UK economy officially out of recession but finance and accounting outsource market to grow in 2010
January 27 , 2010 :
The first official figures out this week reveal that Britain is technically out of recession, but pressure on companies to cut costs remains intense. The rapidly evolving market for the outsourcing of finance and accounts (F&A) – driven by the current economic climate and changing customer preferences – has resulted in a raft of solutions being developed to optimise cost-savings and enhance efficiencies inside the accounts departments of large and small businesses.
While growth in the market for outsourcing F&A has been hampered over the past decade as a result of overseas suppliers struggling to develop a viable economic model for switching these services abroad, analysts expect the market to grow significantly in 2010.
India and other off-shoring centres have now emerged as places of excellence for technical and process capability, which enables suppliers in these locations to add value to F&A services. Analysts expect 2010 to be characterised by a growing trend of businesses outsourcing key functions of their accounts department, including debt collections, accounts payable and accounts receivable.
Analyst and advisory firm Nelson Hall estimated that the F&A outsourcing market was worth $2.6 billion in 2009 and the firm expects it to continue to grow at a rate of 11 percent per annum over the next four years, bolstered by the current economic environment which makes it highly important for organisations to implement cost-effective and streamlined back office processes that can additionally benefit from the ‘best practice’ processes evolved by vendors servicing multiple clients.
“Pricing of F&A outsourcing is still frequently carried out on a per FTE basis. However, due to high levels of economic uncertainty it is highly important for organisations to achieve volume flexibility within their BPO contracts, which can be more readily achieved with transaction pricing once a baseline has been established.” said John Willmott, Chief Executive Officer (CEO) of Nelson Hall.
Willmott added, “There are also advantages to establishing business-oriented metrics early in a contract since use of these helps to guide and encourage service innovation in line with an organisation’s overall business goals leading to increased business effectiveness”.
Leading global IT outsourcing company Coforge is providing F&A services to a leading UK-based, low-cost airline. The outsourcing arrangement, which is currently in its fifth year, has enhanced the airline company’s capacity to deliver an effective pricing model to customers during the current tough economic conditions.
Coforge Ltd. has also delivered a new online chat service portal, delivered to customers of a leading European high street retailer. Some of Coforge’ clients have obtained up to a 73 percent ‘cost saving’ benefit in addition to a 300 percent increase in the volume of business transactions while only having to increase the number of staff by an average of 60 percent.
“We find that flexibility in a pricing model is key to making a successful relationship. To ensure that the pricing remains correct it is essential to track performance and productivity on an ongoing basis so that any corrections can be mutually agreed”.
“The key dimension of correctness is to have a fair performance metric against which the performance is measured and assessed for any bonus or penalties, making it meaningful for both parties to strive to improve the performance on a continuous basis.”said Ravi Pandey, Senior Vice President and UK Head of Coforge
Coforge is a leading IT solutions organisation, servicing customers in North America, Europe, Asia and Australia. It offers services in Application Development and Maintenance, Enterprise Solutions including Managed Services and Business Process Management to organisations in the Financial Services, Transportation, Retail, and Distribution and Government sectors.
Coforge’ software development processes are assessed at SEI CMMI – Level 5 Version 1.2. Coforge’ human resource processes are assessed at the highest-level of maturity at PCMM Level 5.
Further, Coforge has processes and systems for information security management certified in accordance to the ISO 27001 standard, and its facilities offering Managed Services conform to ISO 20000 standard of Service Management.
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Certain statements in this release are forward-looking statements. The business involves various risks, and uncertainties that could result in the actual results to differ materially from those indicated here. All forward looking statements made herein are based on information presently available to the management of the Company and the Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.