Online published on 28 February, 2020.
Outsourcing defines the shift of job work involving less critical or non-core services to third party vendors who specialize in such type of services. Outsourcing has started from 1960s evolving from time sharing data process model to Business process outsourcing (BPO) and then to Knowledge process outsourcing (KPO). Business process outsourcing (BPO) involves delegation of business processes to third party withan aim for operationalefficiencyand achievement ofquantifiable targets. Knowledge process outsourcing (KPO) goes one step beyond in outsourcing which involves delegation of domain expertise and skills for improvement of value chain. The Legacy of Outsourcing goes back to United States the need for which has arisen due to blockage of economic growth and rising costs. This has led the US companies to outsource their jobs to cheaper geographies to improve their profitability. Since then Outsourcing has become a global phenomenon spreading across countries and continents. The global outsourcing market will grow in 2015 as organizations are slowly regaining conf idence post-recession.
According to analysts India remains a preferred destination for outsourcing and expects this annual GDP to growat 8–10% for thenextdecade. Globalization and technological advancements has remained the reasons for growth of outsourcing industry in India. Added to that the huge talent pool and low labour cost have made multinational companies to outsource their jobs to India for cost reduction and eff iciency in business processes. Over a long period the industry has been the fancy of sales, marketing and financeprofessionals to even medical professionals. The markets have reacted positively to the formation of stable government at the centre which claims to improve the macroeconomic
environment, make India a manufacturing hub and develop smart cities. With the development of smart cites which provide good infrastructure and suitable climatic conditions will give opportunity for development of IT and ITeS services and create an exponential growth in outsourcing. The outsourcing of Finance and Accounting services has also grown at a faster pace due to complex regulatory and tax environment in India and lack of skilled man power for specialized accounting and financial transactions. The fiercecompetition from industries to improvetheprofitability, reduce costs and achieve higher levels of excellence in Corporate Governance has made the job of CFO/Finance controller daunting and challenging. Added to that the increased risk of compliance and maintaining ethical standards in Book keeping to face the tough regulatory environment has made the scenario more complicated thanbefore. Allthisrequires a team of specialized expertsand efficiency in processes as well as retention of manpower. These aspects may not be handled significantly by employees in payroll. Whenever there isa need and aservice is there to fulfil the need the demand for that service increases. This is the reason behind the increase in demand for Finance and Accounting outsourcing when several firms are there to provide such kind of services. These firms offer services that increase the efficiency in business processes, own the burden of risk and regulatory compliance, perform routine transactions smoothly and are cost effective. Many of the firms have assisted the Multinational companies who wanted to establish their operations in India by making their journey smooth sailing in the Indian accounting, Taxation and regulatory environment. Some of the firms have even gone an extra mile in providing strategic inputs for decision making to CFOs and Top management.
The Term Manufacturing Industry implies any Industry which uses Raw Materials or semi finished goods to produce finished goods on a large scale. These goods can be used as a component for some other large products or can be sold to retailers who in turn can sell it to consumers. Production of hand made goods for personal use cannot be termed as manufacturing. A large number of complicated regulations and laws are associated with a manufacturing industry starting from labour laws to environmental laws. A large part of costs are to be incurred for society and environment. In spite of the cost involved according to some economists it is a wealth producing sector of an economy in comparison to service sector which is termed as wealth consuming. Manufacturing employs approximately 30% of non agricultural workforce. Significant rise in index of growth for the manufacturing sector from 6.3% in 2009 to 8.2% in 2011. Sharing 15% of GDP the manufacturing sector has the potential to share 25% of GDP. India is the 2nd preferred global investment decision. For improvement of business cycle the growth in manufacturing is very much needed and this sector will augment the growth for all other sectors of the economy. Since this Industry is labour intensive growth it will give employment to a greater amount of work force in India.
Thus, with the help of this sequence the present study would like to through some light in this growing concept of finance and accounting outsourcing with special reference to manufacturing industries of Odisha.
