Navin is an experienced finance and accounting (F&A) operations specialist with 20 years in the outsourcing industry. He has strategically led the development of several workflows, reconciliations, process re-engineering, operations management tools, and setting up greenfield operations like Payroll and Financial Research.
Today, businesses are looking to optimise the large volumes of transactions and cash flows. While simultaneously, they are also trying to reduce reconciliation time, enhance the data accuracy and reduce any revenue leakages. Automation and outsourcing or automation through outsourcing are helping businesses in reaching their targets and setting new goals.
The global business process outsourcing market is likely to grow at a CAGR of 9.1% from 2022 to 2030. The need for Business Process Outsourcing (BPO) has increased along with the need for organisational efficiency and business agility because BPO is instrumental in surviving a continuously changing business environment. Outsourcing not only saves time, reduces overheads, decreases costs, and provides flexibility but also increases efficiency by ensuring service continuity and minimal disruptions for clients.
Among the sub-segments of BPO, the sub-segment of finance and accounting outsourcing is likely to experience a visible growth during the period 2022-30. FAO is important for payroll, bookkeeping, credit control, accountancy, financial consultancy, etc. The FAO market grew at 9 to 11 percent throughout the pandemic, of which, source-to-pay outsourcing, a subsegment of FAO, had a significant share of 24.5 percent in the global FAO market because it mitigates supply chain risks.
Why is the FAO market ready to witness robust growth?
FAO provides updated technology to businesses that they would have avoided otherwise. In this way, firms don’t have to be concerned with tech customization since the technology is entirely outsourced. Outsourcing shifts the entire responsibility on the service provider thus, there are no time delays associated with it and businesses can instead focus on revenue-generating activities. It enables effective management of the accounts leading to cost savings and faster decision making.
With F&A outsourcing, the company is free from the responsibilities of the accounts while remaining updated with the latest market practices and rules. The experienced management team also leverages business intelligence which comes in handy in the competitive environment. Also, the data accuracy thus helps in delivering better business insights for all the stakeholders. FAO is beneficial as it allows the experts to handle the processes by applying best practices.
For that reason, with the increasing FAO, skilled accountants and finance professionals are and will be in high demand for their specialised skills. Especially with the increased banking facilities and rigorous regulatory requirements, a substantial need has grown for FAO. Companies like Corient are providing outsourcing services to cater to this increased demand. Corient assists accountants and businesses by delivering accounting, payroll, consulting, back office, analytics, and management information services that combine the best of both people and technology.
Other than this, the businesses are also trying to cope with the regulations, such as an increase in transparency, adoption of best practices and standardisation of finance and accounting services. These all, along with the obvious benefits, are incentivizing businesses to increasingly outsource finance and accounting. Paying salary and benefits to an in-house accounting staff no longer makes sense when comparable inexpensive professionals are accessible outside of the firm. When one can access outsourced accounting services with direct access to a group of professional accountants, relying on outside professionals becomes potentially beneficial.
As per predictions, the FAO market will value at US$53.4 Billion in 2026, up from US$37.9 Billion in 2020 with the ongoing covid-19 led disturbances. It will grow at a CAGR of 5.9% from 2022 to 26. This growth will occur as a result of cost efficiency brought about by BPOs and increasing third-party reliance by the businesses for business expansion. The Asia Pacific region (transformation hotspot) specifically, will drive the expansion of accounting automation by adopting the latest technology.
In the future, outsourcing service providers will increasingly rely on modern technology such as machine automation and artificial intelligence to accelerate activities and boost client productivity. To remain relevant and assure service contract renewal, suppliers in the finance and accounting outsourcing space would require to shift away from old pricing patterns and toward automation initiatives. Therefore, businesses too shall adopt outsourcing to get the best market space for themselves.