12th
January
2008
A number of Finance and Accounting (F&A) functions are similar from company to company, as are the goals: Most companies want to tackle costs, improve performance, efficiently spend money and manage revenue cycles, in addition to undertaking the required accounting and reporting.
The relatively standard processes imply that technology can lend a big hand as long as the people who perform those F&A functions have a fair degree of functional expertise and conform to common processes. That said, tax complexities, revenue-recognition policies, industry specific requirements among other factors present challenges, but these issues are almost always under the watchful eye of an executive who is highly motivated to achieve the desired accuracy and compliance.
Now contrast this situation with what you see in most Human Resources departments of organizations where it’s not uncommon to find many nuances relating to the geography, business-unit operating models, and various employee programs. One might think that achieving common ways of doing things in HR would be more problematic.
The difference between the two functions raises the question: Why is it that the predominant sourcing model for F&A is labor arbitrage? We see much more standardization and “managed services” orientation in HR outsourcing than we do for F&A functions. Whether companies are using a captive operation or outsourcing, F&A has become the poster child for effort-based sourcing.
So far, the promise of a vibrant market for F&A outsourcing is unfulfilled. The contracts are labor-oriented and the investments made by many of the leading service providers to standardize offerings aren’t being employed. Which leads one to ask: What will it take to change this? Why aren’t CFOs more receptive to a managed service around accounts payable? Might this be a situation whereby service providers are not providing comprehensive solutions to F&A executives? Perhaps it a case where finance managers cannot relate to “managed services” offerings? Or maybe it’s a relatively higher degree of integration among and between finance processes that is making standardization so elusive?
Whatever the cause, today’s outsourcing landscape offers a much higher degree of maturity for HR services than F&A services. Is the lure of cheap labor so compelling that the promise of a managed service for F&A is just not worth the effort?
posted by Peter Allen in Outsourcing |
8th
January
2008
I have recently come across the following news:
British callers may be infuriated when they discover that the company they are telephoning has moved its customer service centre to India. But their frustration is nothing compared with the heart attacks, ulcers and isomnia afflicting those on the other end of line.
Research carried out by India’s booming call centre industry has found that the 1.6 million people who work in them, mostly in their twenties, are plagued b ailments arising from the stress of dealing with irate customers.
The Indian government is so concerned about the problem that it is preparing to launch a health strategy for the workers.
A study conducted by Strathclyde University for the union of IT enabled services, which informally represents call centre workers, found that 77% felt “very” pressurized and 45% identified difficult customers as the main source of their stress. Read the rest of this entry »
posted by Christopher in Outsourcing |
19th
December
2007
I would like to wish everyone who reads Metagrobolize out there, very happy Holidays and a Healthy and Prosperous New Year.
We’ll be hiding for a week or two and then coming back stronger and more controversial than ever!!
posted by Glen Stidolph in Outsourcing |
19th
December
2007
Its been some time since our last blog posts, however its not for the lack of news or articles, its been a simple cause of ‘lack of time’
We’ve received a number of emails asking if Metagrobolize is going to continue with its supply of news, information and sometimes irreverent views on the global outsourcing industry, and the answer is a very definite yes.
We’ll be back in 2008 with renewed vigour!
posted by Glen Stidolph in Outsourcing |
6th
November
2007
U.S. Outsourcing went down by 16% since 2006
- Europe Outsourcing Market increase 24%
- Reason of smaller, shorter and more focused deals as well as decline in the level of re-tendering activity in the U.S. market
US outsourcing operators are suffering from a “dramatic shift” in the global market as customers ditch America for Europe and Asia-Pacific, new research warns.
The latest Quarterly Index from sourcing advisers TPI shows that U.S.’s Outsourcing Contracts have declined by 16% when compared to the same period in year 2006. Read the rest of this entry »
posted by Christopher in Outsourcing |
18th
October
2007
Many of the comments I hear about outsourcing revolve around the concept of 3rd world salaries and ‘slave labour’ etc.
