Posted by: in Services on May 05, 2011
Finance and accounting departments are expensive, resource intensive but crucial department of a company. Carefully operated fiancé and accounting is the key to success for any business. If you could save decent sums of money but having to give away finance and accounting operations with all the crucial company information, how would you decide? This blog entry explains why many CFOs recently said no to finance and accounting outsourcing.
New research study by Ovum, an advisory group that detects market changes in software and IT services, reveals that buyer companies generally prefer to execute their finance and accounting operations- in-house.
This main result of the study is interpreted as surprising by market experts as the strategy of outsourcing finance and accounting services often proves to be more efficient than in-house production.
Ovum surveyed CFOs of US and UK enterprises, exceeding turnovers of US $500 million. The result is that a majority of CFOs is insecure about outsourcing finance and accounting services. This stands in contrast to outsourcing cloud computing services, a service segment that more CFOs would strategically outsource to an external service provider.
The main reason not to outsource finance and accounting services is the lack of loyalty to a third party provider. 44% of the interviewed companies claim that loyalty is a reason to keep finance and accounting operations in-house.
The loyalty issue is combined with the intention of many CFOs to keep the in-house team skilled and capable of handling finance and accounting operations, as 31% named loss of control as additional reason not to outsource.
In the Ovum report, India is named as most popular offshore outsourcing destinations by US and UK clients, which offers the most reasonable price rates. Nevertheless, in terms of dissatisfaction and high-risk destinations India is also listed in the top ranks.
The interviewed companies that were already outsourcing finance and accounting services to an offshore service provider indicated that 15% reduction would cause them so switch vendors.