Outsourcing, today is increasingly used as a means of both reducing costs and achieving strategic aims. Its potential impact can be seen across many business activities, including information technology, specific operations (e.g., some aspects of finance and accounting, back office activities and processing, and administration), and contract functions (e.g., call centers). Burgeoning businesses, pressure of competition, shrinking time spans, easier communication, the concept of a global village with seamless synergies, abundant hard working and skilled personnel at low costs, and the ability to work 24/7 due to time zone differences, are some of the reasons for the surge in outsourcing. There are many reasons why outsourcing is permeating every element of the value chain and providing tremendous opportunities for players to provide remote services of many kinds. In recent years, most of the fortune 500 companies have started the trend of concentrating more on their core competency areas and outsourcing non related to other specialist organizations. Business Process Outsourcing (BPO) is the delegation of one or more lT-intensive business processes to an external provider that in turn owns, administers and manages the selected process based on defined and measurable performance criteriaR 1.1
Despite the adverse global economic conditions, Indian players have achieved high growth rates in this field. Overall, this sector has grown at the rate of 65 percent whereas our economy grows only at the average rate of 6-7%. However, India regulatory surveys of industry practice indicate that Finance and Accounting is one of the fastest growing BP segment after Customer Care and HR Outsourcing. Financial services businesses throughout the world are increasingly using third parties to carry out activities that the businesses themselves would normally have undertaken. Industry research and surveys by regulators show financial firms outsourcing significant parts of their regulated and unregulated activities. According to IDC, the worldwide finance and accounting (FA) outsourcing market will reach $47.6 billion in 2008, growing at a 5 year CAGR of 9.6%. In a recent study done by IDC (source: nasscom.org), the U.S. will remain by far the largest FA business process outsourcing (BPO) market. Transaction management services are the largest opportunity within the FA BPO space while accounts payable will remains the most widely outsourced FA function. In this study the author has tried to analyse the factors leading to the tremendous growth of FA outsourcing as projected by the various reports and also to have an insight into the factors acting as barriers and drivers in the upsurge of this segment.
Outsourcing, FA, India, BPO