However, whilst salaries and costs in countries such as China, India and Vietnam are some of the lowest on the planet, it may be of some help to the purveyors of such sentiments to watch this You Tube video of Dr Hans Rosling. CLICK HERE FASCINATING!
posted by J.Smith in Outsourcing |
16th
October
2007
By all measures, the pace of new outsourcing contract awards has slowed in 2007. The third quarter reports are out any day now.
The paradox here is the continued strength in the flow of work to India-led providers. You can see that from the providers’ earnings reports. My firm thinks clients are opting for effort-based contracts – paying per worker per hour — rather than traditional outsourcing relationships that specify the scope and quality of services.
Watch the news in the coming weeks, and I’ll bet you start to see a renewed emphasis on productivity-based and outcome-oriented contracting. The provider community has the expertise and the tools to deliver great value to clients through real outsourcing, but they must surrender the old ways of selling effort. They have to paint houses like pros.That said, potential purchasers of sourcing will likely be cynical about such quick cycles in business models. Just as they were getting comfortable contracting for people in low-cost destinations, the business model will change to reflect the rising tide of labor costs influenced by currency exchange rates, taxation policies and rising wages. The prospect of higher labor costs for effort-based contracting won’t be very appealing.
I expect outsourcing demand to suffer from these shifts for a while, at least until we converge on a sustainable business model that blends cost, capacity, and capability. That’s the model that will create long-term value.
posted by Peter Allen in Outsourcing |
10th
October
2007
There are some very striking similarities in the recent research conducted by Connect Ltd, an IT support company specialising in providing IT support to SME’s in the UK and research by Catenate Sdn Bhd, a Malaysia based outsource sub contract manufacturer, also specialising in manufacturing for SME’s in UK, Australia and US.
Even though these two companies operate in very different spheres of the outsourcing spectrum, it would seem that SME’s share very similar thoughts when it comes to considering outsourcing.
Connects research, which polled 200 UK IT managers and directors, found that the number 1 reason for considering outsourcing was ‘guaranteed response times’, (#3 in the manufacturing poll) whereas in the SME manufacturing sector, the #1 was increasing exposure to new more specialised work practices and skill sets allowing in-house employees the benefit of being able to concentrate on core competencies or higher value strategic tasks, which turned out to be #2 in the IT sector poll. Read the rest of this entry »
posted by Glen Stidolph in Outsourcing |
5th
October
2007
Mix equal parts outsourcing, Web and open innovation, garnish with “The Wisdom of Crowds” and you get “Crowdsourcing.” Just don’t expect to see it in the upper echelons of Corporate America just yet.
Author Jeff Howe (http://www.wired.com/wired/archive/14.06/crowds.html) characterizes this phenom as distributed labor networks using the Internet to exploit the spare processing power of millions of human brains, much the same way that dispersed computing projects harness the processing might of millions of chips.
MySpace, eBay, Wikipedia, and the vast universe of Linux developers further illustrate the power of crowds properly organized. Howe’s article makes the point that these Web initiatives – previously taboo with old-line businesses – now realize that technological advances are allowing them to source to anyone connected to the proverbial network.
At the same time, such advances are dissolving the cost barriers that once separated amateurs from professionals. Now all the diverse folks who make up the crowd can connect with companies in everything from pharmaceuticals to television. Hobbyists, part-timers, and dabblers have a new source of income, and businesses have a new, cheaper, and often more inventive source of solutions.
Read the rest of this entry »
posted by Peter Allen in Outsourcing |
28th
September
2007
The outsourcing of manufacturing processes is not only still vibrant, but is continuing to gain momentum as product makers begin to turn their attention beyond China, to such countries as India and Vietnam according to experts attending the National Manufacturing Week Conference.
“People tell me that we’ve probably got about three years in China before their standard of living goes up,” said Richard Ligus, president of Rockford Consulting, a firm that specializes in manufacturing, distribution and supply chain strategies. “After that, they’ll probably go to India. ad after that, to Vietnam.”
Ligus joined other speakers at the conference at a session titled “Offshore Outsourcing.” Read the rest of this entry »
posted by Glen Stidolph in Outsourcing |
