed on and paid for.
3. The setup may not work for a business owner who’s not comfortable in losing some control.
The level of control is not the same when dealing with offshore finance and accounting specialists compared to full-time, in-house employees. You usually interact with a point person assigned by the BPO provider. Depending on your management style, you have to set strict protocols that must be followed or find common ground with your offshore team.
4. Communication issues may sometimes arise.
For example, setting meetings and real-time collaborations may be challenging at first, primarily when you and your remote team members work in different time zones. But industry-standard cloud tools and agreed-upon meeting appointments usually resolve these common communication issues.
When you manage a remote team of finance and accounting professionals, open and regular communication is vital. By sharing your company’s vision and goals and setting work expectations and priorities, you and your offshore team members overcome language and cultural barriers and build a collaborative environment. Then, once you’re ready to outsource and work with the right BPO provider with the right team and tools, you will finally be able to reap the benefits that outsourced financial services can offer your business.
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