Compliance Has Chilling Effect on Outsourcing

Ann All

Several months ago, we blogged about the surprisingly conflicting views of some industry observers on growth projections for the outsourcing of finance and accounting activities.


Compliance efforts seem to be the biggest question mark. Some folks predict that companies will be eager to outsource these expensive and labor-intensive activities, while others predict that companies fear losing all-important control over and visibility into F&A.


If results of a recent LogicaCMG survey are to be believed, those in the latter camp are right. Just 7 percent of finance directors in the UK who responded to the survey say they outsource any financial activities, with concerns over compliance -- cited by 68 percent -- the biggest reason holding them back.


Though 50 percent of the FDs had outsourced other areas of the business and another 19 percent said they would likely do so in the near future, F&A functions won't necessarily be on the list, according to several sources interviewed in a recent article.


An Ernst & Young manager, in an Express Computer article, makes the interesting case that outsourcing -- with its strong emphasis on SLAs -- could make it easier to keep tabs on finance activities. This is especially likely to occur if companies work closely with their outsourcing partners -- a good idea for a variety of reasons.


Other possible upsides to F&A outsourcing, outlined in a vendor news release, include more standardized and streamlined financial processes -- and even process improvement in other areas, thanks to the increasingly common integration between finance and non-finance data.

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