Companies, Finance, Accounting, Outsourcing, FAO, Savings
Why don't all companies enjoy the same savings from outsourcing finance and accounting?
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As often stated, the primary driver of Finance and Accounting Outsourcing (FAO) is cost reduction through labor arbitrage. So, if cost reduction from labor arbitrage is a common factor in almost all FAO transactions, should we expect a similar business case across companies who employ FAO? The answer is a resounding NO!
If we look at F&A work outsourced from a given country, say the USA, to a given location, say Bangalore, we might expect similar direct-cost improvements for companies that move the same percentage of work offshore. And we would be wrong.
The primary determinate of the direct-cost benefit from any initiative is the difference between the one-time up-front transition costs and the ongoing savings from cost reduction and cost avoidance. There are many factors that influence a company's business case.
To continue reading the full article by Everest's Paul Nowacki, click here
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