Opportunities
for India, in Finance and Accounting outsourcing are
abundant. It has the near-term opportunity, say 1 to
2 years, to develop a world-class BPO processing capability
to support rule-based, transaction-based finance, accounting,
and tax functions - such as accounts payable, accounts
receivable, tax compliance, revenue audits/reconciliation,
policy administration, premium administration, and claims
processing. This transaction processing expertise has
already been demonstrated and validated by 1) the captive
finance and accounting operations run by Global 500
firms in India, and 2) a handful of well managed BPO
providers in India that have the financial resources,
domain expertise, and relationship selling skills to
earn the trust of US and European customers.
Across
all BPO categories in India, there is a growing sense
that India's providers are their own worse enemy - as
the market is so oversaturated with firms that have
insufficient resources and lack the management talent
to develop a world-class service offering and value
proposition. Without the ability to deliver real economic
value to clients, the only market differentiator left
is pricing which soon becomes so competitive that it
can only support commodity services. I strongly
believe that the India market is in the midst of a major
consolidation of BPO providers, and only the largest
Indian firms or those with superior marketing and domain
expertise will be able to prosper. In the near-term,
as consolidation intensifies and firms go out of business, the
market for finance and accounting outsourcing services
in India will be negatively affected - as any increase
in real risk or perception of uneven service quality
will extend sales cycles and increase buyer resistance
to offshore outsourcing.
Though
F&A outsourcing is creating ripples, it still lags
behind HR and IT outsourcing. Finance and accounting
services are the responsibilities of the Chief Financial
Officer (CFO) in nearly all institutions. It is natural
for the CFO and frequently the Board of Directors to
see finance and accounting operations (including transactions)
as non-core but still very critical and with a significant
impact on internal enterprise-wide operations and external
market value perceptions. |
